topic Re: offer strategy in Mortgage Loans

offer strategy- Happily Ever After

XAVIERSMAMA — Fri, 05 Feb 2010 22:55:51 GMT

I found a house that I love, and would even offer the asking price, but there is no way the house will appraise for that much based on the past 90 day comps. I want to offer what it will appraise for, but don't want the seller(bank, it's a foreclosure) to think it's a low ball and lock me out. Any suggestions on what I can do? Larger houses with more upgrades in the same subdivision have sold for $10-15000 less than the current listing price, and that doesn't take into account possible seller concessions. Any input would be greatly appreciated.

Thanks,

TU-647 EQ-655 EX-676 all lender pulled 12/11/09

Message Edited by XAVIERSMAMA on 12-23-2009 03:52 PM

Message Edited by XAVIERSMAMA on 01-04-2010 03:31 PM

Message Edited by XAVIERSMAMA on 01-06-2010 11:22 AM

Message Edited by XAVIERSMAMA on 01-11-2010 12:24 PM

Message Edited by XAVIERSMAMA on 02-05-2010 02:55 PM

Re: offer strategy

XAVIERSMAMA — Tue, 22 Dec 2009 23:51:58 GMT

So the bank was asking $124900, I offered $119000 with $6500 seller closing cost, they countered with $119000 and $5500 seller closing. My lender says I need $6500 closing so I countered with $120000 and $6500 seller closing cost. This all seems pretty silly to me at this point, it all means the same thing moneywise in the end, but I guess it must look different on their balance sheet or something. The banks agent did tell my agent though that if the appraisal doesn't come in that high, they won't fight it and they will move down, so what exactly is the point of all this? Please send out your good thoughts and wishes, I love this house. I'll keep you updated.

Re: offer strategy

Anonymous — Tue, 22 Dec 2009 23:57:02 GMT

You could consider offering asking price or close to and put some contingencies in there. A financing contingency for sure - the bank won't give you a mortgage for more than the house appraises for. Obviously if the appraisal comes in for some reason higher than your offer, you'd be stuck. You could probably do an appraisal contingency too, saying it must appraise for X dollars. If the appraisal comes in lower in either case you can use it to help negotiate. Again, they can make mistakes either way, too low or too high, so if you don't truly want to pay the sales price, these aren't applicable.. I think some people have submitted offers with letters explaining their low ball offer, that might be another idea to ask your agent about. If you can provide recent solid comps, they might bite. What's your agent thinking?

Re: offer strategy

XAVIERSMAMA — Wed, 23 Dec 2009 00:02:40 GMT

He sent over the comps with the offer, and the bank's agent and my agent are in agreement that it probably won't appraise for the asking, but I guess the bank has to meet some magic number. I'll have to wait and see what happens. I actually don't mind paying the asking price, but I won't be able to afford the difference between what it appraises for versus what the asking price is. The comps in this neighborhood, literally next door and across the street are 200-500 square feet larger, have the high end finishes in the kitchen, and closed within the last two months at $105000, $108500, and $10900 minus any seller concessions.

Re: offer strategy

XAVIERSMAMA — Wed, 23 Dec 2009 23:53:29 GMT

Bank accepted my offer On to the inspection and appraisal which ,I've noticed from this board, seems to be the most eventful part of the process.

Re: offer strategy-UPDATE

ArmyStrong — Sun, 27 Dec 2009 23:23:29 GMT

Congrats and good luck to you.

Re: offer strategy

XAVIERSMAMA — Mon, 04 Jan 2010 23:30:41 GMT

Here's the latest, appraisal came back at $104000, $16000 less than my offer, but almost exactly where I thought the price would be. Still waiting for the bank(seller) to see what they will do. Their agent said they wouldn't fight the appraisal so I have to wait and see whether that's true or not. Keep sending out your good thoughts. I want this rollercoaster ride to be over and move into my new house already.

Re: offer strategy

ArmyStrong — Tue, 05 Jan 2010 04:40:51 GMT

**Good Thoughts!!**

Re: offer strategy- the latest

Charlington — Wed, 06 Jan 2010 05:14:15 GMT

**Good Thoughts!!**

Re: offer strategy- the latest

XAVIERSMAMA — Wed, 06 Jan 2010 19:22:16 GMT

So the bank came back and will accept the appraisal price with no concessions. My lender said to do the loan my rate would change from the 4.5% I had locked to 5.7%!?!?! Is this a bait and switch. I still will have to come up with the same amount of $ to close, and the sales price is lower, so why is my rate so high now? I don't know what to do.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 19:52:14 GMT

ask your LO.

