FHA vs. conventional loan offer on short sale approved home, who's the winner?
I just put an offer on a home in california last monday 5/4. The home was short-sale approved at $285k and has been on the market for almost 150 days. I'm purchasing the home with an FHA loan with 3.5% down. I submitted an offer of $295k + 3% help with closing cost valid until 5/15.. I just found out that the only other offer on the home besides me is a person that offered $280k without help with closing cost and using a conventional loan with 20% down. I'm basically giving $1500+ over what the bank is asking but my agent is telling me that the sellers realtor is saying that the bank (countrywide) would like the $280k offer more because its more "clean" and they are not asking for any help with the closing cost and also because they have a 20% downpayment.
I heard from my agent that the bank has been sitting on the other offer for over 3 weeks prior to my offer. I was under the assumption that whatever loan the buyer uses didn't matter because the sellers bank still gets the money. I was hoping someone can tell me what my chances are of getting this home or if I should submit a higher offer?
- loanmasteroneLv 71 decade agoFavorite Answer
How are these two agents getting together passing confidential information between the two of them? The selling agent has a fiduciary duty to the seller, not you or your agent.
The most a selling agent would tell a buying agent is that there is a better offer, but certainly not go into detail about the offer. Going into details about an offer that a seller has is paramount to telling your agent how to make a subsequent or counter offer. This is not on the up and up.
Something is wrong with this picture.
If the bank has been sitting on this offer for several weeks why did they not accept it then?
Normally a bank want get rid of a property as soon as a qualified offer come in. Since they had this other offer, why do they now come to the conclusion that this is now a qualified offer and was not a qualified offer 3 weeks ago.
You should find out where your real estate agent is getting this unauthorized information from and verify it.
Once the transaction is complete the bank will get all the money they agreed to in the sales contract, so the type of mortgage the seller is using should not matter what so ever.
I hope this has been of some use to you, good luck.
- satarnag01Lv 41 decade ago
I am a CA licensed real estate broker and I specialize in buying and selling short sales.
Here's the deal. The listing agent is wrong, the other offer is not "clean". The offer that gets submitted to the bank will need to be accompanied by a HUD-1 that shows how much the investor (that Countrywide services) will net if they accept the offer (so they are all "clean"). Your only issue with FHA is the time you need to close. Find a FHA broker/lender who can close in 21 days, not 45 and then ask for 30 days to close. Other than that, you being FHA has no real impact on the offer.
Also, depending on the investor (bank of NY or wellsfargo) that Countrywide is servicing, they will allow the 3% for closing cost.
What is happening right now is that I bet Countrywide closed the file and the listing agent resubmitted the short sale package of the other offer and are awaiting it to get assigned to a negotiator. If that is true, then you are wasting your time as the listing agent is moving forward with that offer.
The next time you want your offer to stick, try to be the first purchase offer the bank sees and bribe the owner and/or the listing agent to use only your purchase offer. If you do a search on my name, you will see how to buy a short sales very cheap.
Finally, it is common that we agents talk to one another on a short sale as to not waste anyone's time. I think the listing agent was trying to discourage the new offer as he is already invested 3 weeks with the other offer.
Good LuckSource(s): I am a CA licensed real estate broker and I specialize in buying and selling short sales.
- Beverly SLv 71 decade ago
I work in the mortgage business. I can close a conventional loan in 5 days & an FHA in 21. If you are pre-approved for your mortgage already & they are getting more in the long run from you- we would take your offer over the conventional in a heart beat. Our goal is to get as much as possible back. The sellers realtor should not be telling your agent anything- sounds like maybe the sellers agent is hoping for a higher offer from you (more commission).Source(s): 23 years mortgage business.
- Proud AmericanLv 51 decade ago
Conventional offers are always second best to cash offers. FHA loans are picky, and fall apart easily. Also the buyer who is putting the 20% down has proven to the current owner that they are much more ready , willing and "able" to purchase...compared to someone who wil not have any money in the purchase ..since they are actaully paying the closing costs for you.
These types of deals are what got the mortgage companies into the mess we are currently in. Rolling in costs and inflating appraisals as a result.
Save your money for your own down payment and closing costs, then you'll also be a ready, willing and "able" buyer in the marketplace for a home.
I know this isn't the answer you wanted, but it is true
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- philospher77Lv 61 decade ago
It's difficult to figure out what the banks like. I know that when I got my house, one of the important things was FICO score. For some reason, the banks seem to want to sell to the more "conventional" person, even though they are getting the money from a different bank (in my case), so if I flaked out on the loan, it wouldn't have had any impact on the bank that was selling the property.
So... in your case, they are either going to go with the other person because they have money to put down, or they will go with you because your offer is higher. I'm not sure that submitting a higher offer would help you... if they have concerns, you would need to pony up more cash to alleviate them, and it sounds like you don't have the capital to do that.
- MinPinsLv 41 decade ago
an FHA appraisal is a lot tougher.
So if there is a lot of work needed, the appraisal may not cover the mortgage. short loans take a lot of time to go through.