Can the bank of the seller be involved in the property sale?

melusina

Hey all. I was wondering in which cases is bank involved in the property sale if they do not own the property.

Can they have a say in asking or selling price after the offer is made or is it up to the property owner to decide if s/he accepts the offer?

Our agent is saying that the owner has to consult the offer with the bank before saying yes or no to our offer.

Also when the offer is made what is the property owner's obligation in terms of the offer, is there a deadline by when they have to accept or reject the offer?

Thanks for your help guys

Milk & Honey

If the house is in negative equity the bank may be involved since they will have to be satisfied that full market value is being paid. there is no time limit for accepting the offer unless you stipulate a limit. All offers are subject to contract so until you both sign up either can walk away.

melusina

If the house is in negative equity, is it some kind of special sale and should the buyers be notified? What other implications does such a sale have for the buyers? Can it take longer or anything else involved?

StillWaters

I imagine it could take longer than normal, as the Bank will have to make a decision on whether to allow the sale, and arrange a loan/deal with the vendor on the shortfall.

No, the vendor is under no obligation to tell you they are in NE.

Once the deal has been struck between the vendor and their bank, it should be a straightforward sale like any other.

gigino

Lets take an example of an empty building.

Supposing the property is in sizeable negative equity , can the bank advertise and sell the property without the mortgage holders permission if he/she is in arrears? Or does the bank need the agreement of the mortgage holder?

StillWaters

In order for a bank to sell a property, they would first have to issue a charge on the property, and then get an order of possession from the Courts ie the property would have to be repossessed.

gigino

StillWaters wrote: »

In order for a bank to sell a property, they would first have to issue a charge on the property, and then get an order of possession from the Courts ie the property would have to be repossessed.

But say the people who had the mortgage did not want the bank to "fire-sale" it? Like say the property was bought for €400,000 during the bubble, , its now on sale for maybe €180,000 with no offers, but the couple who own it have gone to Australia for a few years and hope the market may recover by the time they come back. Can the bank issue a charge, get an order of possession from the courts and sell it for lets say €80,000 (if thats all it goes for)......leaving the couple owing the bank the difference?

killers1

melusina wrote: »

Hey all. I was wondering in which cases is bank involved in the property sale if they do not own the property.

Can they have a say in asking or selling price after the offer is made or is it up to the property owner to decide if s/he accepts the offer?

Our agent is saying that the owner has to consult the offer with the bank before saying yes or no to our offer.

Also when the offer is made what is the property owner's obligation in terms of the offer, is there a deadline by when they have to accept or reject the offer?

Thanks for your help guys

When a property is being sold it can be under the following circumstances;

1. The person selling owns the property outright or has a mortgage o/s which is less than the asking price or offer received. In this case the estate agent puts the offer to the owner and they decide whether or not to accept it. There is no timeframe and you'll find if the owners think they might get more they'll hold out on giving a decision in the hope that someone else will bid a higher amount in the meantime.

2. The person selling the house is in arrears or negative equity or has other debts with his lender and may have some sort of a restructure plan in place with them. This is the situation you are experiencing. You have made your offer but the owner needs to run it past his lenders to ensure they are happy enough to accept it and the sale price fits in with whatever deal or structuring of his debts he has with his bank. In this case the owner can't make the decision on the spot as he needs to clear it with the bank first so make take a few extra days to get a decision.

3. The Bank have repossess the property and are the sellers. In this case you make your offer as normal but instead of one person making a quick decision the offer needs to be discussed by a Committee in the Bank to see how it fits in with what they wanted to receive for the property in relation to the loan that was o/s from the original owner. As the decision may have to be a group one that only sit down together once a week it can take a bit longer. This would be the same process if a receiver was selling the property if the developer has gone bust.

In any of the three cases the procedure from the buyers point of view is the same. You make your offer an wait to see if it is accepted. The only difference is the person or people who make the decision to accept or decline your offer may not be the original owner and depending on which of the 3 circumstance above exist it may take a few days longer for a response to your offer. At the end of the day you are buying the house because you like it and whether it is being sold by the owner, bank, receiver etc & was in negative equity previously should make no difference to you..

