BOA Short sale...advice neeed

[Breakthecycle2]

OK, well I don't know what to do from here. The bank has counter offered and wants the seller to sign a promissory note...but the listing agent keeps pushing us to get teh house officially appraised. Our LO has made contact with the seller's agent and I have posted the exact email below. Any advice on what our next step should be would ge greatly appreciated.

"

I Called this listing agent and asked him what the story and was and was quite forceful. 

The bottom line from what he said is the there are 2 things.

1.      The appraisal.  He/they want to make sure that the house will appraisal now rather than finding out down the road that it didn’t.  I’m sure they want to know and have proof that it comes in for $360k.  Our word and thoughts are not enough to support their concerns.  I told him that he should pay for it if the deal doesn’t go through but he is not going to do it.  So someone will have to decide what they want to do on this end.

2.      The other issue is that the seller are negotiating with the bank where her they will be relinquished from the debt of the mortgage being upside down or they will have to pay a promissory note for the balance of being upside down.  It all depends on their financial situation.  Do their income docs really support hardship or they are just trying to beat the system.  I don’t know..

Here is the catch and just my thoughts… IF they don’t agree to pay a promissory note of the balance being upside down, where does that leave us other than $800 out of pocket.

  SO my thoughts are that they figure out what they are doing with the sellers before we do our thing.  We may be at a standstill here. "

[ShanetheMortgageMan]

Appraisal can't be done without knowing the terms of the contract - are you still negotiating with the seller (and their bank) on those?

You shouldn't pay for an appraisal until those have been hashed out. 

[Breakthecycle2]

Shane, 

Right now, the everything is in the banks hands. They (to our knowledge) have not given us an answer, one way or another. The seller accepted our offer (obviously) but now we are waiting on the bank's decision. 

[ShanetheMortgageMan]

I'd hold off on the appraisal - seems like they may want to use it to see if the appraisal comes in higher, then put it on the table for you to buy it for the higher price, which would decrease the amount/nullify the need for the seller to do a promissory note.

[Breakthecycle2]

Ahhhh...and that makes sense! Thanks Shane again,,,BTW...when you get a chance, I posted the latest email from yesterday from the sellers agent, to our agent. Let me know what you think

"I forwarded the email to the seller's attorney. I am out of town until the 26th of July. The mortgage agent called me a couple of days ago regarding news from the bank. The seller's attorney had told me before I left town that he would contact the buyer's attorney and request that the mortgage agent order the appraisal. The mortgage agent is ill advising the buyer by not doing the appraisal. As I told the mortgage agent what will happen if the property does not appraise at $359,000 the day that it is ordered? Is the buyer still going to be able to afford the property even if the appraisal says that the value is $349,000? The mortgage agent said at the beggining of the transaction that they could afford the house without the seller concession, although he never put it in writing."

[ShanetheMortgageMan]

Sounds like they are trying to manipulate you.  In some states it is common to do some items for the purchase before the sellers lender accepts the short sale terms - for example a client of mine in Massachusetts made an offer on a short sale and was doing some inspections before the sellers lender accepted, but we still held off on the appraisal (I didn't even want her to do anything but her agent recommended they did), sure enough the sellers lender never could agree to terms with the 2nd mortgage lender who had to approve the short sale so nothing materialized and the buyer spend about $400 on inspections that were useless.

My response to "Is the buyer still going to be able to afford the property even if the appraisal says that the value is $349,000?" would be "No, I would be asking for the sales price to be lowered to $349,000."  But hey if the loan officer wants to order the appraisal and have the SELLER pay for it, then I don't see any issue.  It's just that it appears the buyer is trying to stick you for the appraisal fee on for a home that may not ever official go under contract.

[Breakthecycle2]

Thanks Shane...I appreciate your continued knowledge!