I'm on a lease to purchase agreement with my landlord for 3 years. I'm supposed to complete the purchase by the yeard end. But the problem is the agreed purachse price we setup 3 years ago have long outdated. Now the house can only be appraised for about 80% of the puraching price. So the landlord decides to do short sale per my suggestion and we promised to make the short sale offer as soon as they get it listed. We are already prequalifed, and has the down payment fund available. But the landlord insists on us moving out at end of the year and told us we're welcome to look for another house. Who in the their right mind would chase away a enger and qualified buyer in today's housing market? And why create such a hastle if we can continue renting from them while waiting for the short sale to complete. If the deal doesn't work out for us then we can easily move out. What's their motivation for kicking us out so firmly? The only reason they cited is the "interior inspection". Why would that require us move out? Please help!!!!!!!!!!
I don't know what your appraisals cost, but a licensed appraiser generally charges around $400 for an appraisal. They are licensed and their license depends upon them following the rules. The 29 year old kid getting $35 from a bank to give a BPO number has no such restrictions. Mortgage co's for the buyer are serious about losing money, unlike servicers for short sales. They use appraisers to get their numbers, not some realtor looking for an extra $35. Someone **paid** for the appraisal mentioned and to me, $400 is not chump change. So, what confuses you, that a bank would use an appraisal instead of a BPO, that an appraisal is $400, that people don't generally pay for appraisals until they are certain that they have a reason for them? How much to appraisals cost in your area?
I think I understand exactly what you are talking about. You ask me to not worry about "the potential huge gap between the landlord's lender minimum accceptable price and the apraisal from my mortgage company". The apparisal from my mortage company would cost me about $400. So you mean they will make deal with each other to make the transaction possible? But I heard cases that they don't make deals with each other and the seller can not sell the house even the buyer is willing to pay his asking price. I read it from Tampa local newspaper. That's why we didn't even try to exercise our purchase agreement knowing the $400 appraisal would be a total waste.
You are correct - there is little coordination here - this is not a nice sweet big engine looking to do the right thing and be nice to you, too. Think of them as separate components with their own agendae. "The bank" of the property is really the "servicer" and the investor. Don't think of them as one. The servicer is paid to manage the account - the sale goes through, they lose an account. They don't do short sales because they want to - it is because of P.R. and possibly some pressure from investors. Your bank (for the buyer) is concerned with you paying them back and the property definitely being worth enough that if you stop paying, they will at least get their money back. When these 2 come up against each other, they aren't really working together, they just respect that they are both sharks out to get money from people and not from each other so they trust each other much more than they trust anyone else (realtors, sellers, buyers).
One step back - the banks have no rights in a sale. The seller and the buyer have the real contract. Because the seller is in a bad spot, his bank can demand rights and it is up to the seller to agree. Just like the bank is not required to do a short sale - it has a contract and can simply foreclose per the contract.
Now you pay attention to the inner play of these pieces - every now and then, you get perspective by stepping back and seeing if you are attributing too much power to some piece.
With that, you can see that there is no magic deal between the 2 banks, it is just that the seller's bank knows that their number can be very flaky and the buyer's bank is deadly serious about throwing away $200K or whatever. Assuming that the buyer's bank isn't Fred from down the street, that is (because it could be a scam setup, right?). So, the seler's bank may take a big swallow and say OK, or may see that the numbers are a zillion dollars off and decide to pay for a real appraisal to see if they really match, or, as you point out, they can do about anything like say, "Nope, we'll lose too much - forget it." I run into that last one way way too often (and, look at the pieces - the investor tells the servicer to work on the sale - if the sale fails, after a while the house goes to foreclosure, in the mean time the servicer continues to be paid for managing it and after foreclosure it goes to their REO department to be sold - while they are paid to manage it - do you think that "The bank" who is just the servicer is working hard for the sale?).
Throw into this pinhead negotiators, lack of management for negotiators, in the case of big federal bailed out investors who don't care that they are playing with taxpayer money now - and you have an environment where getting an honest straight forward sale done which is best for the investor and/or the homeowner and buyer is not as common as it should be. Not a well tuned engine at all..
OK, it sounds like you did NOT really get an appraisal. Yes, it is a gamble. I have sent 2 of them to Bank of America this summer because their numbers were insane. The negotiators made it clear that no matter what I show/prove, they have their number and do not care. (Basically, they are treated as paper jockeys not allowed to make decisions, just follow the guidelines). That money for the appraisals was wasted.
For you, and most people who don't know values, you can count on your mortgage co. making sure that you are getting at least an honest deal because if you walk, they are stuck with what you bought. (OK, and isn't that how we all got burnt and into this world depression? Yep.) Anyway, they won't do some cheap "whatdayathink, kid?" for $35, they will get a certified appraisal where the appraiser has some legal responsibility to be right (and insurance). This is where you can go to the seller and accept a number that is too high from the bank and your bank will say "No way" for you. The seller's bank will believe them, it won't believe you or the seller or any agent. This is where you can take the chance and agree to the bank's crazy demand and your bank will get you out of it - either the seller's bank will say no because they have some other agenda or the investor will tell the bank to take it because they want to get rid of the loss and move on instead of continue to pay for this loss until it is finally sold later. You need to be sure that your bank won't say it is OK to pay a crazy price (anything can happen). However, even if they do, you can go out and buy a car, miss a credit card payment or anything to suddenly make your credit drop so you no longer qualify for the loan and you should have wording in your contract that says you are not liable if you do not qualify for the loan - and get out of the deal.
Not straight forward, but you are not dealing with the cafeteria lady who wants you to eat your carrots. You are dealing with people who destroyed the world economy and want to suck the dollars out of your pocket - it's what drives them just like you sitting around with friends and having a nice chat in the evening drives you. So, expect it to be a challenge. At least take Reagan's motto to heart, "Trust but verify". OK, that really is "Smile cordially but check out everything that these sleazeballs might pull.:" He said it nicer.. ;-)