Home Buying in 92683>Question Details

John, Home Buyer in 92683

I lost to a short sale but my counter offer was higher than the offer that had won. Why? The seller agent told me at the time of counter offer

Asked by John, 92683 Thu Mar 18, 2010

that my offer was not the highest but now the closing price from the winner buyer is lower than my offer! This is a short sale so cash offer should not be the issue. Did the seller agent get under the table cash for the lower offer? What course of action can I take or is there any? Can I file any complaints to whom? This is unethical and injustic!!!

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11
Hi John,

As the others have said, in a short sale it's not the agent's job per se to get the highest price....since the sellers do not get any proceeds. They certainly need to be honest and and pursue a good price for the short sale lenders.....but often there are other considerations. Often you will find that FHA buyers are over looked due to the length of time it takes to get FHA financing through the system. You will also see all-cash buyers given priority since they don't need an appraisal and can close very quickly when the approval comes back.

The buyer is important to the short sale lenders also, and they do consider these things when they give approval.

If financing is not your strength, then find other ways to impress upon the listing agent that you are the best bet. Sell your story....do you have family nearby? Is there a reason you want to be in that elementary school? Do you need a first floor bedroom for an ailing relative? Use your story to present a buyer that has motivation to conclude the transaction.....your agent can help you with this.

I'm so sorry this happened to you...I hope you are able to find another property that is even better.

Karen
3 votes Thank Flag Link Thu Mar 18, 2010
John, Christopher Suh's answer is well-framed and covers the most likely potential reasons the other offer was accepted. Most likely they felt that the other offer had a better chance of moving through the lender's system quickly (the seller's current mortgage lender(s)).

Your agent should be able to get a frank answer from the listing agent as I can see no reason for them to conceal it from you. All hope is not lost. If you really really want this home then I would "hang out" for a while. Many buyer's are often discouraged by the length of time a short sale can take and will abandon their offer.
3 votes Thank Flag Link Thu Mar 18, 2010
No, it's not unethical.

No, it's not an injustice.

The seller can take whichever offer it prefers. And very often they're looking for an offer that's likely to go through, even if it is somewhat lower than others. I know plenty of investors who do that. They want an assured sale.

Suppose you were selling a used car. Two people come to your door. One has a certified check for $8,000. The other wants to write you a check for $8,300, but asks you not to cash it for a couple of days until his paycheck clears. It's your decision, but plenty of people would accept the $8,000 certified check.

And who would you complain about? The seller? The seller's losing money either way. Maybe your offer would have taken a month to close. That's another month of non-payment of a mortgage. The other offer might have been able to close within days.

You're suggesting the seller's agent acted unethically and illegally. If you've got proof of that, start by contacting the agent's broker and explaining what happened. But the broker's going to ask for proof, or some evidence. The fact that the seller accepted a lower offer is neither proof nor evidence.
2 votes Thank Flag Link Thu Mar 18, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
The most likely answer is the listing agent is double ending the deal meaning he found a buyer and is representing both buyer and seller. I would bet your counter offer never made it to the lender and since the listing agent was controlling the deal, they all try to double end them. Anyone who knows anything about short sales knows this is becoming very common practice. Anyone saying this isn't true honestly doesn't know enough about short sales. I am not saying all listing agents doing short sales are doing this but I am saying the majority are.

Forget about it John and walk away. Nothing you can do but get mad. Short sales have become like prostitution and it is sickening.
1 vote Thank Flag Link Thu Mar 18, 2010
Hi John,
Sorry to hear what had happened to you. Did your agent speak with the listing agent as to the reason why they chose a lower offer?

There are many reasons as to why the seller may have chosen a different offer which on the top of my head I listed below real quickly.

1) Seller makes no money on Short Sales so they may have chosen a offer that best fits their situation (i.e. faster closing etc)
2) The other buyer may have all his finances in a row already or higher deposit or large sum of down payment which can move the funding process
3) Other buyer could have had no contingencies or just a few minor ones that won't delay the sale (did you have any contingencies that may have had the seller iffy about?)

