Home Buying in 34604>Question Details

Diana, Home Buyer in Tampa, FL

If listing says "may be insufficient to cover all encumberances/selling/closing costs and subject to 3rd party approval", what does that

Asked by Diana, Tampa, FL Thu Dec 30, 2010

mean exactly? If a home is listed as a short sale for $105K and says the price may be insufficient, does that mean the listing price is not really the true price? Does that mean the home really costs more than the advertised listed price? Can a buyer submit a lower price when it says that the listed price may be insufficent to pay all encumberances/selling/closing costs?

Help the community by answering this question:


Hi Diana,

Yes, short sale listing prices are ficticious. On a short sale, you should also not eliminate overpriced listings because again the asking price is "ficticious". In a few cases the price has been approved (and it normally will state this in the listing) so those properties can actually be bought at the asking price.

What happens is once the seller signs a contract and submits it to the lender(s), they will order an appraisal/Broker Price Opinion to determine the current market value. If the contract is not too far below market value the short sale will proceed, otherwise a counteroffer will usually be given. I've seen counteroffers above market value and the lender/PMI company will not budge on the price. The best deal you can get (if you're not an ALL CASH buyer) is on a bank owned property. You need an active agent to show you the REO the first day it comes on the market and submit your offer immediately because often the best deals go under contract the same day they are listed.

Hope this helps.

1 vote Thank Flag Link Sat Jan 1, 2011

It makes little sense, doesn't it? But yes they can on a Short-sale. The price you see was determined by the listing agent and the home owner, but not the 3rd party who is the Mortgage Holder (lender) who happens to be the be the entity that will have to take the loss. That is why less than 1 in 5 short-sales actually close.

Here is a blog I wrote that explains in more detail:

My advice....save yourself a headache and buy a foreclosure or a traditional sale.

Tony Vega
Charles Rutenberg Realty
1 vote Thank Flag Link Fri Dec 31, 2010
The listing is a short sale, which means that the asking price of $105K is less than the seller's current mortgage(s) on the property and any offer to purchase must be accepted by the the seller's lender. The listing price may not be what the lender (3rd party) will accept. They may accept an offer of less or require more. In a short sale the lender will obtain the fair market value for the property in it's current condition, deduct the closing expenses of the seller and determine if this is an amount they are willing to accept to release the lien on the property.
Hopefully, this answers your specific questions. Should you have any additional questions or would like to work with a Realtor with experience in helping buyers obtain a short sale property, please give me a call. Always glad to help!
Joanne Fisher
Short Sale and Foresclosure Resource
Graduate REALTOR University
RE/MAX Spirit
Direct (352) 346-4949
1 vote Thank Flag Link Thu Dec 30, 2010
Hello Diana,
It means that the asking price will not cover all the seller's expenses to pay off his mortgage and closing costs which defines a short sale. The lender is the final decision maker on accepting an offer. You can submit a lower price but I advise you to seek the advise of a real estate agent first as he can discuss recent comparable properties that have sold in that area to determine if your offer is reasonable.
I hope this is helpful to you.
Good luck!

Laura Feghali
Prudential Connecticut Realty
1 vote Thank Flag Link Thu Dec 30, 2010
Simply put, this is only legal verbage that you will also see in the contract if one is written, it says two things, first the price show is not an absolute value that will be accepted by the bank, which in short sales is a third party in the contract, but one that has power of decission and also power to dictate terms, and price of the home. Supposedly this home is being sold for less than the principle owed on the hiome. The listing price has no bearing or even binding to the third party as it is up to them to decide whether they wish to take the amount listed or any offered price. Third party can at anytime, even after hey have told the home owner that they would entertain the thought of a Short Sale, decide to foreclose on the home and refuse all or any offer submitted even ones that were at list price or even higher than list price. If they decide to accept the offered price they may do so with the notion of paying no closing costs and making it the responsibility of the buyer. As far as the listing price is concerned, it is a price that a diligent Agent has come up with through CMAs and through what ever knowledge as to what the principle still owed might be. The Bank who is in the third party seat has not nor will it ever say that the price listed was the price they were willing to accept. They will take all offers and send it to one of their underwriters to be evaluated and to determine if at that time the bank is willing to take that offer, or to foreclose on the property. Then if theoffer is accepted, the bank may then decide after the sale whetehr or not they will forgive the seller of the remainder of the principal that was owed or whether they wish to go after the remaining principal with the seller of the property. They have up to 5 years to go after the seller for monies still owed after the sale. They may forgive the remaining principle and if so they may and most likely will send the seller a 1099 for the difference of the sale and the principal owed. this would be like income to the seller and he would have to pay capital gains on the amount on the 1099. If the seller had lived in the home for 2 of the last 5 years, the seller may opt to take the exemption of the first $250,000 of this amount if single or up $500,000 of this amount if married and filing jointly.
0 votes Thank Flag Link Sun Jan 23, 2011
Thanks Steven for being a voice of reason among the hysterical answers to this question.
0 votes Thank Flag Link Sat Jan 1, 2011
THE short sale is a process of opportunity, send your offer if the property you like
the price and terms the bank's final response
0 votes Thank Flag Link Fri Dec 31, 2010

In most MLS listing and marketing- disclosure of the facts is required- 3rd party approval, etc. The nature of a short sale is that the sales price is shorter than the mortgage balance(s)
0 votes Thank Flag Link Thu Dec 30, 2010
Hi Diana,

In short, it means the property you're interested in is a short sale.

I'm not at my office right now, but please feel.free to send me a brief email to Josh@HernandoLuxuryHomes.com and I'll email you back with a link to an article I wrote for Realtor.com explaining the short sale process and what you should expect should you choose to move forward with this property.

Thanks so much for your inquiry and I look forward to hearing from you at your convenience!

Joshua Hanoud, PA
Tropic Shores Realty
Cell: 352-397-5182
0 votes Thank Flag Link Thu Dec 30, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer