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Hey Tri this is a really good post. The seller in the process is often treated like, why should they care? You have given us some good reasons why. Not the least is the sellers feeling of responsibility to his neighbors when it comes to pricers. Excelent

Great post as always, Tni, and so true.  A seller may be selling short but that doesn't mean that they care "short".

 

BTW, I love reading and suggesting your posts, informative and sometimes entertaining!!  You have a great style!  Keep up the good work!

Wasted time is another reason.  No Short Sale Seller likes to waste time with a ridiculously low offer that the banks are going to counter....and when they do...the Buyer will bail.

Featured in the group:  Bartender, Make it a Double.

Great post, Tni. Like J. Douglas mentioned above, selling short does not mean short of caring. The ones who don't care usually go into foreclosure ... the ones who do care listen to their agent with hopes of an agreeable outcome.

All Mountain Realty - Yes, often buyers take that position.  I think many simply do not understand what is at stake for the short sale seller.  They think that ANY offer is a good offer on a short sale.  Not the case.

J. Douglas - Thank you!  Glad you liked it and thanks for the suggests!  It's true short sale sellers still care and sometimes buyers forget that.

Chris Ann -- Absolutely, and during that time they could be more aggressively marketing their home to someone who will pay a price that the bank will accept.  Thanks for the feature!

Cynthia - Very true.  Short sale sellers tend to care about their credit, about their neighborhood and they want to inflict the lease amount of harm to themselves and others in getting to the finish line.

 

 

tNI, so true...they are people not non-entities and the buyers forget this many times...it is important as a short sale agent to let the sellers really know their comps and go from there...Santa Maria short sale agents can give you the best direction in a sale...btw, haven't been in the group much?

Tni you've got two home runs back to back today.  You're writing style makes for a simple, easy to understand guide for short sale buyers and sellers.  Excellent...

 

Featured in BananaTude

As always Tni well said. I know I can count on you to express good ideas in a clear and concise manner.

Hi Ginny!  Very true.  You can't ignore the comps.  Yeah, I've been busy ... with Bank of America!  LOL.

Thanks for the feature Anna!  Glad you liked them both!

Hi Dave - Glad you liked the post!

This is a great article. Comps are so important. Short sale sellers are under a lot of pressure and have a lot of responsibility. I tell all of my short sale clients that unless we make an offer within the banks pre-approved range, the chances of them getting the house are very very slim and its in everyone's best interest to work within the range the bank sets. Thanks for sharing. I appreciate your perspective.

Tni, Buyers need to work with experienced agents when offering to purchase short sales.  Agents who write low-ball offers contribute to why many buyers think the way they do about short sales.  The bottom line is that banks need to net a certain amount in order to approve a sale.

Tni:  Your points are so well taken.   In the land of short sales, it has to be about the entire transaction, SELLER included.   And most sellers do care what their home sells for.

This is a great post and I do think even in these bad times with people having to do Short Sales and their lives falling apart they still have some pride and dignity regarding pricing the home fair.

I absolutely agree with you Tni! Sellers are people and not non-entities. As an Santa Maria Short Sale Agents, it only shows how well your services are to your clients. Excellent post!

What a great post!  Short sale seller's do care!!  This should be mandatory reading for anyone looking to purchase a short sale home!

Most excellent article and truly all good points. I have this kind of discussion with all of my short sale clients and I'm glad you do too!

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Thank you, thank you Tni - your post gives a new prospective of the seller in the short sale as someone who really does care about their property, their dignity and the outcome of the sale.  Very well done

 

Great reminder.  I just showed a short sale home yesterday and the listing broker, while sympathetic to the Seller, was ALL about the lender. 

Great post!  Short sale seller's do care, it's still their property. Buyers are always under the impression, that if its a short sale, the can low ball like there's no tomorrow.

This is a great post!  I wanted to another one: In some situations, the bank will negotiate that the seller will pay back the difference or a portion of the difference between the sale price and their mortgage balance.

These are great reasons as to why a seller will still care in a short sale. It may be in the banks hands, but they are still invested in the home. 

I have had sellers counter low ball offers, where there are not any sold comps to justify their price and the agent actually gets angry or tells me to go ahead and submit it to the bank anyway. What a waste of marketing time if we went ahead and submit a low offer that had no chance of being accepted.

Tni, buyers often forget the seller also has a stake in how a short sale is handled by the bank.

Tni, good list, the sellers are STILL the owner of the property, so, they have a say, especially all is on bank approval so they of course they care.

