You know what though? I just was talking to our broker and the office has handled three short sales within this last month. He said they heard back within a three days! But, this is Cape Cod. I suppose it varies from place to place.

I agree with Mark (the first real estate agent that responded to your post), originally the first short sales I did during this down trend was in 2006, they where handled pretty fast I could get a repsonse in a few weeks. I m handling one now that is fast approaching the 3 month mark with no repsonse from the bank!
In my experience your offer price sounds very fair, It really all comes down to market conditions (prices in your area) and the sellers agent providing a very good case as to why the bank should be taking your offer. Just be prepared for a very long wait to find out. Good Luck!
Leanne Smith

That's interesting that they preferred to let it go to foreclosure, rather than the less expensive short sale. Altho the foreclosure expenses are on the seller, not the lender! And the seller's credit is screwed anyway, whether a short sale OR a foreclosure. Good info!

Does anyone know if there was a BPO done and if so, what was it? There's your bottom line.

Eric - Unfortunately Short Sales can be very tricky & time consuming. There are a lot of factors that go into determining if a potential short sale will be accepted by the lender (or lenders). The process typically involves the current seller proving a financial need for the short sale and quite a bit of documentation. The lender will usually assign a negotiator to work out the potential short sale. Be prepared this process can be extremely time consuming and be prepared to wait. You could go 30 to 60 days or more after submitting an offer without getting a response from the bank(s). Talk to the agent you are working with and get clear on where they and the bank are at in their communication process. If the bank set the market price you might be a step ahead of the process. Good luck - be patient - and be persistent.
Mark Gracy
mark@gracyteam.com
(office) 978-984-3107
(direct) 978-861-4016 tel & fax http://www.GracyTeam.com
Keller Williams Realty

Hello again Eric

I have to disagree with K. Johnson on two points. First, I have listed and sold several short sale properties with good results for both buyer and seller. The lender or bank holding the mortgage stands to benefit by improving their net when compared to what the net would be in a forclosure sale. In a short sale the bank avoids all the legal expenses involved with a forclosure, accrued taxes during their period of ownership and reducing the length of time that they carry a non-performing asset. Banks make no money when they have a few hundred thousand dollars tied up in REO property. The bank would much rather loan that money out and earn interest on it. Bottom line is the bank IS MOTIVATED to accept a short sale.

The second point was that a buyer will get the property for less when bought as a forclosure. Remember the whole issue of the net to the lender. The bank will not sell a property for less than a certain percentage of market value as determined by their appraisal. Period. Plus a forclosure sale usually involves a bid period where all offers are collected and then submitted as a group. The bank then reviews all offers and selects the offer that brings the highest net to the bank. If none of the offers are acceptable the property goes back on the market. The downside for you is that you no longer have the benefit of a one on one negotiation situation with the banks negotiator. Your offer could be $100 less than a competing offer and you would lose the house. The key to a successfull short sale is to work with a REALTOR who has a record of success in short sale transactions. Good luck with it!

Short sales rarely end in an actual sale (in my experience in CA). It tends to be a waste of time and very frustrating. If the property becomes bank owned (REO), the buyer often gets the house for less than the short sale price. Patience is the key factor here. If this is really the home you want, continue with the short sale and if the bank does not approve the offer, keep a close eye on the property so that you can be ready to make an offer when it is listed as an REO.

Just curious why did you offer more than asking price? Ultimately the asking price is the price that the bank is willing to take.
You have nothing to do with the outstanding mortgage. You do not know if the people took out second or third mortgage.
Your offer should be based on the recent sales of similar properties in the area.

Eric,

It sounds like a reasonable offer, but LUCIEN is ultimately correct.....the bank will decide if it is a good offer.

Hi Eric
Whether $181,900 is a good offer depends on the current market value of the home and has little to do with the amount owed. In many cases the lender holding the current mortgage will accept an offer that will produce a net to them of 90% or less of the appraised value. The lender may also refuse to pay certain fees such as surveys or transaction fees as a matter of policy even though their minimum net is achieved. The best way to determine what to offer is to have your REALTOR pull some comparable sales to help you estimate the current market value of the home and work from there. Once you submit your offer the lender will order an appraisal or BPO ( brokers price opinion) to establish the market value. If the offer you submit is rejected the mortgage company will often state what they need to net to satisfy their investor. You can then resubmit an offer that meets their needs or move on to the next house.