It seems that home buyers in Sacramento sometimes believe that dealing with a short sale bank is identical to dealing with a bank that has foreclosed upon a home, when the two types of escrows are actually quite different. There are different departments of the bank that handle these two types of transactions and different procedures for the escrow.
In a short sale, the bank is not required to let the seller sell the home. It is at the bank's option when it allows a buyer to purchase the home from a seller at a negotiated price. Banks that elect to sell their foreclosure inventory have made the financial decision to sell those bank-owned homes. Although banks are not supposed to be in the business of real estate, we all know they have ways of hanging on to shadow inventory. But generally speaking, banks do want to sell their foreclosure homes and are only open to discussing approval of a potential short sale.
Sometimes I hear buyers and their agents spout the mistaken belief that "banks are so stupid because they should take that short sale offer or the home will go to foreclosure." They complain: "don't the banks know that it's better to do a short sale than a foreclosure" -- and that's pretty presumptuous and arrogant thinking. Because no, it's not always better to do a short sale. It actually can be better for the bank to foreclose. The bank is doing the buyer a favor by allowing the short sale, not the other way around.
Yet, still, some buyers believe they can continue to negotiate with the bank after they receive the short sale approval letter. Unless the appraisal is lower, I've yet to see a bank renegotiate after short sale approval. As a Sacramento short sale agent, I close a lot of short sales in Sacramento. In a short sale, the home is sold "as is" which means no repairs, no credits, no price reductions, and the condition of the home is the condition of the home. If you don't want to buy it, don't. But don't ask the bank to reduce the price because the bank is likely to tell you to take a flying hike. The bank doesn't care that a buyer forgot to budget for new carpeting or that the roof is leaking.
When I receive short sale approval, I try to explain to buyer's agents that now they might want to remind their buyers the sale is "as is." Negotiations are over. The sale is contingent upon inspections, and a buyer is free to cancel for just about any reason. But a buyer is not free to try to renegotiate because it ain't gonna happen. What a renegotiation is likely to do is to set the stage for that next buyer who's standing in line behind you. But it's not gonna help you.
Photo: Big Stock Photo
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