I actually had two clients interested in one of her listings, but I advised my clients not to make an offer because her policy was to not take the listing off of active status--just submit it to the bank without client acceptance. That type of policy would at best put my clients into the type of situation Heaven is complaining of--multiple offers.
In normal sale situations the seller needs a competing offer for the escalation clause to kick in. The bank doesn't need that to require more money to approve the sale. They can literally do whatever they want, and they don't care.
I know of one SS now with 4 full price offers that the bank is looking at. Why at least one of them didn't go over full price, makes no sense to me. I agree with Ashley (Hi Ashley!)...give it your best shot. That's all you can do. I wouldn't do an escalator though, as banks don't always know what to do with those. Give it your highest and best offer, given what you've said in the question.
So to answer your question--It sure looks like it.
More important than anything said here up until now is "what is the property worth?". North Seattle buyers have a tendency to overbid in the "bargain" frenzy.
1) How much is it worth
2) How much do you want it?
I recently evaluated a "soon to be" bank owned for a client, and we set our max price now without regard to what the bank will be asking for it and/or what other buyers may be willing to pay.
3rd quarter North Seattle short sales sold for $2 more per square foot than "regular" property sales, and bank-owned property sold for $5 more. South Seattle bank-owned properties sold for almost $50 less per square foot...to give you a point of reference. I haven't posted all the graphs yet...but will by Monday.
1. Short sales are not the big bargain they were even 6 months ago. Lienholders are trying to get near or ABOVE retail for these things.
2. Partially due to the tax credit deadline, many of my buyers (I can't speak for everyone of course) are AVOIDING short sales. There's so much inventory they don't really need to deal with the hassle in order to get a good price on something.
3. Kary and Jennifer both mentioned bank-owned. I agree with their comments and see REO as the next generation of "value" properties. Short sales are just not worth it in many cases.
4. Banks are shooting themselves in the foot by following outdated procedures for processing short sales and/or having unrealistic expectations of market value. Two examples (of many) (1) I have a short sale listed that I've sold 10 times in the last year and a half. Each time, the buyer gets tired of waiting for the lienholder and walks. Each successive offer is lower than the last. Had the bank accepted the first offer we got over a year ago, they'd have had $1.25M. Now they'll be lucky to get $800k. (2) I've got another one in which the lender's appraiser inflated the value to $200k more than the house could possibly sell at. The market value offers i have in hand have all been rejected, meaning the house is going to sit there decomposing for 6 months until it becomes a REO, and then it will end up selling for less than any of the offers we have right now. Where is the regulatory oversight on this?
BONUS QUESTION FOR AGENTS: You have 3 seconds to think of your answer. Ok, here goes: "Which is the WORST lienholder to deal with?" (Hint--It starts with a "C" and was recently bought out by a bank which starts with a "B.") Actually--This is a great litmus test for people who want to know if their agent has short sale experience. Anyone who's done a short sale will probably know this.
But this case is much like any property with 8 offers...short sale or not. So the advice here is much the same as it would be if this were not a short sale.
Not only do different banks have different protocols in regrads to reviewing and accepting offers, but EVERYTHING, even your signed agreement with the sellers, is subject to leinholder approval. Short sales and foreclosures can be the way to go if you're willing to wait it out, but you may want your agent to try searching for homes that are "approved short sales" or "bank/corporate owned" or just simply a regular old fashioned sale between buyer and seller. Nothing gets me more than when a client tells me they want a foreclosure or SS because they have heard its the best way to get a deal. That can be true, but not neccessarily. And the truth is, it sounds like you're tired of looking and just want a GOOD DEAL, no matter what it is, right?
Hope this helps,
I would disagree with Keith in that the seller can effectively accept multiple offers, subject to the bank's final say. But I am a bit surprised that they're doing that. The most common practice from what I can tell tends to be to only submit one offer, as noted by Grace. I had one agent tell me once that she submitted three offers and nothing was happening because the bank wanted to first know which offer to review first!
I think you may have missed one comment though. Short sales are low probability transactions. Even if your offer was the only offer, there's nothing to say that the bank would accept it. In King County alone there are over 1,100 SFR short sale properties with an accepted offer, but only about 120 short sale properties closed in September (numbers from NWMLS sources, but not compiled or guaranteed by the NWMLS.) That isn't because the banks are ramping up. It's because a lot simply never close.
