You can't blame buyers for wanting to get a good deal. Especially experienced real estate investors in Sacramento. Well, actually, you can point the Flying Fickle Finger of Fate at them when you've got multiple offers coming in on that short sale that are driving the price up and up and yet they still throw a lowball into the mix -- because that's kinda pointless -- but there is nothing inherently wrong with a lowball offer. Before you start slinging whipped-cream pies at my head, let me explain.
Any agent with a lick of common sense knows that banks approve short sales because the sales price is about what the bank would get if they sold the home themselves as a foreclosure. Some say a bank's net is less as a foreclosure -- I've heard up to 30% less -- because of the cost to foreclose. But sometimes a bank's net is more as a foreclosure, especially if the government is paying them to do the foreclosure. But because of the inner workings at banks, and the way their balance sheets fluctuate month to month, it's really hard to say exactly what motivates them.
As a Sacramento short sale agent, I push for offers that are in line with the comparable sales for my sellers. It's how I ensure their short sale will close. That's what they hired me to do: to sell and close that short sale.
However, every so often the stars are aligned when a lowball offer arrives. By that I mean an auction is at hand. We might need to postpone a trustee's auction. You need an offer on the table to do that. I suggest that my sellers make a deal with the buyer. The deal is this: We'll submit your offer to the bank, but we won't change the status in MLS to active short contingent because we don't consider you to be a buyer. We'll leave it as an "active short sale" with a 48-hour pending rescission. We'll agree to this in writing. If we get a higher offer, you'll have 48-hours to match that price or we'll unilaterally cancel you.
This strategy has worked very well. I'd say most of the time we end up canceling the buyer and accepting a better offer -- because you'd be surprised at the sudden desirability a pending rescission seems to create -- everybody wants what somebody else wants. But every so often the bank accepts the lowball. It's a win-win strategy for all parties.
We closed an 8-unit apartment building as a short sale in Sacramento with this negotiation method last month. Although the buyer ultimately came up a bit in price, this transaction would not have been successful if we didn't employ this approach.