I often get inexperienced short sale buyers and agents who are dumbfounded when my clients don't accept their unrealistically low offers. These people don't understand that tying up the property with a low offer that has no chance of being accepted is not in my clients' best interests. Doing so would prevent other qualified buyers from making an offer that has a better chance of being approved, and getting my clients out from underneath their upside down homes.

Great post and a definite keeper ! I'm Bookmarking this one !!!!!!!!!!!!!!

Tni -- I have heard all four of those statements when buyers are represented by agents who don't understand the process. Your #5 is of the utmost importance to the sale not only for the seller, but also for the buyer.  Buyers need to be educated in the process by their agents and what needs to be done to make the sale a successful one. If both agents are experienced, then the likelihood of getting to the closing table is almost assured.

Yes, Short sale sellers do care sometimes too much ... more than the bank will... if the bank won't give at all. If the BPO comes in low and is in agreement with the contract price, it's a very heart breaking situation for all involved.  A recent comment I heard from my seller was "why won't they negotiate with us they have a great buyer...why would they want it to go to forclosure.  It will cost them more especially if the pipes freeze and break... and who will water the plants.... Sometimes it is just a very sad situation.

While we always would prefer that a buyer's agent would submit a what we would consider a reasonable offer, I welcome any offer and will encourage my seller to sign any offer we get.  Surely you don't suggest that we try to negotiate offers when we don't know (in most cases) what the bank will accept.  None of the five reasons listed above are valid reasons and we need to counsel our sellers to sign any offer so we can quickly submit and let the bank negotiate.  Our seller is going to break even regardless of the sales price, so we are doing them a disservice if we do anything that prolongs the process.

Excellent post Tni, and regarding #4, while waiting for an answer from the lender on a low ball that will most likely fail, the property is showing as contingent and will not very likely be getting back up offers.  Thus missing the opportunity for a 'real' offer.

Angel Realty - Yes, comps are important.  You definitely have to consider where the comps are in the market.  Often it is better to wait a little longer and get an offer in the ballpark of comps than to accept an unrealistic one.  The paperwork is too intense and time line for response too long on short sales to gamble on an offer the bank will not likely accept.

Kathleen - I agree.  Many buyers agents I speak to have no clue what the short sale process is like and they really do think that a short sale is just like a foreclosure.  They don't realize that there are implications for the seller and you need them to agree to get your offer presented to the bank.  A unrealistic offer is usually not to their advantage.

Cathy - Absolutely, they do care.  Some buyers seem to think that any offer will benefit the seller and rarely is that the case.  The seller needs a good solid and realistic offer in order to increase their chance of short sale success.

Gene - Well said.

Thanks Katerina - As a short sale agent yourself, I'm sure you understand the emotions and bank realities at play.  The goal is to get to the finish line as quickly as possible.  A solid realistic offer is the goal.

 

Thanks Sherri - Glad you liked the post.

Reba - Definitely... buyers and sellers.  

Short sale seller - I'm glad you liked the post.  The perspective of the short sale seller is often ignored by short sale buyers and their agents.  But, they have to be considered.

MaryKay - Wow.  That sounds very post worthy.  Hope to see a blog about it.

Luis - Its true they do think that and they can on some properties.  But, a short sale agent knows the market and knows what type of offer they can get on a home.  Rushing in with a low offer is not very persuasive, not every short sale seller is two minutes from a foreclosure auction.

 

Great post - #4 is so important - many buyers fail to understand that the bank will not accept a ridiculously low offer unless supported by comp(s).

I agree totally.  I have a short sale seller who may be hit with a deficiency judgement, and you better believe he cares a lot about his sale price!

Alyse - That's very true.  In CA, the law now is that if the short sale bank accepts the short sale they cannot pursue the seller for the deficiency and they cannot request seller contribution.  But in other states these practices are going on with regularity.  So in those states, another reason the short sale seller cares about the price -- they may have to pay a portion of the deficiency.  Great point.

Ben - Absolutely, people are generally invested in their home.

Pam - I agree.  Submitting an offer on a short sale is a lot of time, work and effort. Instead of wasting time with an unrealistic offer the seller may be better off using that time to get a better offer.  Every situation is different.  Every short sale seller is not days away from foreclosure.  I have some short sale sellers that haven't missed a payment.

Michael - Yes, they do forget.  

Eileen - Absolutely.  Even before the law changed in CA to be more favorable to short sale sellers, I made a point to explain to buyers that the short sale seller has to agree to the banks terms in order for the short sale to go forward.   Many buyers just don't consider that.  But, a short sale is about the seller's financial life.    

