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Short Sale - Buyer's appraisal for less then seller's BPO value

We are in the process of buying a short-sale. The home was on the market for $235,000 and we offered $235,000 in March 2010. The seller's have 2 lien holders (Wells Fargo 1st and B of A 2nd). The banks countered at $265,000 after they did there BPO (late March/early April). We countered back at $245,000 but we haven't heard from the banks since. Our lender then did their appraisal (mid June) and we recently received the value of $236,000. This is $9,000 less then the current contracted amount and roughly $29,000 less then what the banks want. Before our appraisal results came in, we heard rumored that the banks might counter again at $260,000. We don't know if we should hold our ground and stay at the $245,000 price or if we should fight harder and drop it to $236,000. We have roughly 15% to put down toward the house if we are at the $245,000 price. We are scared that if we fight to drop it we will loss the house and they will just choose to take it into foreclosure instead of letting us buy it at our appraisal price. We really love this house. What should we do?
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June 30 2010 - Kent
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hold strong!!! Banks and servicing companies are always looking for "easy' negotiations. If your lender is only allowing a certain amount then stick to it. Most lenders will move on a price once they see a buyers lenders appraisal and another BPO or appraisal done by their reps. 

Good Luck!     
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June 30 2010
If you can share the appraisal with selling / listing agent along with your loan commitment.  The list agent will share with bank's negotiator / attorney.  Like Arnold says hold strong, the bank will most likely get another BPO and appraisal but it should know a bird in hand is better than foreclosure.  Also it might be a good idea your lender deals directly with the selling agent so it is professional to professional.  Good luck I hope you prevail.  
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June 30 2010
This is the problem with shortsales when there is a 1st and a 2nd mortgage. The 2nd usually is trying to get paid something, and often times, there is no equity for the 2nd to get paid from.

If the market value is $236,000 you need to hold out and wait. But I would have your Realtor (or a trusted local Realtor you know) run another market analysis. If the sold's are a little higher, bumping your offer up a little might just make the difference and hook the lender into agreeing to the deal.
If for some reason the shortsale does not work out, you can always track the home when it goes back to Wells Fargo, and try to write an offer directly to them, or wait til it is a Bank REPO and try to buy it then. I have had buyers wait and get the house for less after this happens.

The one thing is, interest rates are incredibly low at the moment, at around 4.5%! So I would be diligent in assessing the value, and seeing if there is anything you can do to put this together soon (so you could lock-in to the current rates). With shortsales, you have to have someone being really persistent to make it happen.

I wish there was a simpler answer to your question, but it all depends on your motivation, your timeframe you want to buy in, and the comparable solds.
Best of luck,
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June 30 2010
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@Paul
They already have an appraisal from their bank.  If they agree to go higher than that appraisal they will be putting money into the house that will not be counted in their LTV ratio.  That will mean paying more in MI as well as buying an already depreciated asset.

@Marie
Unless the current lien holders can get an appraisal that your lender will accept you will it will cost you by offering above the current appraisal.  Is there any reason to believe the current appraisal is inaccurate?
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June 30 2010
The appraisal is more reliable then the BPO.  The bank cannot hope to get more then the appraised value.   Counter back.  If it fails wait for foreclosure and pick it up then.
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June 30 2010
@hpvanc

Your right- I missed that the buyer had her own appraisal. I mis-read and thought it was just the lenders BPO.

@Marie

In that case, I would try to forward your appraisal to the sellers lenders. Sending them your appraisal and staying persistent in trying to get a new response from them is all you can do.
That, and keep your search open for something else that might come along on the market. Either that, or again- wait and track it when it goes back to the bank.
Again, good luck :-)
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June 30 2010
Don't buy for more than appraised value. 
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June 30 2010
 
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