Home Buying in 22042>Question Details

Chris, Home Buyer in Arlington, VA

With an approved short sale, can I ask for money back during a bid?

Asked by Chris, Arlington, VA Sun Oct 5, 2008

I found a great approved short sale, but I believe it is overpriced a bit. Would it be OK to ask for money back during the bid. Who would pay for that (seller vs. bank)? Is there a specific stipulation that I need to know about?

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I have helped many buyers that saw ads like this with approved short sale status. Most of the time its approved at the price listed. Having to reduce the price could have you start all over again with the bank. The sellers will not be able to cover the money back question as most sellers in this position do not have the money to do so. The bank may reduce the price yet only if you the sales comps are there to support it.
0 votes Thank Flag Link Sun Dec 20, 2009
You can ask for whatever you want with a short sale. However the bottom line is the "net" to the bank. They look at all offers and determine whether the sales price, the concessions, the commissions to be paid, all the transfer taxes and any other costs associated with the deal and decide whether it fits within the "net' they have determined they need.

Beware of the words "approved" short sale. Until your offer is signed by the bank nothing is approved and those words can be very misleading. They might have agreed to a price based on a BPO or an appraisal but until they sign an actual offer nothing is "approved."
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0 votes Thank Flag Link Mon Oct 6, 2008
Hello Chris. In a short sale, any seller concessions will have to be paid for by the bank. The short sale approval is premised on the seller not having any money to give to the bank. That's why it's a short sale. If the seller has money to give, the bank comes first. Thus, if you write up an offer asking for concessions (e..g., closing cost credit), the seller can accept the offer, but it's meaningless unless the lender approves it because the whole contract is contingent upon the lender's approval.

In your case, it sounds like the lender may have approved a prior offer for the current asking price but the prior offer was withdrawn. Lenders don't pre-approve short sales. They'll only make a decision when there's an offer on the table. Thus, if the listing agent says, it's pre-approved, it really only means that the bank approved an prior offer, but escrow did not close for whatever reason.

I am not clear on whether you plan on making a full price offer and ask for a credit to make up for the fact that the property is overpriced (in your opinion) or are you planning on making an offer for less than the pre-approved sale price? In the end, it's really a matter of semantics. The lender cares about the bottom line. If your offer yields less net proceeds than what they have already approved, the prior approval is really irrelevant. Theoretically, any prior approval is not a guarantee that a subsequent offer for the same price will be approved by the bank, but it's a good indicator that they would. However, the bank is not obligated to approve the new offer.

I think you'd have a better chance at getting the bank to approve a short sale for a lower price than a short sale offer that asks for a credit at the close of escrow. That's just my opinion based on my experience with short sales. Good luck to you.
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0 votes Thank Flag Link Sun Oct 5, 2008
Ute Ferdig -…, Real Estate Pro in New Castle, DE
No disrespect to Bill intended but ... many of the short sales in this area are getting seller concessions. Of course, it depends on what the bank is willing to do and, more importantly, if you're competing against other offers. You may believe it's overpriced, but the only way to know for sure is to have your agent run the comps against similar properties. Once you have the comps, you'll be in a better position to bargain with the bank. When the bank receives your offer, they'll have one or more local agents prepare a BPO (Broker Price Opinion) to determine the market value. If you're working with a savvy agent, their market analysis should be pretty close to the BPO value.
0 votes Thank Flag Link Sun Oct 5, 2008

Let's be practical....the seller is in a tough financial situation and cannot afford the property. Because of this, the owner is asking the bank to accept less than is rightfully owed to them to settle the loan agreement.

What you are requesting is for one of the two parties involved, the seller or the bank, to pay you money at closing. Either party would have to agree to this stipulation........It is highly doubtful that either party would agree.

You can always ask.......but don't expect too much.

Good luck,
The "Eckler Team"
0 votes Thank Flag Link Sun Oct 5, 2008
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