Manuel - Sounds like this is not your first rodeo.  I'm sure your short sale sellers benefit from the fact that you get it.  It is in their interest to bring the best offer possible.

Thanks Michael - Glad you liked it!

Barbara - I agree.  I recently closed a short sale that took much longer than anticipated, and I know the only reason it closed was because there was a very experienced agent on the other side.  She was realistic with her clients, prepared them for the process, and we were able to close as a result.

David - Your response highlights why short sale sellers need to get good legal and tax advice prior to entering into a short sale agreement.  So they know what is at stake.  Indeed, every situation is unique.  But in the vast majority of cases we do know what the bank will accept.  The banks want reasonable offers.  Tax consequences aren't valid reasons?  Seller is going to break even?  That is simply not true, and I do not think you are giving accurate advice if that is what you are telling clients.  I do agree with your last point which is that prolonging the process does a disservice.  However, in my experience, submitting unrealistic offers prolongs the process for the seller.

Gabe - You got it.  What seems like the fastest path often is not in a short sale.  Sell the house for a fair price and you will have less delays with the process.

 

David - There you go.  Banks use BPOs and appraisals not your wish list.  Take a look at the comps.

Dagny - Absolutely.  Great point.

It is very easy for the Seller to be completely overlooked in the short sale process and for all the reasons you've named it is important not to just disregard them in the process. 

In my area we have agents that list low, I guess in the hopes of multiple offers that will push the price up.  Sometimes it works, but I have to explain to my buyers why even a full price offer might not be accepted by the bank.  However, these listing agents got their sellers to agree to these teaser prices.  I also get listing agents who tell me to write up any offer since they want to start some kind of negotiation with the bank - I guess to see what the bank's bottom line is.  If the first buyers walk, then they can list it at the bank's price with less guessing.  With those agents, they seem to have trained their sellers to accept anything just to get the ball rolling.

It has been my experience when working with a homeowner on a short sale they are sometimes offended by what a prospective buyer my offer. Even though the bank will be taking the loss the seller still takes pride in the home they purchased. However I do occasionally get a homeowner who just dosn't care what is offered they just want out of the deal.

Short sale offers are sometime rediculously low. I try to just have the sellers counter with a reasonable price and advise that the buyer may counter. Every seller is different. Just depends on the situation.

Well said Tni - the buyers don't understand the impact the seller has to deal with when they short sale!  By the way - thanks for your tip on the help line at BoA - I got my approval letter pretty quickly after tweeting them.

 

Buyers feel like they have to start somewhere so a low offer is still an offer. I encourage sellers to accept any offer to get the negotiations started with the bank. Generally the bank won’t tell you what they will accept until you present them with an offer. So why would a listing agent ever discourage an offer? Yes, the negotiations may go nowhere fast but then if the bank sees offer after offer way lower than their BPO or appraisal it should tell them something. Go and get a revised BPO or appraisal! The market is the market not what a BPO agent or appraiser thinks it is worth.

 

I have never heard anyone blog on this topic before.....you are dead on about people thinking the seller is a non-entity in a short sale.

Great Post.  Chris # 3, hit it on the head. The real key is the seller's agent understanding what to price the home at.  The Bank is not going to just accept "any price" and why take it off the market on a low ball offer.  It is waste of time and could lead to the home going to foreclosure.  We handle a short sale just like any other listing.  if the offer is a low ball, it is countered to make it reasonable.  In my experience a low ball offers will just bail as they will keep looking and find another home and offer on a bunch of homes hoping to "steal one".  I won't put in a low ball offer on any sale.  If I have a client that is ridiculous on an offer, I charge a $500 non=refundable retainer just to write the offer.  So far no takers and that is ok, life is too short to deal with dreamers.

Sometimes a low offer is not so bad if this stops the foreclosure process. It doesn't mean the bank will accept the offer, but it may be in the sellers best interest to take to offer anyway to help them avoid foreclosure.

Tni, you are so right!  I wrote a post about a selling agent who threatened to take me to DRE because we countered his ridiculous offer on a short sale!  He felt that I had an "attachment to the house" by refusing to accept the offer and "let the bank decide".

