What Does it Take to Win in a Silicon Valley Short Sale Multiple Offer Situation

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Real Estate Agent with eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales B.R.E. 01191194
https://activerain.com/droplet/wQ5

The real estate market in the Silicon Valley is very heated up this days, but there are still plenty of short sales being offered. Many of these short sales are in higher price ranges that have previously not seen a lot of short sale activity. What that means is that agents who do not have a lot of experience with short sales are making offers. Because the inventory is so low, most of these short sales are getting multiple offers. So if you are an experienced agent but not with short sales, or a buyer here are some things you need to know:

 

1. Don't low ball. The bank won't accept it and you will have plenty of competition from buyers wanting to pay market value.

2. Follow all of the instructions the agent gives on the MLS. If they say email instead of call, SEND AN EMAIL. Do not pester the agent with multiple calls a day. Your pre offer behavior is a sign of how you will act during the long short sale process.

3. Fill out the short sale addendum carefully. The addendum allows for the deposit and contingency period to start after bank acceptance unless you change it. CHANGE IT!!!!  At a minimum you should put the deposit in escrow immediately. If you really want the home I would also recommend offering to do the inspections right away instead of waiting for bank approval. It is a risk to the buyer in case the bank does not approve, but it is better than waiting 1-3 months for an approval and then finding out the home has more repairs needed than the buyer is willing to make.

4. The home is being sold "As-Is" Don't ask for repairs.

5. Don't ask for buyer credits unless it is an FHA loan. Banks are most likely going to reject the request for credit and if your buyer needs to have it or they walk it does not put you in a good position.

6. Don't change the title and escrtow company. The seller's company has already done a lot of work and has a relationship with the listing agent.

7. Give at least 90 days for approval on the short sale addendum.

8. Present a great case on why your client is able to wait for short sale approval.

 

If you have any questions about short sales in San Mateo or Santa Clara Counties please feel free to contact me.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E. 01191194

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Marcy Moyer eXp Realty of California  Specializing in Probate and Trust Sales, and Rental Investment Properties

 

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Rainmaker
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Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

I have to respectfully disagree with a few of your points. Here are my responses:

1. You should offer on the low end of the comps in order to better negotiate a short sale for your clients. The seller controls the short sale so if your clients give incentives to the seller, they will have control of the short sale. From a listing agent perspective, this is the best strategy as well as in negotiations, you want to negotiate the best low price in order to complete the transaction. For example, it is easier to close on an approved short sale of 250k than an approved 280k short sale. 

2. Agreed

3. As a buyer's agent, I don't recommend putting a deposit in. Also, I don't recommend spending a dime on a short sale until you get an approval letter. Finally, a good listing agent has contractor friends who can point out issues with the home prior to listing so that the listing agent can submit the high bids to the bank in ordert o further lower the purchase price. Worst case scenario, if the listing agent didn't do their job properly, the buyer can send their contractor bid to the listing agent so that the listing agent can then see if they can get seller concessions or a price reduction.

4. My response to number three addresses this.

5. Not true. You should ask for the moon, including home warranty and termite report and repairs. Some lenders will reject it and some will let it stay. For example, Chase uses a value based method rather than a net system on California loans.For the lenders that allow closing costs for FHA loans, then have the purchase offer written up as a FHA loan then change it after approval (with seller's consent of course).

6. Agreed. They only should be changed if escrow or title are not smart enough to close the transaction. This is mostly seen in a two lien issue where the first is giving less than what the second is willing to accept.

7.  & 8.  Agreed!

Mar 07, 2012 04:52 AM #1
Rainmaker
555,507
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Marcy,

Interesting info and I agree with most of it.

However when it comes to placing a deposit into escrow I think it would be wise to take it as a case by case basis. Meaning looking at all the factors when a buyer makes this decision. i.e. how many loans on the property? does it appear to be a true verifiable financial hardship? are there HOA dues in arrears?  how many short sales the listing agent has closed recently? how cooperative are the sellers? is it a divorce sale?

I know the CDPE classes teach (at lease the one I took) placing the deposit into escrow early, but I do see some risk and again I think it's a case by case basis. And btw, I know it's probably not easy to get all the answers in advance, yet I think it's prudent to know most of these.

Mar 07, 2012 11:41 AM #2
Rainmaker
468,600
Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Satar and Linda,

Thanks for your comments. I am in no position to say how things are in other markets, but in San Mateo and Santa Clara Counties the competition is fierce for buyers. There is no place for low balling most homes, and anything that is already priced competitively is going to get multiple offers. My last 2 short sales had 11 and 6 offers respectively, and I did not under price either of them. So people who low ball do not get their offer accepted in these circumstances.

As far as putting money in escrow, again, it is a seller's market. If you do not do it, I do not accept the offer. No need to when someone else will be willing to commit to the process.

Of course when I represent the buyer I do my best to make sure the listing agent knows what he/she is doing, the bank is one that I know has been reasonable as a gewneral rule, and the seller has a hardship.

Mar 07, 2012 11:32 PM #3
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Marcy Moyer

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