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short sale bait and switch

I am currently under contract to purchase a house that is a short sale.  The house was listed on the market at $157,000.00.  We put our offer in for that amount plus two percent seller's assist.  We have waited three months for a response from the seller's bank.   They just responded and they want $185,000.00.  I know the banks have every right to do this.  We would have never looked at this house if it was listed at the $185,000.00.  I feel like this is a bait and switch.  Does this happen often? 

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September 13 2013 - Pottstown
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Welcome to Short Sales. This is more than common and it is almost always what happens and here is why. A short sale must be approved by the bank that has the loan because there is not going to be enough proceeds from a sale to pay off the loan so the bank must agree to lose money. How much they lose will be up to them.

A seller and his agent decide what to list a short sale for. The bank DOES NOT set the price. I feel they should, but it does not work that way. The seller decides the price to lure in an offer so that they can then present it to the bank for approval. It takes months to get an answer and then and only then do we find out what the bank will really sell it for. It is just the way the process works on a short sale and why we tell everyone it WILL BE frustrating and it WILL BE long.

Your agent should have already explained how the process works unless you have an inexperienced one. Even at $185k they are losing money and I bet it is still a deal. Counter them back with something and see if they take it. Once you get a reply the next reply will not take as long, but remember they only work 5 days a week and have to have meetings to decide anything.

Tim
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September 13 2013
It has become more an more common.  Find another property.  That kind of increase for Pottstown is outrageous.  I'm a PA Realtor and I know that area.

You have not even been through inspections yet.  Don't count on the bank making any repairs.  You may be out of pocket for the inspections only to find out the bank will not negotiate at all.
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September 14 2013
hi,

Unfortunately, this can occur in a short sale transaction.  Some reasons include:
1. Increase in local area home values
2. Property was on the market a long period of time and had not received any offers so the agent lowers sales price to get an offer
3. The bank only does a "drive by" brokers price opinion and over values the property. This in turn causes the bank to think the value is higher

The best solutions:

1. Work with an agent who has experience
2. Ask your agent for comparable homes in the area before making an offer
3. Keep looking for a home even after you have made the initial offer

Hope this helps.

Thank you,
Maria Sabio
Short Sale Certified Specialist
Chane Realty Inc
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September 14 2013

Unfortunately it does happen, and  the bank will come back with a higher valuation and sometimes IMHO off the mark at times. Good communication
is always needed especially dealing with short sales, although the name says short sales at times there is  nothing short about it.
Best of luck

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September 13 2013
Yes, I had a listing in Nashua, NH it was a short sale, we had a buyer submit an offer and the bank had me up the list price therefore the current buyer was disqualified because out of their budget and got another buyer and it successfully closed.
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September 13 2013
Unfortunately, this is very common and it's not a bait and switch. The bank has done their due diligence (interior BPO) every 90 days or so and found out that the current FMV(fair market value) is $185K. You should check with your realtor and have them perform a CMA to see if values have increased in the area.  
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September 13 2013
Profile picture for wetdawgs
Yes, it happens.   

The price advertised is often a price determined by the owner (the seller) without consultation with the lender.  The seller has no skin in the game and simply wants to get out.   The lender often comes up with a different price after getting a BPO and the lender wants as much as possible.  

Short sales can be a very frustrating process.   Asking for seller's assist is great way to get short sale offers (or foreclosures) rejected even when the rest of the offer is competitive.   If you need seller's assistance, stick with regular sales and even then you'll often find them rejected.

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September 13 2013
 
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