Right on the money Tni! Definite re-blog :) The seller is still our ultimate fiduciary duty; getting the house sold responsibly at a fair price and quickly to avoid further damage to their credit and minimal tax consequences. Then there is another side of the story.. I just read an article where BofA thinks the proper thing to do with their short sales is to list and sell them at MARKET VALUE. They 'claim' that this is for the benefit of homeowners, to keep the value of homes high. I don't know of one single buyer who would see the logic in that- distress sales, especially short sales, need to have a price benefit for the buyer; #1 to compensate for the fact that it will take half of forever (in the case of said bank for sure) ore even NEVER, to get a response, that they may get countered higher than they are willing or able to pay, that once the offer is accepted and they are happily in escrow and looking to close in a few days after completing paying for inspections and appraisals, that the lender just may go ahead and foreclose on the house right out from under them (again, a 'norm' for said bank) . ... but that's anothe blog post.. LOL Thanks for the great information we can share with buyers that may be a little bit off target with their idea of values of short sales and what they can buy them for based on what they hear by those that don't know the 'real' story.

If the seller mattered, why is the bank in charge of approval? The bank looks at numbers and nothing else.

I maintain that a SS agent who supports his/her SS offer to the seller and the bank has the same opportunity as someone who offers a higher price. Getting a SS offer accepted by the seller is the first step and if the bank rejects the offer with a counter, you'll know the range of the strike price. Now, with all the information, will the SS buyer justify the difference or negotiate with the bank? The faster you submit an offer, the quicker you'll know the strike price range and the quicker to close.

This is a great blog!!! Makes so much sense, yet many people miss this logic and think that the owners have no say so. Unfortunately, many still think we're in a market where they can dictate what the prices/value are. Thanks for the post.

Tni

This was an excellent read, and one that I believe any buyer considering a short sale should read. It's easy for buyers to have their own perspective, but in these situations there are others to consider, especially the bank who will make the ultimate decision.

Jeff

Tni:

Good information for a prospective seller of a short sale property.  Thanks, this information will come in handy with a seller whose property I may soon list for a short sale.  I keep telling him he needs to contact a lawyer before we put the unit on the market. 

So very true!  Great post!  We won't get into the "comments" the buyers agent says when our sellers counter the "rediculous" offer!

Excellent points, and I would counter the "take any POS offer and submit to get things rolling" arguments with: what if the seller truly IS in distress as many are? The clock is ticking. If you waste four to eight months of their limited time with an obviously lowball offer, and then the buyer walks in the face of a reasonable counter, there may not be time for a do-over.

An experienced short sale agent knows the bank wants to approximate the price that the property would sell for if not a short - and will be hard to deal with if the is not happenng.

Tri, you spelled it out in terms that any buyer or seller could understand, so well written I had to reblog it for my readers to enjoy too, thanks!

Good morning Tni, good advice as always and timely, had this conversation with a client just yesterday and told her I would do a little research for her.

Will reblog this along for my Heights clients to utilize

Greetings from Innerloop Houston Texas

Linda Jamail Marshall,Broker,ABR,QSC,RECS,ACRE

713-523-4600 info@LindaMarshallRealtors.com

Tni congratulation! This is a great post! all of us working with distressed buyers and sellers in today's market have had the same conversation with buyers who are trying to bargain a short sale. What buyers don't know is that the banks when evaluating their offersare expecting the short to sell at market value. Thanks for sharing!

Judi - It is easy.  But they are very much a part of the process.  If they don't sign your offer it will not be presented to the bank -- that simple.

Judy - You know if their is a tight time deadline that is one thing.  However, most of my short sale sellers are contacting me well in advance now.  In some situations, I am even able to close short sales without a missed payment.  Why waste time with a low offer when we could get a better one if we waited two more weeks?  Experience tells me to bring a reasonable offer and the process will be quicker for the seller.

Allen - Some short sale sellers do not care.  They are simply overwhelmed.  But many do.  Short sale buyers should not expect that they don't care, or that their agent doesn't fully understand the process.

Bill - It does.

Terry - Congrats on the approval -- glad it helped.

Robert - Nine times out of ten I know what the bank will accept.  I know that from experience.  You do occasionally get a home without any comps and then you have to use your best estimate.  In that case, your approach could be appropriate and I would explain that to the seller.  However, in most cases I know the comps and pretty much know what the bank will accept.  My job is to get an offer the bank will accept so that the seller's short sale does not turn into a marathon if that can be avoided.  That can make the difference between a 4 month short sale and a 10 month short sale.  Big difference.

Brad - Yes, they do feel that way for some reason.