Some banks charge higher fees and/or rates on smaller loans.

Also, your lock might have expired by now and rates have gone up quite a bit.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 19:52:56 GMT

Also, were you originally expecting to get a rate buy down or anything from the seller or something?

Re: offer strategy- the latest

XAVIERSMAMA — Wed, 06 Jan 2010 19:56:57 GMT

Apparently the rates are higher on smaller loans, it still seems like quite a jump though. I locked my rate on 12/28 so it hasn't expired yet. The funny thing is, with the newer rate, my payment would be $50 more per month, even though the house is $20000 less. Hilarious right? I think I have no choice but to keep looking. What does it say about the state of things when I have to purchase a more expensive house, to save money?

Re: offer strategy- the latest

XAVIERSMAMA — Wed, 06 Jan 2010 19:59:05 GMT

The seller was contributing $6000 to closing costs, now with the lower appraisal they won't contribute anything. The 4.5 rate was with a one point buy down. I'm waiting for the LO to send me a breakdown to see how the new figures add up and whether the 5.7% includes a point or not.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 20:01:01 GMT

the reasons for this is that the bank makes less money on fees (which are percentage based) and on interest on the file. And alot of smaller loans they end up keeping in house instead of selling to the mortgage market, so they incur more direct risk.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 20:03:24 GMT

I am going to guess that there is no point included. They may charge more up front funding fees for a smaller loan and you are loosing the point plus getting hit for another .2% jump. so from 4.5 to 5.7 Just guessing though.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 20:35:06 GMT

xaviersmama,

Ask why! Don't get hustled into a bigger mortgage payment becasue you want a house sooooooooo Baaaadd! Do the math @ 4.5 & @5.7 . That's money that can clearly go in your pocket. You get a lower price and the bank sees an opportunity to make some money off of you. I understand that the lender has to make his money but I would clearly renegotiate that interest rate. What changed in your credit file that you had to get a higher rate? if your answer is nothing I would ask more questions!) What does He/She (lender) mean due to the loan? It was always a loan!

I know you are geeked about getting the home you want @ a great price but interest is monthly. Remember you have to pay the bill.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 21:04:35 GMT

GIGI. Not sure if this is that case, but it appears to be. Banks charge higher fees and a higher interest rate for loans under a certain amount. This is because they often have to eep these loan in house (higher risk) and stand to make less money on interest on a lower $ amount loan. My guess is the price drop put the loan amount under the bank's min pricing for the lower rate and fees. Most banks also will not do loans that are under a certain amount at all. It is quite likely that this is what happened here as the loan amount is not under 100K and I woudl nto be surprised if that is the cutoff. (I thought it was more like 75K and it varies by bank and area I am sure), but I would not be surprised if this is the case.

OP should definitely call and try to negotiate, but this may very well not be a case of bait and switch, but a case of the property not qualifying for the best rate/program due to sale price. (which was confirmed by the OP and LO already apparently.

Re: offer strategy- the latest

XAVIERSMAMA — Wed, 06 Jan 2010 21:07:20 GMT

I hear you gigi5, it's because the loan will be for less than $100000 and whenever they are lower the fees and the rates are higher. I guess I'll have to keep looking.

Re: offer strategy- the latest

Anonymous — Wed, 06 Jan 2010 21:10:24 GMT

Also GIGI, if you chec posts, the seller was orignally paying a point to buy down the rate. With the drop in price due to the appraisal, the seller is no longer willing to do this. So, part of the increase in rate is directly due to the loss of 6K in concession. As a matter of fact, if the LO said he/she got the deal at 5.7% with the buyer (OP) not bringing any more money to the table, that means in effect that the OP is loosing 6K in concessions the buyer was going to pay and only getting a 1.2% jump in rate. Seeing how that it almost 6% of the purchase price of the house in concession being lost due to the appraisal, it seems like not that bad of a deal. The OP could always offer to buy down the rate themselves. It almost seesm the bank is going out of it's way to mitigate costs if her out of pocket remained the same even ewith the loss of the 6K, and the only change is the rate jumping up 1.2%.