Author Topic: Short sale purchase negotiations  (Read 994 times)

intellectsucks

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Short sale purchase negotiations
« on: August 31, 2017, 09:21:06 AM »
Weíre in the process of purchasing a short sale property (it will be our primary residence).  We offered full asking price ($235k).  The appraisal our mortgage company did came up with a value of $243k.  The sellerís bank did an appraisal that came in at $265k.  Another factor to consider is that the home needs some fairly major repairs: the HVAC has two zones and one zone is completely inoperable (the AC unit needs to be replaced, some electrical work needs to be done to the HVAC and the heater may need to be replaced), there are no gutters on the house, and the rear exterior wall needs to have the vinyl side removed, the sheathing replaced and probably replace insulation, etc due to water damage) along with a pretty fair amount of fairly minor interior repairs (missing trim around doors, minor patching needed in some drywall, etc etc).  The sellerís bank has not come back with a counter offer yet.  Any price above $255k is outside of our budget.  Here are my questions:
First, how much weight will the needed repairs hold in negotiations with the bank?  Our realtor says that those repairs are unlikely to be considered by the bank because the bank is looking at comps and has no way to know the functional condition of any systems in those comps.
Second, how likely will the bank be to consider other monetary concessions that could be attached to an increase in price (for example sellers assist)?  I know this would be a common practice when dealing directly with the SELLER, but havenít been able to find a lot of information regarding whether this is something that is commonly done when negotiating with a bank.
Third, what other advice can you give in this situation?
Thanks in advance for your thoughts and assistance.

Another Reader

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Re: Short sale purchase negotiations
« Reply #1 on: August 31, 2017, 02:18:03 PM »
Send the bank your appraisal and a list of needed repairs from the inspection report.  Affirm the offer and walk away if they don't drop the price.  Otherwise you will overpay.

Cwadda

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Re: Short sale purchase negotiations
« Reply #2 on: September 01, 2017, 07:49:18 AM »
Quote
First, how much weight will the needed repairs hold in negotiations with the bank?  Our realtor says that those repairs are unlikely to be considered by the bank because the bank is looking at comps and has no way to know the functional condition of any systems in those comps.
My advice would be to go inside and take pictures of everything to make a case. It could be that the bank has never even seen the property(?). The next thing I would do is ask for a 1-on-1 meeting with the bank in person with your realtor and all associated parties. Say that you would like to work out the details. This works in the bank's favor since this allows them to unload the property sooner. Short sales are notoriously long processes.

Quote
Second, how likely will the bank be to consider other monetary concessions that could be attached to an increase in price (for example sellers assist)?
Again, meeting with the bank in person and talking to the person in charge will clear this up. Put yourself in the bank's shoes. This house is just another hassle for them to deal with. You're already offering the asking price which means they're not going to take a big loss. They're already happy! Now just make it happen.

Also, +1 to the walking away comment. Always be unafraid to walk.

Hope this helps. I'll check back if you have more questions.

Another Reader

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Re: Short sale purchase negotiations
« Reply #3 on: September 01, 2017, 08:53:45 PM »
There is no person at the bank to meet.  The asset manager handling the case is likely in an office in another city or state.  S/he has a stack of files on the desk, some guidelines, and a quota of cases to resolve.  The bank is likely the servicer of the loan, not the originator, and they represent the owner of the loan.  The owner of the loan writes the rules.

Dicey

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Re: Short sale purchase negotiations
« Reply #4 on: September 04, 2017, 05:51:55 PM »
Make sure the property is worth the effort. Our short sale took eight months and a lot of wailing and gnashing of teeth to close. We were also paying cash for the house and taking it "as-is", which didn't seem to help much. At one point, they demanded $35k more because the home had risen in value since we'd made the highest and best offer. (We had to outbid 12 other offers.) WTF?

We told them no. We also hired our own appraiser and our agent provided the comps to show our price was fair. We only stuck it out because the house is walking distance to DH's work, and the house itself is part of our "how we met" story. Otherwise, it would not have been worth it.

