Katrina: One never knows how low the bank will go. If you love the property and fill it is a fair price, I'd say YES, accept the offer. Good luck.

The bank in unlikely to go under appraisal price given that your original offer was $175,000. Your cards are pretty much on the table and along with them your leverage. If your initial offer included concessions that have been eliminated, you may have a little wiggle room in the price. If you are looking for a reduction below the currently approved short sale price, you are going to have to go through the entire valuation process again and there is a chance that somebody else will put an offer in on the home or that the bank will still say no (30 days from now). I would suggest that you have you agent provide you with comparable listings and determine if you are comfortable paying the current offer.

All that being said...if you are happy with the house, move forward with the purchase. There will always be better deals out there and as long as you plan on living there for the long term you ought to be more concerned about finding the right home as opposed to the perfect deal.

For more information on Short Sales you can check out my webpage.

How did you come up with the initial offer you made? Seems like the bank is offering you a price $10k below what you initially offered so, provided that amount is consistent with the market values in your area as determined by your initial offer, why not accept? Make sure the $165k price is in writing and applies to your offer.

Here's the process I have experienced working with a large number of short sales. First the Seller's agent advertises the home, an offer comes in which is submitted to the bank along with the Sellers' financials. Once the bank approves the Sellers status as a short sale seller, the bank requests a broker price opinion which is done by an agent other than the Seller's agent. The bank uses that information to determine market value and then sends an approval letter to the Seller's agent. The approval letter is usually specific to the Buyer that submitted the offer and is generally valid for a specific timeframe. If there were multiple offers, some banks counter all offers and others take the highest and best submitted and work with that one first, then move on to the next and so on. Remember, in real estate, everything needs to be in writing to be valid, so make sure you see the approval letter before you take your next step.

Good luck with your purchase!!

I would ask how many offers are on the home. And ask your agent to give you an idea in comparables surrounding the home. Beause im my experience the lenders set a price and they take so long to get back to me if the price is off from the approval price. What I also see alot is by the time I get an approval the home is declined since the appraisal date. Do your homework before proceeding.

Sincerely,
Alejandro Peraza

What you should try to do is keep lowering the price based on some items the mortgage company knows about ,some they don't.
Take the appraisal then start deducting, deduct what? Deduct every cost the are going to have in order to foreclose. Such as Lawyer fees, eviction, prepare it for sale, cost to sell( ie 12 months on the market, how much interest could they have made on the money you are giving them). On repairs, I have a contractor come out and give me a written estimate add my pictures, then subtract that.

Once I have deducted every thing I offer them a price slightly higher than what it will cost them to foreclose. Its simple they are making more money by selling to me than foreclosing. Only one problem with this, twice the bank renegotiated the mortgage with the seller and dropped their rate to 5%. Good for them not for my buyer.

Just go ahead and make your offer. Banks will take the highest offer they receive, but you also need to be prudent. You should order an inspection, and you should get a copy of that appraisal. Assuming that there aren't any major issues you'll need to address, then take that price and adjust it by the percentage the median sales price declined for the past 3-6 months, and offer that price.

Thanks for the input. I am the buyer, and am working with an agent. But she has never worked with a short sale before. She seems to think the reduced price is a steal, but I am concerned because it is exactly the appraised value.

Again, I was just wondering if banks are willing to sell below the appraised value, or if they expect exactly what it's worth,

Thanks again.

I would consult your buyer's agent......were they not involved when you put in your initial bid?

katrina,
in my opinion, and this is without knowing the full extent of the property or your situation, I would say take it. I don't want. to pretend i have the crystal ball for the real estate market but I do feel that if they are willing to go lower than what you offered you should take advantage of that. sure maybe values will go down but lets face it as long as you hold onto this property for 2 to 4 years you will get a good return on the property.
Again this is only my opinion. I advice you to contact an educated real estate agent in your area that can better assess you market area.
best of luck and happy holidays.
Tyler