Short Sales - The Success of the Sale May Be Doomed from the Start

By
Real Estate Broker/Owner with David Wain Realty, LLC

The offer killed the short saleMy Client Has Made a Difficult Decision

About 2 weeks ago a client called and said he wanted to discuss something with me. He is also a good friend and I said sure, what's going on? He went on to explain that he no longer wants to be dumping money into a house that is worth so much less than he paid. It doesn't make any sense to him but he doesn't just want to walk away either. He would like to short sell it. I told him to let me see what I think we can get for his house. After doing the required due diligence and preparing a CMA, I concluded that a fair price would be $349,000. He paid $505,000 in 2006 so for this area of South Florida, that is about right. Not over or under, just a fair price. After discussing the details, we decide to give some room for negotiations and list it at $359,000.

The Next Step

I did the normal things like enter the listing of the MLS, order the signage, syndicate the listing and feature it on my website. We immediately start getting calls from the usual inquisitive neighbors wanting to see what the price is. That was followed by the neighborhood stalkers - you know the folks who like to drive around looking for a house instead of calling a real estate agent to just search the MLS for them. The next day we receive calls from Realtors(R) and start making appointments.

The Next Day

One couple had been looking with their agent for almost a year. I know this agent and felt his pain. He contacted me and says after over forty homes, this is the one - the only one - they like. It is an extraordinary home and I can see why. He tells me the offer that he thinks they will come in should be $339,000. As my client's agent, I convey that information to him and while we don't have a contract yet, he says no to that offer. It arrives but they offer $320,000 and although he just wanted to reject the offer, I encourage him to show we will negotiate some but still show them where we want the offer to be. We go back at $355,000. They seemed shocked. this is a short sale after all.

In a Short Sale It's Not What the Seller Will Agree to - It's What the Bank Will Accept

I explained to the other agent that my client wants to be as close to being sure that the bank will see this as a good offer as possible and therefore have a better chance of actually getting the short sale accepted. We have an experienced short sale negotiator/attorney working with us, so on our side, all our ducks are in a row. The agent called me back and said the highest they will go is $340,000. One point here, the short sale addendum does not specifically mention that we are in a multiple offer situation. I relayed the counter to my client. He was going to agree but I advised him to counter with a stipulation. He will take their price but will keep the home on the market OR $345,000 and only work with their offer. I never give up something while negotiating without getting something back! These buyers are strong - great credit, substantial down payment - so I felt that this was a safe way to go. They weren't happy but then again, they are also not my clients!

The Point Here Is To...

get the best price you can even if it is a short sale. The better the offer, the more likely the bank will accept the deal. I've seen some sellers take ANY offer, and wonder why they get foreclosed upon. The deal has to make sense to the bank and if they can get even more that $1 by foreclosing, you can bet that is what they will do!

All comments are welcome - what would you do?

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