I have been working on a short sale recently that experienced an untimely death. In the beginning of July I listed a home in Layton that had a week left before the first scheduled foreclosure auction. Upon submitting the file to Wells Fargo (the 1st mortgage) for review, they postponed the auction.
I listed the property at $169,900 after a CMA showed the AS-IS value at around $160K-$170K. By my estimates, the home needed approximately $15K in repairs and was valued at $195K on post-fixup. We quickly received two cash offers. One at $155K and one at $158K.
Upon submission of the offer we were assigned a negotiator and she ordered a BPO (broker price opinion) on the property. It was handled in about three days. About a week and a half later a I get an email from the negotiator saying:
Counter offering to $195000 or best and final offer ************************** * Counter offer acceptance is subject to senior management approval, mortgage insurance and /or investor approval * No sale transaction is accepted until lender signs written contracts *She then attaches paperwork with the counteroffer price of $155,000...the original offer price! Whoa? I emailed her to clarify the discrepancy for me. After several days, I received no response. So, we kindly filled out the paperwork accepting their $155,000 and sent it back to see if anyone in their office was manning the store.
It took about ten days but the negotiator that sent me that email was suddenly no longer working on our file. Instead I got an email from a new negotiator. After several paperwork tasks, I get an email saying that they are countoffering again at $195K but this time they had the right paperwork to back it up.
The buyers didn't want to budge on their price so the negotiator sent me this note:
The BPO completed on the property suggests $20,000.00 in repairs needed to the property even with the value at $195,000.00. Unless the buyer is willing to provide a higher offer, we will not be able to move forward and the offer will have to be declined. On a different note, I want to inform you that I will be out of the office beginning this afternoon through Friday 8/12. I will be back in the office on Monday 8/15 and will continue with any tasks upon my return. If the file is not moving forward, this would be the reason why. Thank you.I was shocked to get this note. It seems to me that the BPO agent checked a box wrong on their form. Here the bank believes the home is worth $195K AS IS. That is simply not what the market says. I ran follow up CMAs to confirm and sent them to this negotiator. Unfortunately, I sent them about an hour after this guy had left for vacation.
The following Monday I recieved this email from a new 3rd negotiator:
Please be advised that the Short Sale for the property above has been declined by Wells Fargo. If you have any additional questions or would like additional details concerning the Short Sale process, please contact Wells Fargo...Any my immediate response:
What?! We are in the midst of a BPO dispute. [The other negotiator] left for vacation Friday afternoon. He has the BPO dispute findings sitting in his email box which were sent to him about an hour after he left town. So are you saying that the investor would rather take his chances at a trustee sale and/or marketing the place as an REO? I seriously doubt the investor would fare better. Please advise.No response was ever received. The home was put on the docket for foreclosure auction again.
The lesson learned here is that garbage in equals garbage out. When a wild BPO gets done that is 25% over market value, your short sale will almost certainly be in trouble.
Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480
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