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Kroaler

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Re: Short sale purchase negotiations
« Reply #5 on: September 05, 2017, 04:40:23 PM »
Short sales are painful.  I recently closed on my first one heres what I can share.


1.)  There didnt appear to be any benefit to offering cash and taking as is.   Made no difference in the price they would consider... 

2.)   Basically your dealing with an asset manager several states away that only sees the final value on the Hud-1 form.  He is going to try repeatedly to get the highest amount possible.   Dont be surprised if he tries to take the 3 offers in front of yours before accepting yours to make 300$ extra...   I mean its silly really. 

3.) PATIENCE PATIENCE PATIENCE PATIENCE PATIENCE :     This process is absurdly long on a good day.(5-6 months)   and if its a long short sale, well.... there are people from 2009 still waiting to hear back from an asset manager....

4.) "Its in bad shape, will they lower the price?"  NO! .  They ordered a Broker Price Opinion and they will not lower the price for you no matter what your find...   Refer to "2" , the asset manager is trying to get as much as possible.

5.) The asset manager negotiates more than you do.   Youll be at your top $ and they will kick back to you with a value that is only 3,000 $ higher, and youll think, "what the hell, I dont want to wait another month for them to counter, lets accept and close this" -  NO advise, but I fell into this trap.   In Hindsight, I believe I would have been better off walking away. 

So in summary, I wish you the best of luck, however I dont plan to buy another shortsale for a while, not all cash anyway...  I WILL NEVER make another all cash offer on a short sale.

Hope I helped..

Edit*

One last piece of advise, does the person trying to shortsale Have PMI?  If someone has PMI the bank will make 0 effort to make a short sale work...

« Last Edit: September 05, 2017, 04:47:50 PM by Kroaler »

intellectsucks

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Re: Short sale purchase negotiations
« Reply #6 on: September 20, 2017, 08:27:37 AM »
The latest: the sellerís bank told us they werenít going to lower the price.  Our realtor wanted us to incrementally increase our price up to our max but we decided to counteroffer with our max price ($250k) and tell them take or leave it.  The sellerís bank said they would lower their offer by $2000 (bringing it down to $263k).  We told our realtor to draw up the termination paperwork.  He informed the sellerís realtor.  An hour later it came back approved.
Iím torn, as Iím really happy we got the house (itís pretty perfect for our situation), but I canít help but wonder how the bank would have reacted if we would have credibly threatened to walk as soon as they asked a higher price.  Was it our willingness to walk that got the deal done or did the extra $15k make it worth it for them?  Anyways, closing date is next month, so keep an eye on the DIY subforum for updates on all the many repairs that will need to be done.

Cwadda

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Re: Short sale purchase negotiations
« Reply #7 on: September 20, 2017, 09:21:16 AM »
The latest: the sellerís bank told us they werenít going to lower the price.  Our realtor wanted us to incrementally increase our price up to our max but we decided to counteroffer with our max price ($250k) and tell them take or leave it.  The sellerís bank said they would lower their offer by $2000 (bringing it down to $263k).  We told our realtor to draw up the termination paperwork.  He informed the sellerís realtor.  An hour later it came back approved.
Iím torn, as Iím really happy we got the house (itís pretty perfect for our situation), but I canít help but wonder how the bank would have reacted if we would have credibly threatened to walk as soon as they asked a higher price.  Was it our willingness to walk that got the deal done or did the extra $15k make it worth it for them?  Anyways, closing date is next month, so keep an eye on the DIY subforum for updates on all the many repairs that will need to be done.

Congratulations! Yes, being willing to walk helps the situation.  You have to talk straight up business with these banks, no dilly-dallying around. Just business. If it does work, great. If not, walk away immediately and move on. It saves a lot of time for all parties.

Dicey

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Re: Short sale purchase negotiations
« Reply #8 on: September 21, 2017, 11:57:15 PM »
If you're staying long term, that $15k won't make much difference in the end. Here's to a speedy closing!
I did it! I have a journal!
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