The Dangers of Writing Overpriced Offers

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

overpriced offersGranted, it's much more of a problem if a buyer writes an overpriced offer on a short sale than for a traditional equity sale in Sacramento, but when there is financing involved, it's still a problem all the same. It requires more work on everybody's part, and it's often a battle to close escrow. The problem is the appraisal. If the home doesn't appraise at the amount the short sale lender agreed to accept, the short sale bank won't always back down and lower the price. Not only that, but now that short sale bank has a number in mind that most likely can't be duplicated with another offer.

Whenever I am looking at offers for my sellers, I consider the fact that the escrow might not close. If it doesn't close, can we locate another buyer for these particular terms and conditions? Can we duplicate that buyer?

Read more on my personal blog today about Paying More Than Asking Price for the House.

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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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Tags:
purchase offers
short sale
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overpriced offers
paying over list price for home

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Rainmaker
457,777
Bill Dean
Haggerty Team St. Louis, Mo. - Fenton, MO
William Dean - Broker, Salesperson

Elizabeth,

Overpriced offers?

Now that's an issue I have not seen, I've had overpriced offers on Hud  sales where they are appraised low for the area and then bids go way above list price.  my experience with short sales  has been ridiculously low offers.   I d see where it could be a problem, tho.  The bank would get fixated on the offer that failed , then a normal or low offer comes along and they would tend to ignore those.  You would THINK they would give more credence to an appraisal over their own BPO's  BUT, that requires common sense, from a bank? HAH! lol

Feb 19, 2013 01:33 AM #1
Rainmaker
423,781
Jean Hanley
Coldwell Banker Kivett Teeters - Hemet, CA
Specializing in Folks Who Want To Buy/Sell Homes

Oh jeepers Elizabeth!  I "WOSH" I could get buyers who want to write overpriced offers, or at least full price offers.  Everyone lately seems to want to go in low just to see what the seller will do.  Rarely does this turn out for the best.

Feb 19, 2013 02:40 AM #2
Ambassador
3,084,895
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I think our market is beginning to see overpriced offers again.  Folks writing whatever they think it will take to get their offer accepted.  If is asking for trouble later on if you are dealing with a Short Sale.  THe highest is certainly not always the best offer on a Short Sale.  The one that can be duplicated by another buyer, as you point out, is the one a seller should want.

Feb 19, 2013 02:52 AM #3
Ambassador
1,229,631
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Several months ago, I got 30+ offers on one pretty good property. Those that wrote cash offers subject to appraisal for 100k over market value were not even considered (and then the agents got angry with the seller.... for not writing a counter).

Feb 19, 2013 08:42 AM #4
Rainmaker
2,889,012
James Dray
Fathom Realty - Rogers, AR
Exceptional Agents, Outstanding Results

I had placed a bid on a property a couple of weeks ago that was 3,200.00 over and lost to one that was a little over 10,000.00 over list.  Interesting problem we have here. 

Feb 19, 2013 06:01 PM #5
Rainmaker
3,239,703
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

 While we have had over asking offers...they have not hit an appraisal snag...one in particular....and suspicion is that we are back to appraising based on offers rather than comps...have seen this in both traditional and short sales.

 

Feb 19, 2013 06:57 PM #6
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Hi Jean: We tend to get overpriced offers only in seller's markets, so you must not be experiencing a seller's market in your area.

Hi Chris Ann: You and I both know guiding the short sale so it can be duplicated with the next buyer is the smartest way to do it.

Hey Melissa: Isn't that weird how sometimes buyer's agents act as though we owe them something apart from a rejection? There is no law that says a seller has to issue a counter. I'm inclined not to want to do business with those who don't know what they are doing because that's just begging for trouble down the road.

Hey James: Even in Arksansas, huh?

Hi Sally: I'm not seeing wild and hairy appraisals based on offers here.

Feb 22, 2013 05:05 AM #7
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