Ultimately the seller chooses which buyer to go with, which than they submit it to the lender for approval. Again these are just a few things that may have steered the seller from choosing your offer. I'm sure other agents here will chime in.

Sorry again to hear what happened and if you have any questions please feel free to ask
Chris
chris@esimplerealty.com
Web Reference: http://www.chrissuh.com
1 vote Thank Flag Link Thu Mar 18, 2010
Pretty late to actually buy the house, but an explanation should be warranted. Cash offers are a factor as closing time(for sure in this area) is dramatically cut down.
0 votes Thank Flag Link Tue Apr 17, 2012
Hello John,

I'm sorry you lost on the house that you liked so much you are still hurting.

When making an offer, the price is not the onlly factor looked at. Sellers are not obligated to accept the highest price - they can choose whatever offer they like, based on what's important to them.

Cash is always preferred to the financed offer (unless the cash offer is so low it won't get approved).
It's much safer for the seller to choose a cash deal - in terms of its chances to close.
The quickness of closing is important.
How much money is put in escrow is important as well (the more the better).
The "no inspection" is better than "with inspection".
Doing inspection upfront, before the offer is accepted, is done also (so the buyer does not refuse to buy after the short sale is approved). If something happened to the property while it was selling - the buyer, whose offer was accepted could renegotiate the price (like roof leaked, AC broker etc).

If the bank required some money paid to the city (city liens) as a separate amount (or for real estate taxes) - the sold price would appear to be lower (because the buyer would need to pay both - the purchase price and the lien/tax money to whomever they were due)...

I could list more reasons, which does not change the current situation - because you really don't know what happened with the offers, and without knowing what happen, it's better to move on and find an even better house.

Wishing you best of luck,

Irina Karan
CDPE - Certified Distressed Property Expert
IrinaKaran@gmail.com
Beachfront Realty, Inc.
0 votes Thank Flag Link Tue Apr 17, 2012
One reason why the closing price could be lower because the appraisal came in lower.

Another reason could be that the buyer did pay CASH. Cash is king in real estate especially in short sales and REO sales.

The type of financing could be a factor. Some sellers will favor a conventional loan over a FHA loan even if the FHA loan has a higher $ amount.

Kawain Payne, Realtor
0 votes Thank Flag Link Tue Apr 17, 2012
A plausible reason is that there offer was the highest at the time it was submitted, then throughout the course of getting the sale approved, the buyer got their own appraisal & their lender's appraisal came in lower than what was approved & therefore the short selling bank had to come down in price.

There are a myriad of issues that can occur throughout the short sale process. There is not necessarily a case of injustice or one being unethical.

What do you mean "this is a short sale so a cash offer should not be the issue" ? Oftentimes a lower offer that is all Cash is considered better than an FHA offer that is higher.

If I can give you any advice today, it is to make sure that when you submit another offer on a short sale, make darn sure YOU are the primary buyer & ONLY your offer is being submitted to the bank. Cross out the wording on the Short Sale addendum that states that the seller can submit multiple offers to the bank.

EmilyKnell1@yahoo.com
562-430-3053 cell
0 votes Thank Flag Link Thu Mar 18, 2010
You say the the agent told you that at the time of your counter offer, yours wasn't the highest . It may have been the truth at the time but someone came in with a lower offer but more down payment etc. Listing agents aren't trying to double end all their listings as others are saying here, I know I haven't and I know, who some of the agents are that are responding to you, won't turn down a buyer's offer on a property till they find the buyer themselves. When we get multiple offers we present them to the seller and explain the good and bad of each and it is up to the seller to decide. It is not an auction were the highest wins!
0 votes Thank Flag Link Thu Mar 18, 2010
Hi John,
Many things go into deciding who gets an accepted offer besides the price. I think most importantly who is the best qualified buyer. Who will have the easiest time getting a loan? Who is the least likely to fall out of escrow? For sure it is not just the Price! Keep at it with your agent, you will get one!
Connie Bramble
714-337-8718
0 votes Thank Flag Link Thu Mar 18, 2010
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