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Do Lenders approve Short Sale offers at gargage sale prices?

You would think they do when I look at some of the offers that Realtors submit on some of my Short Sale Listings here in and around Coral Springs. Aren't Buyer's Agents looking at comparables within the homes neighborhood to determine what is a good market value for a particular home? Or are they just allowing the Buyer to offer a garage sale price? Most Short Sales should be priced to move at the price they are listed so why do Buyers and their Agents feel that they automatically must low ball the list price by 20% - 25%? Lenders may want to move the property but they simply won't give it away.

Greed can be a nasty thing; what about buying a Short Sale property that is probably already priced just below fair market value? No, let's not....let's see if we can milk them for even more - yes, greed is affecting a lot of Buyers and their Agents.

It sure would be great if we all could get on the same playing field and move the market into getting homes sold at great values as this will benefit us all. Is this more prevalent here in South Florida or is this happening in your neck of the woods too?

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I'm looking forward to hearing from you soon. Please call me at 954-464-1100 or email me at: lynnp@ImagineYourHouse and it would be my pleasure to help you!

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Posted by Lynn Pineda-Coral Springs REALTOR® Coral Springs Florida Homes For Sale on 07/19/2008 03:36 PM

Comments (18)

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18 Comments on Do Lenders approve Short Sale offers at gargage sale prices?

JUL

2008

My experiance is that many looking @ forclosures see it as "distressed" thus can get a better deal

-the start to get in the wholesale mentality - like many investors - cash is king and the more the better - yes it is greed but gotta look out for your self - and why not make the offer - never know what will be accepted

I spent some years in Loss Mitigation and the whole secret is make the deal attractive to the lender. What is the balance of their loan? What is the true value of the property? How long do they normally take to sell properties in the area? Give them a firm fair frendly offer and you might be surprised.

Dont worry about the lender. Truth be told, they have maybe 3-5% of loans in delinquent status. Only 1% ever get to Foreclosure. They are making plenty on those of us who are making our mortgage payments.

They anticipate losses and set back reserves for them. Currently many banks did not anticipate what we are seeing thus the bank closure like Indy bank. If the bank fails, then you might really get a bargain through the FDIC.

But again, dont you worry. If your offer is not good enough, the bank is NOT going to accept it.

I tell buyer's agent who shows an interest in my short sale listings that you MUST get it at list price if they want approval! You would think I am speaking a foreign language because they seem to think that list price is 10-20% below list price.

JUL

2008

Lynn- I had a buyers agent today ask me if she submits an offer will I put it pending? I told her that if the offer is full price I might, but I will not have the seller sign a low ball offer and take the property off the market. She started to argue that it was a MLS rule and I had to. I told her the only thing I have to do is what's in my clients best interest and not let his home be foreclosed on. I would submit her offer, but my client wouldn't sign it to make it a viable contract until I had approval from the lender. She hung up unhappy.

James, yes you're right as they think "distressed" means that the seller is giving the property away. Not so, it means that they'll be looking at a fabulous buying opportunity. Greed doesn't have to go hand in hand with looking out for number one.

Tony, sure "fair" is key! It's true that the lender won't acknowledge an offer that isn't on the money. Why should we even bother with ridiculous offers? They just hurt one's credibility.

Renee, oh, I know....."read my lips" or should I say "Listen to what I'm telling you" So many are so used to seeing a List price and thinking it says "offering way below List price" If they did a proper market analysis, they'd know the price is fair and shouldn't think that they Seller and Lender will allow a steal.

Mark, too many forget who we're representing and who interests we're protecting and then they get angry when we don't agree with them. Ahhhh.

Lynn

Not all sales are garage sale prices. There a number on issues the lenders have including the mortgage insurance issues.

Good luck and success

Lou

JUL

2008

Lou, you're right. I was commenting on how so many think that a short sale is automatically being sold at garage sale prices.

Lynn- you are so right, we get these low ball offers all the time. Like on a 150K condo, 50K offers! ARE THEY CRAZY! I mean, they just think the banks are SO desperate. I tell the buyers agents to make an offer based on their comps, do the comps! You should see the stupid comps they send to me. They do not even want to take the time to do it correctly. They send me a one liner! That is not comps!

Mark- I will not put our listings Contingent just because a buyer makes an offer and I don't give a rat's butt what the mls says. The mls is only looking out after buyers agents. We are lisitng agents and as such we are trying to get our sellers house sold before they lose it in foreclosure. We had one buyers agent who put money up, made a full price offer, we put it pending with their committment, guess what, they walked away! They even lied to their own agent and went to some other agent to cancel the deal. It was awful and that was like 30 days we lost for our seller! Who is now getting served her foreclosure papers. I ask, how can the mls do that to the sellers! They let banks keep their foreclosures active until they accept an offer, what is the difference with a short sale! We fully disclose to the buyer and agents that we are accepting offers. Even if they are full price we won't put it Contingent anymore. Not after that!

JUL

2008

Lynn - Short Sales are tough. I just finished one that took 10 months (it had issues) and had 2 banks involved. And we had to go to court to hold off the foreclosure, contract in hand, just to finish the closing. Good Luck!

Katerina, I'm with you...doesn't it just drive you nuts?! What are they thinking? What's worse is that they simply look at a list price, drastically reduce their offer price and don't even attempt to do their job in looking at comparables.

Eva, it's true as Short Sales can be tough but oh so worth it! 10 months - holey cow! Congratulations on hanging in there as I'm sure you had a very pleased homewoner.

JUL

2008

I have found that many agents tend to think that a bank is desperate and will accept anything. Yes they want to get the house off the books but really lowballing is bad for everyone. Short sales can be great deals if they deal actually goes through, and that is the goal.

Hi Lynn:

Great blog. I just posted one about a Home Foreclosure company here in South Florida that is great. They ensure the agents representing the company are trained and fully understand the "in" and "out" of a short sale. If you get some time, read my post. I would love to hear what you have to say! Thanks ~kk

JUL

2010

An excellent perspective on how useless a lowball offer is on a Short Sale.

JUL

2010

Tony and Suzanne, thank you. It continues to amaze me how the lowball offers still exist and some feel Lenders will just give the property away.

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Lynn Pineda-Coral Springs REALTOR® Coral Springs Florida Homes For Sale

Coral Springs, FL

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