One Way to Handle a Lowball Short Sale Offer That Can Work

By
Real Estate Agent with RE/MAX Gold DRE #00697006

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.

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elizabeth weintraub

 

 

Weintraub and Wallace Realtors

 

 

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

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Topic:
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Short Sales Specialists
Lyon Realtors
Diary of a Realtor
Legal Aspects of Short Sales, Foreclosures, Loan Mods
Tags:
multiple offers
lowball
foreclosure
short sale
sacramento short sale agent
active contingent
flying fickle finger of fate
postpone trustee auction

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Ambassador
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

So the actual buyer was the initial low ball offer?  And I must remember this.

Mar 28, 2011 03:52 AM #1
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Yes, the actual buyer was the lowball offer. Just because a buyer won't always act like a buyer doesn't mean I won't try to work with them. My loyalty lies with the seller and closing that seller's short sale.

Mar 28, 2011 03:59 AM #2
Rainmaker
1,097,644
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

Great idea Elizabeth, thanks for sharing with us.  I assume that the deal is canceled once the bank approves the original offer.

Mar 28, 2011 04:00 AM #3
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Elizabeth, the thing I like the way you work short sales is you keep all the parties you have control over "in reality" with the best possible chance of bringing a deal closed to the table. Otherwise everyone is just wasting a lot of time. Your experience is showing here and is invaluable to the clients you represent.

Mar 28, 2011 04:05 AM #4
Ambassador
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Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Dear Elizabeth,

I like reading your blog because you add so many links.  I wander and enjoy all the reading through other articles like jumping from stone to stone to cross a running brook in the Spring sunshine! 

I hate reading your blog because you add so many links!  I wander and enjoy when I should be more discplined and working! 

Oh, well, I pacify myself by calling the adventures you offer to me "online learning" classes!  And they are - aren't they?

Have a happy day -
Lynn

 

Mar 28, 2011 04:45 AM #5
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Lowballs are truly best suited for those situations where the Seller has no other choice because the foreclosure date is set.  And even then, my experience is banks counter and end up allowing more time to market the property for an offer in line with market value.

Mar 28, 2011 05:48 AM #6
Rainmaker
627,517
Mary Douglas
United Country Ponderosa Realty, Red Feather Lakes, Colorado - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

So, sometimes the lowball offer, is the only offer...in your market place with multiple offers, that seems like a rare event.

Mar 28, 2011 02:21 PM #7
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Every short sale is different, even if the lenders are the same and the seller's situation almost identical to the next, each is unique. It is totally impossible to characterize each, much as I might like to try.

Mar 28, 2011 05:21 PM #8
Rainer
295,383
Paddy Deighan JD PhD
TimeshareLawyers.pro - Vail, CO
Paddy Deighan J.D. Ph.D

I don't know abvout you...but I ahve been encountering too many sellers lately that are taking strong positions on the "selling" price in a short sale...must be something in the water

Apr 01, 2011 12:03 AM #9
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