Why are Short Sale counter offers from the Wells Fargo Bank considerably higher than asking & comparable​s?

That was a question a new client who is just starting out asked me that question:

1^st: It is totally irrelevant what the current seller paid for the home. What matters is what is the current value.

The value of a home is a mix of objective data and with a subjective component,  I always provide my sellers with a range.

As you said, the price you are willing to pay for this home is in the lower spectrum of the comps. Your rationale is that the home needs repairs. Do the other homes need repairs as well?

Cosmetic repairs (say you don't like the color of the carpet or the window coverings) should not be a factor on pricing a home.

The lenders will decide on a price based on comps they solicit from other Realtors (aka BPO, broker price opinion) or from a formal appraisal. Depending on the lender, they may accept an offer as low as 85% of the fair market value (that means, the price suggested by such BPOs or appraisals).

Problem is, sometimes this BPOs are made by people who are totally unfamiliar with the area. I had one done in my listing in Antioch by someone from Tracy, so unfamiliar that he did not even had a local lockbox key. So, if you believe that home is overpriced, the listing agents should work with the lender and provide them with comps. However, the lender probably will lean with what "their" guy told them. 

If the lender is just servicing the loan, that is, sending the monthly mortgage statements, paying the taxes (if the seller had an escrow account), etc. but does not own the note, they will send their recommendation to the investors, who sometime make the wrong decisions, sometimes cannot be found at all. If the lenders had mortgage insurance, they have a say on it, and can make demands or contributions from the seller.

I had short sales where the bank seemed to agree to the offer presented just to come back after a few weeks and change some of the terms stating that they were following investor's wishes.

My suggestion: take a second look at the comps (comparable property)  were some of the SOLD homes short sales? In that case the price was established months before closing the deal. Depending on the size/price range of the house, the FMV=Fair Market Value  may be going up a little. How does that home compare with what you've seen so far? Are you willing to wait a tad longer? Are you pressed to buy now?

You should know that Wells Fargo has a policy of not extending trustee sale dates. So don't think you have loads of time!