Special offer

Offers: Don't Waste Your, or My Time!

Real Estate Agent with RealEstateAdvisor.Pro

Don't Waste Your, or My Time! (more importantly--our buyers and sellers time)

When you are looking to place an offer on a short sale, give real consideration to what your offer will be! Don't just assume because it's a short sale you can make some crazy offer on the property. Agents, please advise your clients in the right direction. Don't try and be the hero and say, "yeah, let's put that low offer in!"

Here is the deal. A short sale, as we all know is when a lender accepts less than the amount owed on the house. But remember, they still look at market value. A $250,000 offer on a $389,000 listing tells me two things; one, the agent that made the offer has no idea what they are doing, and did no homework at all before making the offer, and two, the buyers are just out to steal something, and are not really serious about buying this property. (Three, the listing agent is way off on the list price).

The graphic I made below gives guidelines on how to present an offer on a short sale based on fact, not the hype of trying to steal it. The market value argument is something short sale agents have to fight over and over again, so I sort of know what I am talking about.

Different areas of the country may have different market fluctuations, so your percent may change a little, but you get the general idea. A good agent knows how much his or her market has dropped and anticipates the drop or increase in the near future. This will help when formulating your offer on that short sale. Use recent sold comps, and explain to your buyer what you feel market value should be at.

I speak from experience when I say that anything other than fair market value; you're wasting everyone's time. Again, under full disclosure on my part, I don't know the situation in your area, but I bet this guideline will work in most places in our country. Market value is the moving target, but I can assure you it's not that big of a target. By the way, repair value decreases should be valid and not insignificant. The toilet paper holder missing does not constitute a $10,000 drop in price!

Please try to understand that this is not a slap to people wanting to put low offers in on short sales. Sometimes things are just not understood. This is why I created this graphic so that everyone could understand visually.

Short sales are quite a bit of work for all parties involved. It's emotional for the buyer and the seller, and to proceed forward on an offer that will never fly is just silly.

When calculating offers for your clients, or if you are the buyer, please have "reason" behind your offer and make it make sense.  Provide your comps to the listing agent if you think we're wrong on our evaluation.





Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Buyers want a deal or a steal and seem to want to clog the system.  The seller can always reject a low ball offer.

Nov 16, 2008 12:47 PM
Marcia Kramarz
Re/Max Executive Realty - Medway, MA

Good info - I'm not sure you need to remind realtors - but I guess you do - BUT without a doubt this is a discussion any realtor working with a buyer on a short sale NEEDS to have with his or her buyer. 

Somewhat unrelated question - Have you ever closed on a short sale where the sellers were not late in their payments (yet) ?

Nov 16, 2008 08:58 PM
Christopher Hallmark
The People's Home Mortgage Corp. - Matawan, NJ

Beautiful post Frank.  It gets tiring with all these "buyers" who think they can pick up houses for pennies on the dollar.  This is a breath of fresh air.



Nov 21, 2008 11:47 PM
Steven Wright
Home Real Estate - Aurora, CO
CRS - Home Real Estate - 720-989-5283

Frank, I appreciate your post, but there a number of things that you didn't take into consideration. One of those is the amount of inventory that the particular bank has on hand. That is great that you definitely seem to be more of a listing agent and you don't like buyers or their agents that come in with a low ball offer. But it is a fact of life and people are getting those types of deals. It may take them 100 low ball offers to get it or maybe 200 but they are. Most of my investors get at least a 20 percent discount on any given property (depends on area). Remember that banks like cash offers and quick closing, especially in this day and age. Don't take it personally when you get a low offer, just fulfill your Realtor duties and submit it.

Nov 23, 2008 03:53 AM
Brett Tousley
Keller Williams Realty - Richland, WA
Tri Cities Real Estate | (509) 420-0013

Overall I agree that most short sales sell close to market value, but there are exceptions.  I don't view those exceptions as a waste of time, but an opportunity for my buyer client.

The listing agent that gets ticked off by a low offer is doing an injustice to their seller.  By presenting the offer in a negative light, you are closing the door on a possible deal with no negotiation. 

