Mnlakeplace,

Your question takes for granted that the bank (like sellers) has emotions and/or a bottom line. The reality is that nobody knows what the formula is that the bank uses (except the bank) and why they choose to accept some offers and reject others. Ultimately they are working with algorithims, balance sheets, and other complicated financial instruments to determine whether or not an offer is acceptable at that given time. While it makes the most sense to us that they sell it at the highest possible price in the shortest amount of time - often this doesn't play into their formulas.

You also assume that the bank has the benefit of foresight and knows what the property will sell for in the future. Right or wrong they may assume that they can sell it for more if they control the entire transaction, but the reality is that don't know what it will sell for - no more than you or I do.

Cameron Piper

My guess it wasn't submitted properly. Or it was to short.

Thanks for the clarity, Scott. I love this forum for just that purpose. Follow up question, what if there is no PMI on the loan? What's the bank's incentive then not to sell during short sale or to decide on a list price that's ridiculously out of range of the real market? It seems like they are ignoring their own BPOs. Any ideas?

The main reason is money, in a short sale they can only lose money. When they foreclose, and the borrower has private mortgage insurance the bank can recoup some or all of the lossses. In a short sale they are wiping out money with virtually no chance to recover it. As well as if the borrower had a 80/20 loan and has a second mortgage or equity line, the 2nd mortgage compnay will get zero in a short sale in most cases and why woul dthey want to agree to it. The price they buy it back at auction is a percentage of what the origional first mortgage was. They need to complete the auction to wipe out any liens or other mrotgages so they can sell it on the open market. this is wherethe pmi compnay will cover the difference between what they sell for and what was owed.