Marcusm

gigino wrote: »

But say the people who had the mortgage did not want the bank to "fire-sale" it? Like say the property was bought for €400,000 during the bubble, , its now on sale for maybe €180,000 with no offers, but the couple who own it have gone to Australia for a few years and hope the market may recover by the time they come back. Can the bank issue a charge, get an order of possession from the courts and sell it for lets say €80,000 (if thats all it goes for)......leaving the couple owing the bank the difference?

They have no rights to do anything provided the mortgage is paid up to date and there is no breach of the terms (e.g. renting out when on a residential mortgage). In reality, the banks in Ireland are minimising the number of repossessions and forced sales. They do occur and they can be a tragedy for families but they are generally only in situations where there is a substantial failure to keep the terms of the loan.

melusina

Thanks killers1 it's much clearer now. I assume we are case No. 2.
Is the decision of the bank on the price normally final after the first meeting with the seller? e.g. Will they make clear there what sale price has to be achieved or is there a meeting with the bank every time there is an offer (in case the first one is not satisfying for the bank?)

killers1

melusina wrote: »

Thanks killers1 it's much clearer now. I assume we are case No. 2.
Is the decision of the bank on the price normally final after the first meeting with the seller? e.g. Will they make clear there what sale price has to be achieved or is there a meeting with the bank every time there is an offer (in case the first one is not satisfying for the bank?)

No problem Melusina. The bidding process is no different when the bank is involved or whether the owner was selling the property. The property is up for sale at an asking price. You make an offer with the estate agent (presumably below this figure) he rings his contact in the bank (i.e. the seller) and they ring him back to say it has been declined. You then might decide to increase your offer and again a phone call is made to the bank to advise them of the new offer and again they may decide to accept or decline the offer. There way of making clear what they will accept is the asking price that they put on the property as this is the figure they are looking to sell for. If no offers come in at the selling price they may decide to accept the closest one. I'd suggest if you have had an offer declined to tell the estate agent that you cannot afford the asking price but ask them is there any leeway to meet in the middle somewhere and revise your offer accordingly. Ultimately the bank want to get as much as possible for the property in the same was any private owner selling their house would want to...

ressem

Just a caveat.
When a colleague was buying property recently, their agent came back with the bank not accepting the offer. It turned out to be just another negotiating ploy on their agents part.

So if the offer is turned down for this reason, don't be too quick to increase the offer. The banks are trying to get old bubble tracker mortgages off the books, so they're not being too difficult about selling apparently.

killers1

ressem wrote: »

Just a caveat.
When a colleague was buying property recently, their agent came back with the bank not accepting the offer. It turned out to be just another negotiating ploy on their agents part.

So if the offer is turned down for this reason, don't be too quick to increase the offer. The banks are trying to get old bubble tracker mortgages off the books, so they're not being too difficult about selling apparently.

It can also be the case that the Bank who are selling the property have an agreement with the person who owns the property (albeit in arrears or negative equity etc) that the property won't be sold for less than X amount. Just because the property is being sold by a Bank it doesn't automatically mean a massively reduced price, in any cases I've come across the Bank were happy to hold out for bids close to the asking price and would very quickly decline anything below a certain level...

Meredith

Melusina, I had a similar experience recently where the house I was interested in was part of a 3 house deal with the vendor's bank. The other two properties had already gone sale agreed, one of which was sometime before Christmas, not sure about the second one. An offer was already in with the EA from another party and was 'with the bank' for consideration. So I asked the EA to ring us when there was an answer as I had seen the house a few times and was thinking of putting an offer in. The EA works for one of the major estate agents in the country but never called back. I left messages for her to ring me back as I wanted more information on the deal but never got a callback. The house is still up on myhome.

Personally, I would have thought any deals would have to be agreed in advance and as long as offers satisfied the deal, then it would rest with the owner as to what offer he wanted to accept...although that is only my opinion. In the end I decided against the house anyway but I thought there was something fishy up with the whole arrangement and if I was either of the other parties involved I wouldn't have been happy having to wait several weeks or months to find out if their sale would go through - apparently the vendor wanted the sales closed as soon as possible. All I would say is try to get as much information from the EA about it and if it's a house you're seriously considering and you put an offer in, that you won't be left waiting ages before the deal is done, or not as the case may be. Don't let other properties pass you by...