The seller or the bank can and should counter an unacceptable offer in this market. 

Nov 23, 2008 05:17 AM
Tracy Miller
Canton, MS
S. S. Specialist

Frank, I enjoyed reading your blog.  You provided some great information here. 

Nov 23, 2008 10:27 AM
Terri Hattaway
Real Estate and Financial Services - Ponte Vedra Beach, FL

Thanks for the "rule of thumb" Frank. 

I have made offers on several short sales, mostly for investors who are terrified of overpaying in a deteriorating market.  Now I have a buyer who wants to make a lowball offer on a functionally obsolete 2 bedroom single family built in 1975 that is basically a teardown.  The listing says it can't be a teardown, but the building official says otherwise.  So much for "market rate" and "typical transaction".  This post will serve me well in educating future buyers.  Thanks for the info.   

Nov 25, 2008 08:44 AM
Joanne Johnson
West County, MO

Great blog! I was involved with a short sale where the bpo priced the home above the current list price despite the fact that the home was tested at several price points along the way & generated no offers at the higher prices. Then the agent brings in an offer well below the price he established in his bpo just 3 weeks before!  BPO agents need to keep in mind that their valuations must take into account market condition & be valid for at least 6 months.  If prices are deflating at 1% a month, it would be prudent to factor that into your pricing, wouldn't it?  I've noticed that some agents who primarily  focus on reo properties tend to overprice homes that aren't so dire because they become accustomed to seeing such wrecks that they aren't in tune to how fussy the non investor has become.

Jan 30, 2009 09:26 AM
Charles Fischer
Housing Market Realty - Merritt Island, FL
Professional Real Estate Services

Frank:  Low-balls work best to get the ball rolling in the process, if no other offer is available.  MAny banks will not start the process until an offer is on the table.  However, low balls are best served on as-is houses and/or REO properties that need work!

Feb 10, 2009 11:20 AM
Joanne Johnson
West County, MO

Buyers agents need to guide their buyers a little in this venue. Listing Agents have done their comps and take property condition into account when determining price - especially in a short sale. We are working with time constraints. I understand buyers are looking for a great deal amongst distressed properties but a bank is rarely going to approve a ridiculously low ball offer on a short sale. They'll put it into foreclosure before they accept anything tens of thousands of dollars below market comps for the area.  At least in a foreclosure situation they can ask for highest and best and work multiple offers off one another simultaneously.  Buyers must be patient and understand that this is a very tedious process. If you haven't got a flexible time line, a short sale is not for you!

Mar 11, 2009 07:30 AM
John Moran
Keller Williams Realty's At The Beach Team - Destin, FL
For Your Place At The Beach

Nice effort,  too many times people try to make things more complex when they really should be trying to make them simple like you did with your diagram.  With regard to low ball offers agents on both sides of the transaction have to work to keep the buyer's and seller's eyes on the prize - a sale - and help them get to a price that will stand the test of an appraisal.  A crazy price that is too low won't have a chance and the buyer will miss out on a property.  The upside is the seller my discover what price the bank is willing to take.  Either way it's a lot of work for a maybe.  I've found that it's more efficient to go after foreclosures or listings that are priced right with sellers that are ready, willing and able to sell at market prices.

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Search Sandestin Foreclosures, Search Grayton Beach Foreclosures, Search Watercolor Foreclosures, Search Santa Rosa Beach Florida Foreclosures, Search Watersound Foreclosures, Search Alys Beach Foreclosures, Search Seacrest Beach Foreclosures, Search Rosemary Beach Foreclosures

Mar 12, 2009 03:03 PM
Steve Chaisson
Keller Williams - Nashville, TN

This is a great post but I am a bit confused.  You stated that sometimes low ball offers work.  Your profile has a list of properties that sold for drastic percentages below "as-is" value.  I agree with everyone that it is important to counsel clients to have reasonable expectations. 

I posted in the short sale forum regarding this subject - is there actually something formulaic that specific lenders adhere to?  It stands to reason that guidelines exist, yet those of us who call themselves foreclosure experts (myself included) never seem to actually accumulate real data to determine if the big dogs out there actually have objective guidelines for acceptable percentages.

