Home Buying in 95405>Question Details

NS, Home Buyer in Santa Rosa, CA

Our offer for a short sale got accepted by seller almost $100k lower than listing price. Can someone explain?

Asked by NS, Santa Rosa, CA Tue Jun 17, 2008

or let me know what are the next steps ? IS the bank likley to accept the offer? We really like the house but do not want to go beyond the price we have negotiated with seller. FYI, the house has no other offers and is on market since 100 days.

Help the community by answering this question:


There is a reason this property has been on the market for 100 days--it is NOT being shown because it is listed as a "Short-Sale". If you look at the numbers of "Short-Sales" and the actual % of them which close, it is VERY discouraging. More disturbing to me are folks tracking "in-escrow" properties and pointing to the "bloated" numbers as an indication of an improving marketplace--nothing could be further from the truth. The “Short-Sale” stacks up in the “Continue to Show” category as they take months to close or NEVER close. They can take months to negotiate, are presented by Realtor/Licensee's who don't KNOW what they are doing, are NOT willing to spend the time or money not only in the daily follow-up needed ONCE it gets into escrow but also in any marketing to draw attention to the property.
When we had "Debt forgiveness" as a concern, getting the biggest price for our seller was paramount. Now with the “Debt Forgiveness Act” which allows a home owner up to $2,000,000 in forgiven debt, price is NOT that big of a deal. So getting $100,000 off the list price might seem BIG for you but frankly the seller could sell for $250,000 under the list price--it is all CONTINGENT UPON LENDER APPROVAL!
Indicators of this market are all over. Our Tuesday Realtor marketing breakfast tours the East and West sides of Santa Rosa weekly. When we go West we have maybe 1 or 2 pages of listing to view. The Eastside will have 4-7 pages. Why? Westside properties are NOT even be marketed to the REAL ESTATE COMMUNITY let alone YOU the consumer! A friend publishes one of the local real estate for sale magazines--it is razor thin! Why? The REO or Post-Foreclosure agents know their product is going to be undercutting the market and fly out the door in multiple offer frenzy and the "Short-Sale" (pre-foreclosure) agent is NOT going to waste their money on marketing a property which has an 8% chance of closing.
I would continue to look at other properties and NOT get your sights set on buying this property. I keep seeing agents in our MLS saying "Short-Sale" approved but then they say, "Any brokerage fee will be split 50/50 between agents"--we'll if it is APPROVED then don't you KNOW the commission? Now here's the big conundrum--if you find an REO property you really like and you are a first timer with little or no down, be prepared to get beat out by investor's and other's with big bucks for a down payment.
In Sonoma County about 60% of our paltry 400 sales in May where either post or pre-foreclosed properties and new home builders Liquidating. NO ONE is moving up!! This is NOT a healthy market but opportunity does abound if you are savvy and have a Realtor/Licensee who knows their way around the battlefield!!
0 votes Thank Flag Link Sun Jun 22, 2008
The bank is not obligated to accept any offer on a short sale. They can either accept or reject the offer, counter at a higher price, or eventually let the house go to auction at a foreclosure sale. To the bank, it doesn't matter how long a short sale listing has been on the market, since they aren't the current "owners".

Banks can take months to respond to short sale offers, and often their response is simply a rejection of the offer. They don't always issue counter offers, even if the current offer is fairly close to what they're looking for.

The next steps for the bank would be to get a BPO (Broker Price Opinion) and an appraisal on the property, if they haven't done this already. This will give them an idea as to the current market value of the home, as well as how quickly homes are selling in this area. With this information in hand, the bank will then decide whether your offer is worth considering or not.

Good luck... and remember that short sales do require a lot of patience!
0 votes Thank Flag Link Wed Jun 18, 2008
Hey NS,

Unfortunately, short sales are not decided on by the Seller nor the Seller's Realtor. The Seller may be willing to accept your offer (why not, it's not their money they're losing at this point) but the bank may not. In my opinion, Short Sales are nothing more than a Bait and Switch in most cases. Most Short Sales that you see on MLS or other search engines are not approved by the Seller's Lender. This means the bank has not said they will accept the price the Seller and their Realtor have Listed the home for.

The banks are innundated with Short Sales these days from Sellers that can no longer afford their homes which translates to a rediculous delay in a response on an offer. The banks are getting better but in most cases, you may not here a true acceptance for weeks and then be prepared for a counter offer most likely. Please check with your Realtor but I do not reccomend that you pay for any inspections until a fully ratified contract is returned to you with the Seller's Lender's approval of your offer. In the meantime, keep looking at more homes in case something else comes up.

Best of luck!

Ken Schrier - Realtor
Kenneth Schrier Real Estate Group
CPS Property Advocates
Rohnert Park, Ca.
Web Reference: http://www.kenschrier.com
0 votes Thank Flag Link Tue Jun 17, 2008
What is the asking price? If it was $1M, the $100K difference may not be significant enough for the lender to disapprove.

And....what are the comps? If it was priced at $100K more than comparable properties, then the $100K difference just brings it down to where it should be.

How much does the seller owe on it?

If there is not other offer on the table after 100 days, the lender may be more inclined to negotiate the price, the terms, the commissions. For example, it the lender decides to accept your offer but wants to minimize its selling expenses, it may try to make up the difference by offering a lower commission to the agents representing the buyer and the seller.

Yes...as much as I hate providing an ambiguous answer, it is still "It depends..."
0 votes Thank Flag Link Tue Jun 17, 2008
the seller can accept(and does) any offer tendered, because MOST short sales
are preforclosures for the seller. the next big hurddle is the bank. if there is a 100k difference, my experience is that the bank will counter the offer, so there is lots of negotiating involved. doesn't mean
the bank will not come down, but remember, every dollar negotiated ,less than the mortgage owing, is money, out of the banks pocket. short sales are a wonderful bargain for the buyer, but you must be patient and also, enlist a realtor that is familair with the procedure. it can take 60-90 days to get to closing. GOOD LUCK ! nena o. bondarenko, Realtor
0 votes Thank Flag Link Tue Jun 17, 2008

While the seller might have accepted your offer, the bank has to approve it. If it seems too good to be true, it probably is. Being on the market for 100 days, in general, is not uncommon. Your issue is trying to determine what the seller's outstanding mortgages, and all unpaids are on the home. Since this is not a foreclosure, the bank's only objective at this point is getting an offer that can allow them to not lose money, or lose as little as possible.

Do you know that similar homes in the area have sold for an amount close to your offer? If so, then the bank may have to belly up to the bar and bite the bullet. If not, and your offer is quite different than the value of what other homes have sold for recently, then the bank is likely not going to approve your offer.

At this stage it doesn't matter what the seller agrees to, the bank is in control, and as Anibal said, the bank is going to take their sweet time in gettiing you an answer.

Good luck,

0 votes Thank Flag Link Tue Jun 17, 2008
The very first thing I will ask is:
Do you have a REALTOR representing you?
Either way it is a fun ride with short sale. Banks may take long time to approve the sale.
The next step is to wait for the bank approval.
Anibal Fragoso, REALTOR
0 votes Thank Flag Link Tue Jun 17, 2008
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