Ric - Yes, that is the thing about low ball short sale buyers I've seen as well.  Many times they bail, because in a month they don't think it is a steal anymore anyway.  I can't fix that point of view and approach but I can try to protect my seller from it so that they can reach their goal of a quick and successful short sale. 

Linda - It does depend on the timing I'll give you that.  But a week or two more to get a decent offer up front is time well spent.  Especially since banks will often limit how many extensions they will give.  Why beg for an extension for an offer you know is not likely to fly?  You are wasting everyone's time with that.  

Wendy - How ridiculous.  I've had similar type reactions (although not that far) from buyer's agents that feel they have a "right" to submit their crappy offer directly to the bank on a short sale.  Right.  Go do some reading and get back to me please.  The seller still owns the property.  If it goes to foreclosure try submitting that offer when it is an REO and see how far you get.  LOL.

Debbie - Thanks for the re-blog!  I agree there is a definite short sale value that you have to give buyers because they do have to wait for the approval and the price has to stand the test of time.  When I price a short sale I consider comps, competition, and what I think prices will look like in 3 months.  But, I know the bank will only consider the comps.  So it is an art, but not very difficult.  When buyers low ball a short sale price, many times it just shows that they shouldn't be shopping for short sales.  Go bargain an REO.  Oh that's right... that's hard.  Ok now add a two month wait, an investor who has to sign off on a huge loss, a servicer that orders $20 BPOs, and a seller with a huge tax bill.  That's a short sale.

#51 - The seller does matter if you want to buy a short sale.

Kimo - When prices were falling rapidly and no one knew where they stood I would say that approach could be valid.  My market is pretty solid with multiple offers and plenty of comps.  There is a range for sure, but I don't need to submit an offer 40% below comps to figure out where the comps are at.  I can look them up.

Demarco & Marisa - If only buyers could!  The only thing you can do as a buyer is to not buy if you don't like the prices.  And, of course you could lose some opportunities doing that.  The banks are in total control of the real estate market right now, like it or not.

Hi Jeff - Absolutely.  Glad you enjoyed the post.

Evelyn - Great advice.  He needs to get the proper legal and tax advice before listing.

Woody - I don't know what it is.  If you have to promise someone an unrealistic deal to get them to write an offer it is probably your clue that you are dealing with an unrealistic buyer and need to move on.

Linda - Bingo.  Why go to the trouble of carefully packing a moving truck that has no engine?  What is the point?  And I find that after two months of waiting the low ball short sale buyer thinks that the bank is truly "considering" their offer when they are truly just processing the file and haven't even glanced at the offer yet.  As time goes on those buyers begin to overestimate their chance of success.  Even if they get a small counter at that point they often walk because they really started to believe the bank would take it just because of all that time.  I don't play that game if I can avoid it.

Jim - Exactly.  And our clients come to use for experience and expertise.

Hi Steve - Glad you liked it and could relate!  Thanks for the re-blog!

Linda - Glad you liked the post.  Thanks for the re-blog!

Hi Mayra - Thanks for the call.  I appreciate it.  We can keep telling them - hopefully somewhere down the line they believe it.

Yes, and as a REALTOR®, I will respect my clients right to price his home. Even if it is a short sale.

Hi Tni,  Excellent post.  I get so many buyer agents thinking the seller should accept any lowball offer.  Your post does a great job addressing this issue.

There is so much confusion surrounding short sales for the public. I love seeing posts like this that help clear that up. Thank you for your contribution!

Very nice.  Couldn't have said it better myself.  I'm going to tweet this because it is so informative for potential short sale buyers to have the right mindset.  Thank you!

Great blog post, Tni. So nicely done. Please let me know if you get any sellers that need short sale help in the Los Angeles area. :)

If we have a Buyer that insists on a low offer, we find out what their real bottom line is and we prepare them that the bank will very likely come back with a higher counter offer.

They often want to take the risk.  As long as they are not stuck on their low number, we'll let it ride.  Surprising is that every once in a while...the Buyer wins with the lower offer.  Joy

Great post addressing this topic when it comes to short sales, especially #1.

Great post.  So often buyers and even agents unfortunately don't understand short sales and don't even realize that the seller is still the owner of record and has a say and has to accept the contract.  These are great and true reasons why the purchase price does matter. -Kasey

If it is their home they probably will not have a tax forgiveness problem or tax liability through this year.

I suspect that most sellers just want to get an offer in to the bank.

I also KNOW that some agents themselves put "low-ball" list prices on their listings just to create activity and attract multiple bids. That sort of activity makes us all look bad with the public.