If you're primarily looking for a bargain, I would suggest bank owned properties, where the bank has already foreclosed and put the house on the market. Most of those are at least cosmetic fixers, but if you can handle that, you might get an even better buy than a short sale. You will, however, have more need to have an attorney review the bank documents. Some bank's documents are so poorly drawn I've even advised a client to walk from the property rather than to deal with them. The link is something I wrote back in August about short sales--it's entitled: "Are You Feeling Lucky?"
I think a lot of people don't realize how competitive a short sale can be. A lot of buyers are getting beat up trying to chase a bargain. It's reminiscent of the competition we had several years ago where good homes were getting multiple offers. I have seen many of my clients give up on chasing short sales for this very reason.
Best of luck.
the truth is that the seller cannot accept all 8 offers. The seller can only accept one offer. There can be back up offers...if the accepted offer backs out.
So if you really want this property, you need to have your Realtor work for you. They need to call the listing agent and do the best they can to find out what the seller needs. Some Realtors just fax in offers, never contact the listing side to see what the seller wants, needs, or is looking for in an offer.
Here are a few ideas:
1. If it's a short sale seller is in trouble financially. The seller's role, as owner, is to select the best offer because if they pick an offer that eventually backs out, that could lead to foreclosure. Is the seller concerned about foreclosure?
2. A short sale is a process. The first step is to submit a short sale package, including financial information, a hardship letter explaining why the owner can no longer make the mortgage payments. Usually approval of a short sale requires weeks or months because the case manager is working with perhaps 200-300 cases, so they just work on the first case that comes up. Until the lender approves the short sale in writing there is no sale.
3. In most cases there are two lienholders, the first, or primary mortgage, and the second, which could be a Home Equity Line of Credit. BOTH need to approve of the short sale, which is a loss to their investors. We are seeing cases where the first mortgage agrees, but the second, which is smaller, wants more money than they are being offered.
This means that if this short sale is just starting:
1. it may take months to get an approval
2. The actual sale price might be different, if in fact the second demands more money.
3. You need to know the status, if it's approved, etc. That is your REaltors' job
Lastly, because short sales are due to financial problems.you might want to find out where and when the sellers are moving. Depending upon the situation they might be totally broke and need first and last month's rent to get an apartment., The lender will not let the seller have any money from the sale show on the HUD 1.
You'll need to be very careful about how you ask, but it might be that if you were willing to make sure that they had enough money for first and last month's rent (that means cash paid outside of the transaction), they would accept your offer. Make sure to adhere to all local laws, talk with your Realtor.
It may also be that they would like to rent back from the new owner after escrow closes so they can have a smooth transition to their new home, so talk with your Realtor about possession and occupancy.
After reading throught the posts I have a few comments. First of all, if you really want this house and "can" be more competetive in your offer, take Ardell and Ashley's advice and contact your agent. While you may be unhappy with his effort, he is still in the best position right now to help you. Your agent is your voice and he should be able to communicate with the other agent in regards to strength of offer if nothing else.
Secondly, you "can" get out of this contract but contacting the listing agent and trying to resubmit an offer would not be a wise thing to do for multiple reasons. (most have been mentioned)
If you pull out of this deal or just don't get it you definitely should have your own agent for future offers on other properties. (It sounds like that is the direction you are heading but I just wanted to make sure you were not planning to contact listing agents on short sales directly). While it can be done it is not advisable and as was said earlier, the banks may not pay a full commission to a dual agent which could ultimately hurt your chance of getting the home.
Working with friends and family can be hard. Recently my brother in law (in California) had been searching for a home for about 7 months. He had written over 40 offers on bank owned and short sales with his friend who was basically part time and inexperienced. He finally got accepted on a property but then it turned out he couldn't afford it because the taxes were way too high. (melaruse for our California contributors). I was down there in August, gave him some tough advice but ultimately he got a new agent and picked up his keys on Monday!! And his wife had my neice yesterday!
This is a great time to buy but you need an agent who is experienced and motivated especially if you are going after short sales. Maybe you can be honest with your friend and get him working harder for you? If not, move on.
I would be happy to discuss my experience with you if you are interested as I am sure plenty of contributors on here would. Just make sure you feel comfortable with whomever you choose, this is more than likely the biggest financial decision of your life up to this point. It needs to be treated that way.
