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Old 07-03-2012, 11:40 AM
 
62 posts, read 160,984 times
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I have an offer in on a short sale condo. Asking price was 72K, I went in at 70K and my offer was accepted. I based my offer on the last assessement on the county tax records. I also found out that 3 properties in the exact same complex sold in February and March for 58K, 56K, and 62K. I didn't offer that because I didn't want the seller to think that I was lowballing them and reject my offer. Also, since those sales happened more than 60 days ago, I wasn't sure if it was valid to include those when coming up with an offer price. Well today, I found a brand new listing in the same complex again for 56K. So this trend of high 50s and low 60s is continuing. I found out today that the bank has already completed their BPO. I haven't done appraisal yet. Do BPOs base their analysis on sales and comps too? How does that work exactly? I just worry that there may be a huge gap between the findings of the BPO and my bank's appraisal. 14K is a lot.
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Old 07-03-2012, 11:50 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,557,926 times
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Basing your offer on tax records is not a good idea, they can be way off of actual current market value. Sounds like you are overpaying unless there has been a recent uptick in prices. The current 56K listing may indicate otherwise. This assumes the comps you found are all similar (size, bedrooms, amenities, condition, etc).

Yes, the bank's BPO should be based on recent sales/comps. They will not look at tax records. Same for your loan appraisal. If the bank approves the short sale, then you may have to make up the difference in cash or cancel.
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Old 07-03-2012, 12:05 PM
 
62 posts, read 160,984 times
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Quote:
Originally Posted by rjrcm View Post
Yes, the bank's BPO should be based on recent sales/comps. They will not look at tax records. Same for your loan appraisal. If the bank approves the short sale, then you may have to make up the difference in cash or cancel.
If they come up with the same conclusion that the condo is worth lower than my offer price, can't I negotiate? I've heard of some people doing that when the appraisal comes in lower than the offer. But those people weren't dealing with a short sale. I'm just hoping I also get that option too. I don't want to lose this place so I'm willing to pay a couple of K more but I think 14 is too big of a difference.
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Old 07-03-2012, 12:18 PM
 
3,576 posts, read 5,904,462 times
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BPO means nothing in my neighborhood.

Our realtor has stated some recents BPO were at $480k and home sold for $400k cause owners threatened BK.

Same thing with $420k BPO that eventually sold
For $359k.

But than it one BPO was $329k and sold as short for $349k.

So BPO and actuall selling prices can be all over the map.
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Old 07-03-2012, 01:09 PM
 
Location: El Dorado Hills, CA
3,670 posts, read 7,976,512 times
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BPOs reflect a realtors opinion of the value of the home. They don't reflect the buyer's need to get a discount in exchange for the uncertainty and slow timing of the transaction. But if the $56K is truly comparable, why aren't you trying to buy that instead? Or is it also a short sale? If so, it's not really comparable b/c it might not be a price the bank will accept.

If the BPO from the lender comes in under your offer, you can be assured that the lender won't drop the price below your offer price. If the appraisal comes in under your offer which prevents you from getting a loan, you might have the opportunity to negotiate with the bank to reduce the price depending on how your contract reads.
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Old 07-03-2012, 01:19 PM
 
Location: Tempe, Arizona
4,511 posts, read 11,557,926 times
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Quote:
Originally Posted by only1beebs View Post
If they come up with the same conclusion that the condo is worth lower than my offer price, can't I negotiate? I've heard of some people doing that when the appraisal comes in lower than the offer. But those people weren't dealing with a short sale. I'm just hoping I also get that option too. I don't want to lose this place so I'm willing to pay a couple of K more but I think 14 is too big of a difference.
You should read your contract on what you are allowed to do if the appraisal is less than the offer. It may not specifically refer to an appraisal, and may be tied to your loan contingency. Typically, you have the option to cancel and get back earnest money if the appraisal is not high enough to qualify you for a loan.

Of course you have the option to negotiate with the threat of cancellation if they don't agree. The bank may be more flexible if their BPO also indicates a lower value. Worst case you cancel and submit a new offer at the lower price.
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Old 07-03-2012, 01:41 PM
 
62 posts, read 160,984 times
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aneftp, that's what I'm worried about. How meaningful are they. I've heard that BPOs and sometimes even appraisals can be subjective.

Quote:
Originally Posted by rjrcm View Post
You should read your contract on what you are allowed to do if the appraisal is less than the offer. It may not specifically refer to an appraisal, and may be tied to your loan contingency. Typically, you have the option to cancel and get back earnest money if the appraisal is not high enough to qualify you for a loan.
Thank you! I did check it. My appraisal contingency says that either I can agree to it at the offer price or the seller can agree to come down to the appraisal price. It doesn't say that I can cancel though. And nothing about my deposit either.

Nina, I'm not looking for a discount. But I'm also not looking to pay 14K more than anyone else. I made a horrible mistake with the price. But I'm not a real estate agent nor had help from mine, so I did the best I could. It just wasn't enough. If it comes down to it, I might have to pay for my mistake by letting the seller walk away with my deposit.

Oh and the other one is also a short sale but has a bank approved price. Mine is already at the completed BPO stage, so I won't gain anything timewise. But I am thinking it over.
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Old 07-03-2012, 01:51 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 18,535,708 times
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Withdraw the offer. Since it is contingent on the bank's approval, (and it apparently hasn't happened yet), if you withdraw it now, you can go back and offer at a price you are comfortable with that might still gain bank approval.
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Old 07-03-2012, 01:51 PM
 
Location: Tempe, Arizona
4,511 posts, read 11,557,926 times
Reputation: 2179
Quote:
Originally Posted by only1beebs View Post
...If it comes down to it, I might have to pay for my mistake by letting the seller walk away with my deposit....
You should also check your contract to see if you have an option to cancel before the short sale is approved. You may want to consider a preemptive move if it does, and perhaps consider the other condo or resubmit your offer on this one.

Edit: DMenscha and I think alike
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Old 07-03-2012, 03:26 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 18,535,708 times
Reputation: 6356
Quote:
Originally Posted by rjrcm View Post

Edit: DMenscha and I think alike
Which ought to cause you some alarm.
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