Can You Offer Less On An "Approved" Short Sale? Maybe, Maybe Not
Phoenix Home Buyers - this is a great explanation of 'if and when ' you can offer less on approved short sales. Thanks to my associate Karen Fiddler for this great post!
My buyers ask me this all the time. Just today I was out with a buyer who wanted to know about the two homes we saw, if they could offer less than asking price. So the simple answer is 1) NO and 2) YES. What? this doesn't make sense to you.....let me help.
1) No
When a short sale lender receives an offer for a given price, they order an appraisal (called a BPO). This is different from a normal appraisal and it's done by real estate agents. It takes into account the actives/back-ups and the general direction of the market, in addition to recent sold comparables. This is the value that the lender uses to evaluate the short sale purchase offer. It's not to say they won't take less than that BPO value, but it will need to be close, reasonable. Then they approve an offer price.
So....if the approval is a recent approval. Then the short sale lender is going to expect to get that approved price. In this case, the listing agent/seller is likely to say NO to an offer which does not meet the terms of the original approval.
2) Yes
When the buyer walks away from a short sale after there is an approval of terms, then there is an opportunity for a new buyer. When the home has been back on the market for a long period of time (normally over a month) then the listing agent/seller might be willing to accept a lower priced offer and send it to the lenders for approval. Maybe the market has slowed, or a new comparable closed at a lower price...maybe a new listing came on at a higher price. The change in the market might justify a lower price.
Another thing which might compel the short sale lender negotiator to accept a lower price is the time of the year. If they can close before the end of the year, or sometimes the month...they might take a lower price, especially if it's all cash.
So when the approval is old...the answer is Yes, we can offer less and see what happens.
Remember.....in a short sale, we are still writing the offer to the seller, the current owner. It's up to them whether they would like to take a lower offer and try and make it work. Even if an approval is old, they can say "no" and try and find an offer which meets the terms of approval.
When I get this question....I always answer "let me talk to the agent, and I'll let you know"! This way, I have an informed answer to the question, and I can put my buyer in the best possible position to have their offer approved...my both the seller and the lender(s).
Karen Fiddler
Broker/Associate
The Fiddler Realty Team/eVantage Real Estate
Lic # 01494165
Serving all of Orange County, California Real Estate!
Buyer's Agents, Listing Agents, Short Sales, REOs, Equity Sales, InvestorsSEARCH THE MLS HERE
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