In the early days of short sales here in California (and we are currently the "home" of short sales), listing agents would submit multiple offers to the banks for review, but we all quickly learned was that sending more than one (1) or the strongest offer to a bank negotiator was complete and utter folly. The negotiation process with some banks is so stringent that submitting 8 offers (as may be the case this time) is likely to create unnecessary delays since the negotiators are not interested in looking at 3 equal offers and 5 weak offers. In fact, what normally happens is that the weaker offers are ignored immediately and the strongest offer is the only one reviewed. Several negotiators with whom I've talked have actually told me that they expect the seller or listing agent to be responsible and NOT send a whole handful of offers for review. It's certainly okay to keep several offers "in the wings" in the event the first and highest offer drops out, but sending a bunch is unnecessary paperwork at least to the lenders here in California.
Unfortunately, as to your question about resubmitting your offer through the listing agent, it would not be acceptable. Your current Realtor is the "procuring cause" in this transaction and even if you were to submit an offer through the listing agent, your current agent would be entitled to the commission on the sale, so there is no advantage to the listing agent to work with you now that you have made it known that you have an agent.
While I can certainly understand your frustration in trying to find a home, I am certain that the perfect home is out there waiting for you and you'll find it soon. Work closely with your agent to gauge the market for the home and to offer the highest and best price for the property next time. Good luck!!
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
An agent is really now allowed to favor an offer on his listing over other agent's offers. In fact many will bend over backward to make sure that their offer is not treated better. Also, often in a short sale the bank won't pay one agent for both sides, so that could hurt you.
You know what you need to do ASAP. Cal your agent.
I would not say that if I didn't think it was the best advice (others may disagree). In fact I just helped a young man get a short sale who posed a question on Trulia. But in his case his agent refused to show the property or write the offer...3 times. That is not the case here. You just need to get your agent to make a better offer, because you are feeling like you did not give it your best shot.'
If 7 other people want this house, and are more qualified or can offer higher than you, there is really nothing any of the agents can do about that. You can get a new agent if this doesn't work out. But I'm 99% sure that you can't rescind this offer and bring in a different agent, and the result will not likely be different if you do.
I'll be interested to see the other opinions on your latest question.
You must be a patient person if you're going after a short-sale. In some ways you also need to be lucky. The bank is the true decision maker unlike a sale where the seller's lein liabilities are less than the agreed sale price. And like you've heard from my associates, the normal rules really don't apply since the bank can do just about anything it wants. More than just how many and how much the other offers are, just the type of offer (i.e., cash vs financed) makes a big difference. In the end the lender wants to reduce its loss while finding a solid buyer. Than can sometimes mean that the highest bid doesn't necessarily prevail. As long as you're not a first time homebuyer counting on the $8K tax credit you must remain patient. Statistically, short-sales can take upwards of 16 weeks to complete.
Once we are in mutual acceptance however, we change the listing to "Pending Backup Requested" and will allow unsigned backup offers, but do not execute them or send to the sellers lender unless the first buyer falls out. This is assuring to any potential buyer that if their offer is mutally accepted, that they will have a real shot at getting the home, versus a blind auction when an agent shotguns a bunch of offers to the bank.
Having a short sale specialist who works with sellers can be very valuable to have as your buyers agent when you are considering purchasing a short sale. This agent will know which questions to ask the listing agent to ensure you are not entering a blind auction and if the deal is viable to get to a closing table.
Basically, we're still debating whether to revise our current offer and submit a full price offer. What do you guys think?
In the BPOs the banks come up with, I had an experience earlier this year where the bank's BPO was incredibly inflated compared to very recent sales of nearly identical houses in the same development. My sale price was actually higher than all those comps. Fortunately though the bank was working off of some sort of a percentage. Reasonably close to the BPO was good enough.
Looks like we're stuck with our agent if we wish to continue pursuing this house. :(
I guess the positive side of not having our offer approved by the bank is that we can move on to other listings with a NEW agent. In case we need a new agent, are there any short sale specialists reading this forum?
Part of the reason why we've been looking for 2 years is that our agent is a friend of ours. I don't want to say that he's lazy but he pretty much expects us to do our own research--we find the listings we like to see on Redfin and then he just unlocks the doors for us.
Anyhow, I'm wondering if it's possible to part ways with our agent and withdraw our current offer on this short sale. We would then contact the listing agent of the short sale to see if she'd be willing to serve as a dual agent and help us submit a higher offer that will hopefully be strong enough to win out. Given that she would be in contact with the negotiator during this process, she would certainly serve as a strong advocate on our behalf right? Of course, this would all depend on her not already representing another buyer and also having the Seller's consent.
Given that we've waited for 2 years for this house, we really hate to let it slip away and I can't think of a better alternative to our current situation :(