If there is anything I never discuss in real estate, it's religion and politics. Taboo, to say the least. I try to see both sides of the conflict and make my mind up from there. I will dip my toe into the politics side and share with you my opinion of the "stimulus" that has be lauded as a cure-all for our ailing economy.

Essentially, it was a 2-aspirin remedy for a severely broken leg.

The main thrust of the stimulus, through the TARP fund (Troubled Asset Relief Program), was to assist banks with clearing the "toxic assets" from their books...a worthy cause. Unlike the Resolution Trust Corp solution to the S & L debacle in the 80's/early 90's, this program "injected" funds directly into the banks to help balance their books and stay liquid.

A secondary result of the TARP funds was to have enabled lenders to continue making loans on good assets...thoroughly vetted home purchases, car loans, etc. I think it's safe to say that it is not happening as intended.

If you are a buyer who is wading throught the thick forect of "loan application" prepare to surrender a blood sample, family medical history, and quite possibly your first-born. All kidding aside, it has become quite a chore to qualify buyers in this marketplace, despite stable job histories, stable cash flow, good credit scores, etc. But that's only half the battle...

...Buyer and Sellers in a transaction can lose bigtime when these lenders take it upon THEMSELVES to determine the market value of the home being purchased. This is happening despite the fact the state-licensed appraisers are completing VERY THOROUGH appriasals on these homes and supplying additional comps, market synopsis, and what not. A little known fact is that some institutional lenders have "Appraisal Review Departments" that vet these certified residential appraisals and advise on what they believe is the true market value.

So not only are these lenders holding Buyers hostage for loans which are supposed to be more forthcoming, they are de facto "re-valuing" our homes and communities to best serve their interests and protect their books. I would better accept it if the lenders came right out and said we don't want to loan tto you because of X...instead they play games with the appraisal and take our transactions to the very day before closing and mark a big REJECTED stamp on them...

Be prepared and vigilant if you are in a transaction depending on a mortgage...

So you wanted a deal and you put an offer in on a short sale, perhaps even against your realtor's advice. 1 month went by, then another, and finally you hear back. The documentation is in order, the bpo was completed, and the Seller is countering your offer price $40,000 HIGHER! Huh? You thought that offer, while low, was enough to snag this home that is on the edge of foreclosure. The banks need people like you to unload these homes, right?

WRONG.

Like any other negotiation, dealing with banks on short sales DEMANDS you know their bottom lines, procedures, and rules of play. The first fallacy is that they NEED YOU. That is incorrect. Every bank has procedures for divesting themselves of bad investments and they stick to them UNLESS it's in their favor to take the shortcut, i.e. your offer. Even if a lender's REO department is flooded with inventory, it does not mean they will accept $.50 on the dollar for that beat-up 3/2 in need of a little TLC. Banks and servicers see only numbers, not rotted wood or broken windows. If the numbers don't work for the bank, then it's a waste of your time.

Which leads us to BPO's (Broker Price Opinions) and appraisals. While we all know the real estate sector is beat down, it doesn't mean that old 3/2 isn't worth a plug nickel. Lender's use appraisals (sometimes multiple appraisals) to arrive at a proper market value for the home, in accordance with their procedures. One lender I deal with automatically takes 5% off the BPO price to account for delays, time, and condition. So do yourself a favor...comp out the property BEFORE making your offer, ask the listing realtor for comps to justify value, and if you lowball, expect a counter (or someone else to slide a higher offer in after the bank counters yours).

If much time has elapsed since the property was last appraised, consider requesting a new appraisal. Guaranteed it will come in lower and closer to market value.

Just remember - the bank doesn't care if it needs new windows, the tile job was done poorly, or the cabinets are older and need freshening up. Heck, they don't even care about the age of the roof, the a/c system(s) or even the paint. Your negotiator is OVERWHELMED, OVERWORKED, and EXHAUSTED...there is very little motivation for them to work outside the framework that is set up. If they can't sell the home via short sale, the file is simply shipped over to their legal dept for foreclosure, then onto the REO dept for re-sale. No agnst, no emotion, etc...just a simple numbers game. So do yourself a favor and offer the RIGHT number so you, too, can be a winner in this market.