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Old 07-09-2013, 07:23 PM
 
2 posts, read 5,058 times
Reputation: 12

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My husband and I have an offer on a short sale house. The amount owed on the loan is about 10k more than we've offered. However, the bank has counter offered for about 75K OVER what is owed on the loan. Can the bank ask for more than what's owed on the loan? My real estate agent said she's never encountered this situation. What are the prospects of us getting this house for what's owed on the loan or less?

Stressed home buyer
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Old 07-09-2013, 07:43 PM
 
Location: Phoenix, AZ
173 posts, read 465,779 times
Reputation: 117
Short answer, yes. The bank can counter whatever they think is market value. Did your RE agent provide comps for that area?
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Old 07-09-2013, 07:44 PM
 
Location: Kahala
12,120 posts, read 17,930,312 times
Reputation: 6176
The bank feels the market value exceed the load - they don't have to accept a short sale if they don't want to.


Short Sale Price - How Flexible is That Short Sale Price?

First, realize that a short sale is a privilege. It is not a right. Banks do not have to approve short sales. There is no law that says a bank must grant a short sale for the seller of an underwater home. Banks do short sales based on 5 principles:
  • The seller is underwater
  • The seller has a hardship or is in imminent danger of foreclosure
  • The buyer is qualified to buy the home
  • It is more profitable to short sale than foreclose
  • The price is adequate or at market value
It's the last bullet point that banks care about when they decide to preapprove a short sale. They want to be in control of the pricing. Being in control of the pricing means they won't waste time working on a short sale that is priced too low. But it also means they might not get any offer at all because they picked the wrong price.
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Old 07-09-2013, 07:54 PM
 
Location: Portland OR / Honolulu HI
960 posts, read 1,217,748 times
Reputation: 1875
If the seller increases their asking price to a point higher than the loan amount (plus the realtor commissions) then the sale would no longer be a short sale so bank approval would not be needed.

So if the seller truly only owes $10,000 more than your offer, then if you increased your offer by $10,000 plus the realtor commissions and the sellers expenses, then bank would be out of the picture and the seller could freely sell the property.

Most likely though, is that the seller owes $10,000 more than your offer on a primary loan but they may also have an additional equity loan on top of the primary loan and that could also be a reason why the ank came back higher than you expected.

Good luck with it.
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Old 07-09-2013, 08:27 PM
 
1,730 posts, read 3,813,983 times
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I've not experience a short sell first hand, but an acquaintance of mine sold her house under those conditions and ended up with the house selling for $100K less than the outstanding loan. I'm surprised that someone is even involved in a short sell when there is only $10k between the current value [ie "offer price"] and the bank loan. Why are they even in the short sell process for only a $10K deficit on the current market value?
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Old 07-09-2013, 08:31 PM
 
2 posts, read 5,058 times
Reputation: 12
Thanks for the replies. I'll keep my fingers crossed.
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Old 07-10-2013, 01:07 AM
 
13,754 posts, read 13,342,113 times
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Well there's all kinds of reasons for someone to be in a short sale... okay I can only think of one. They just can't make the payments and they don't want to foreclose. Normally the bank requires the home to be on the market with an agent for a certain amount of time. If I understand it correctly, the meter stops as soon as the owner communicates the intent. I just did a short sale *sniff* on my 4 acres in Mississippi. First I wanted to do a Deed in Lieu of Forclosure, which is basically "Here, Bank, you can have my house" *picture arm extended holding house keys* The bank says "wait just a minute little lady, there are 27 hoops you must jump through first" Anyway we went around for a year and I didn't pay a dime on my mortgage. And they didn't foreclose. Before it got too far, the bank accepted an offer. Hurts me to think about it but... the market there is so bad. My other house the bank said "that's okay, you keep your house. You don't owe us nothin' no mo" (it was Memphis - they talks like that) True, they forgave a few thousand left on the loan. I got an offer of $4500 so I sold it to my son for $5000.
Good luck. Don't stress. Stuff. It's just stuff. Hope the bank gets what it wants.
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Old 07-10-2013, 03:39 AM
 
1,730 posts, read 3,813,983 times
Reputation: 1215
When people talk about offers of $4500 or $5000 or a -$10K short sell, it's gotta be about the mainland. Or Puna.
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Old 07-11-2013, 09:49 AM
 
13,754 posts, read 13,342,113 times
Reputation: 26025
Yes, yes. Memphis house. I admire the Hawaiian economy!!
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