Why Short Sale? – FREE information on Foreclosure Defense, Mortgage Modification, Tax Consequences, Deed-in-lieu-of-foreclosure, Short Sales, Deficiency Judgments, Bankruptcy Referrals & more. John Michailidis, SaraMana Properties – Phone: (941) 822-5221
Why Understanding The Lender's Counteroffer Is Critical To Short Sale Approval -- Sarasota, Bradenton, Venice, Lakewood Ranch, Florida
Many people don't realize that the Short Sale approval process is a two-tiered process. First there is the negotiation between the seller and buyer, who must come to an agreed upon price and terms. Next the offer has to pass through the lender's approval process. If the seller doesn't first agree to the buyer's offer, things never progress to the next stage - a seller is under no obligation to present the bank an offer that he/she doesn't approve of. That said, even if the buyer and seller do come to an agreement, the bank can accept, reject, or make a counteroffer. Things can indeed get quite complicated.
In my experience of having participated in many such transactions, it's my observation that a Short Sale counteroffer can come from the lender for any one of three reasons:
- They just want to give it a shot to see how much more money they can get.
- The investor who actually owns the loan that the lender is servicing has a minimum number below which they will not go.
- Out of principal, they simply don't accept offers without changes - they need to feel like they've "won."
Of the three, don't underestimate the power of the last - I always try to include a "throw-away" item in the offer (an item that the buyer/seller really doesn't care if they get or not) just to give the bank something to say "no" to.
As for the first, I guess you can't blame them for trying to get more. The buyer always has the right to make a counteroffer to the bank's counteroffer, and many successful deals eventually come about as a result of this back-and-forth between banker and buyer.
The second item accounts for some seemingly bizarre counteroffers that you wouldn't think would matter -- here's an example of what I mean . . .
I recently experienced a buyer who offered a sale price of $96,800 for a Short Sale property, with a 3.5% credit back at closing. The bank's counteroffer was $96,800 (same price) with a 3% credit back to the buyer. A quick calculation reveals that the difference between the offer and the bank's counteroffer was only $484, an amount that you wouldn't think was so critical on nearly a $100,000 deal, but the particular investor that owned the loan had a "rule" that they did not allow credits greater than 3%.
Knowing the quirks of the Short Sale game can certainly give you a leg-up on the process. Understanding the lender's counteroffer is critical to your success in winning a Short Sale Approval!
The SaraMana preForeclosure & Short Sale Assistance Team helps Short Sale Buyers, and Property Owners in Sarasota, Lakewood Ranch, Bradenton, Venice and throughout Manatee & Sarasota Counties Florida to STOP Foreclosure, potentially Avoid Deficiency Judgments, Successfully Short Sale their homes, and move on with their lives.
For more information, Call 941-822-5221, or use this ONLINE FORM.
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