Question: I have an accepted offer on a short sale where Bank of America owns the mortgage, and I am using Bank of America for my lender. The appraisal came back $40,000 less than the offer price. Will Bank of America lower the price?
Answer: The short answer is they may possibly lower the price. Here is the long answer:Bank of America is no better or worse than any other bank right now. It is very hard to deal with any of the big banks. That being said, they do not actually still own the note on the house in house. They sold their mortgage notes to other investors, Fannie Mae, Freddie Mac, Wall Street, China, etc. Many of these loans that were sold to investors are still serviced by the banks that did the loans to begin with. So let's say that B of A made the loan and sold it to a Hedge Fund. The owner of the home can not make the payments and asks B of A to let them do a short sale. B of A is now responsible for co-ordinating the short sale, but may not be the decision maker. There are two classes of B of A short sale loans, delegated, or non delegated. If the loan is delegated it means that B of A has the ability to make financial decisions about the loan. If the loan is non delegated it means there is an investor who is the one making the decision. So, let's say everyone comes to an agreement on the price, the sellers, the buyers, B of A, &/or the investor. You have your appraisal done but an appraiser hired by B of A who says the house is worth 40K less than the agreed upon price. If the loan is delegated it is probably more likely that B of A will act rationally and lower the price. If the loan is non delegated, it is entirely up to the investor as to what they will do. The person who is in charge of short sales for B of A suggested that the listing agent ask the negotiator whether a loan was delegated or non delegated. If the negotiator says, "I can not tell you" that means it is non delegated and you are at the whim of an investor who may or may not know anything about the market. Remember, the banks are not obligated to approve a short sale. If it is in the best interest of them or their investor they will, and if it isn't they won't
I personally have not had this problem with B of A short sales, but it did happen once on an REO owned by B of A. My buyers had an offer accepted at what we believed was a very good price. They opted to go with a lender from B of A who was terrific. The appraisal was ordered and came in 30K less than the offer price, but we felt the appraiser did not use good comps. He used comps that were on the same street, but in a different neighborhood that had less value. (It is a long street) My buyers agreed to let B of A throw out that appraisal and order a different one. The new appraisal came in at the value of the offer, but they said they would not do the loan because the roof looked like it needed to be replaced. At this point my buyer asked B of A to replace the roof and they did.
So the bottom line is that you will not know what B of A (or their investor) will do until you ask. Logically, if the value has dropped, they should take a lower price. However logic is not always dictates the decisions of the people involved.
Keller Williams Realty