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Banks Take Market Price Offer up a Notch

By
Services for Real Estate Pros with Wilde Law Firm, PLLC

I have said for several years that the two things you absolutely must have for a successful short sale is a market price offer and the full participation of the Seller. That is still the case but the banks are taking it up a notch.

 

I have seen language in a certain big-five bank's Approval Letter and Arms Length Transaction Affidavit that states "Buyer and Seller, and/or any agent of the Buyer or Seller, cannot knowingly misrepresent the fair market value of the property during this sale/purchase of the property. Any knowing misrepresentation of the fair market value may cause this approval to be void and (bank) may pursue available remedies at law." By signing the Affidavit the parties are attesting to the fact that they are not misrepresenting market price. In other words, the parties are all swearing that they believe that the offer price that was put forward to the bank and approved represents market price. Not 80%, of market price, not 90% or 95% of market price, but 100% of market price. I am not using this scare you but to show you the seriousness of this requirement and the mindset of the banks.

 

It used to be that we were making an offer to the bank, they would value the property with a BPO or an appraisal and then the negotiations would begin. In order to speed the approval process up the banks and lien holders are now putting more emphasis on the requirement of starting with a market price offer. It feels like they are saying, “O.K., I’ll make you a deal. I won’t use the amount
owed on the loan in a formula on what we will accept in a short sale, but for that you must to start off with a legitimate market price offer.”

So the bottom line is that if you are not starting off with a market price offer then you are not even in the conversation….and with certain bank you could also be flirting with trouble.

Comments (1)

David Grbich
Realty One Group - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

Hi Steve - I have not seen that language. Will be interesting to see how it plays out as the banks have access to their independently performed appraisal/BPO and many ask the listing agent for sales comps and have all the data to accept or reject a given deal. Regards Dave

Sep 27, 2012 12:14 AM