I think this would be the way for each of us to get a lot more knowledge - accumulate that data of what is acceptable and track it.  Take into account the control factors like loan amounts, appraisal amounts, list pricing, time on market, etc. and really start taking a harder look at data instead of throwing slightly more educated mud at the lenders' walls.

Does that make sense?

Mar 29, 2009 07:35 AM
Alan Grizzle
Chestatee Real Estate - Dahlonega, GA
Full Time Realtor, Lifelong Resident of Dahlonega

The biggest waste of time I see is listing agents for short sales list them at a crazy low price that the lender would never take. I remember one listing I had many of my buyers call about. It was listed at $98,000 I called the agent he told me he had offers in the $130,000s waiting on a reply from the lender. He keep it active at $98,000. It stayed in the MLS at $98,000. I keep getting calls I would call the listing agent he told me I can not take offers now the seller filed for bankruptcy and could not take offers. I keep getting calls about it from my buyers who found it online. The loan ammount was well over $200,000.

What a pain I was so glad when it expired.


Jun 13, 2009 08:47 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Hi Frank, in my area (Orange County CA), we can get away with 10% below the lowest sold comp we can find + repair costs for THIS price range. So in your example, assuming these were the lowest comps in that area, we would be able to get it at 342k plus $10,200 in closing cost.


Jun 14, 2009 04:32 PM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Good offer. . . specially for investors looking for bargains. .

Dec 06, 2009 11:50 PM
Ben Benita
Ben Benita - Gainesville, VA
Speaker, Author, Game Changer, Coach


Afraid I must disagree.  If you are a Buyer's agent your client expects you to find him/her a deal.....negotiation basics, whomever gives a number first loses....UNLESS TE OFFER IS VERY LOW!!!!!  For short sales, submit teh low offer, force teh lenders hand, and, be flexible when your firs toffer is denied.  Most short sale listing agents will be thankful just to get an offer and get teh ball rolling rather than trying to guess where the BPO number needs to come in (unless of ocourse it is an FHA loan and you received the HUD FOrm 90045 and know what to list the home for).

Anyway, best of luck to you.

Sincerely, Ben Benita, Expert Short Sales Negotiator, www.United-IG.com


Feb 17, 2010 05:59 PM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Frank,  Too many agents out there running around with a " bottom feeder " next to them in the car !  Well said.

Apr 15, 2010 06:59 AM
xxxx xxxx
xxxx - Alexandria, PA

Frank, thanks for the informative post.  Currently working with a client on a short sale and trying to explain the process to them.  Mind if I use your blog ?

Jun 26, 2010 01:52 AM
Sharon Harris
Keller Williams Keystone Realty - Hanover, PA

Humm..Some buyers  just feel it is there God given right to make a very low offer. They thoughts are the seller is desperate and will accept the offer. If they only knew how banks worked.

Oct 21, 2010 04:52 AM
Michael Mergell
Michael Mergell, RE/MAX Legends Group - Fishers, IN

Great Post!  My team and I are the Short Sale Authority in Indianapolis - we have around 90 active short sales at any one time,  and I agree to the fullest.  Yet it still happens every week,  an agent will bring a buyer and put in an offer incredibly low,  right after they put the offer in I start getting calls and even office drop bys " have you heard anything yet?"  "did the bank accept yet."  We always list at fair market value and I feel like my team is very good at researching it.  If someones low ball offer gets accept days later,  I promise I would call you right away,  no need to stop in each day and ask about that offer of yours. 

The worst part is,  We currently have several incredible deals on our roster of homes,  I find that some buyers will never recognize a good deal for what it is,  They have to offer 70% of list price no matter what.  Even if we already did the work for them and dropped the price several times and now it is at the minimum. 

Anyhow,  Please allow for time to hear back on these offers agents.  I know your buyer will get antsy,  but that is how short sales work.   Many of my listings we will go through 3 or 4 buyers, because they get sick of waiting!

Great Post Frank!

Oct 26, 2010 03:32 AM