Cowchick1000, Home Buyer in Santa Clarita, CA

How often will a short sale become a bidding war if the back up offer is higher than the seller approved offer, but the bank hasn't approved it?

Asked by Cowchick1000, Santa Clarita, CA Sun Apr 17, 2011


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scott farmer, Agent, Scottsdale, AZ
Tue Apr 19, 2011
Your scenario does not create a bidding war. The bidding war is when the price is offered at usually well below market value and multiple buyers place bids on the property and the price gets driven up. Then the seller looks at the offers and picks one or all and multi-counters with highest and best. Then the best offer is signed by the seller and submitted to the bank. Sounds like the offer accepted by the seller went into the bank for short sale approval before you made your offer and any prudent listing agent would hold it in back up position if possible as many short sale buyers fall-out before the bank approves the first offer sent to them.
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John Arendsen, Agent, Leucadia, CA
Tue Apr 19, 2011
If it's a home you really want to purchase to live in for a long period then a little bidding war shouldn't be a deal stopper. But if you're a speculator and/or investor you may be wise to go to the next property as bidding up the property will only serve to dilute your potential return.
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Emily Knell, Agent, Huntington Beach, CA
Sun Apr 17, 2011
Bidding wars depend on the area that you're interested in. Not all short sales create a bidding war.

I can't stress it enough, that EVERY listing agent works differently with short sales.

There are still agents out there that are submitting EVERY offer that comes in to the bank---not right.
There are still agents who think that the absolute highest highest all cash offer is the best offer - not right

Back up offers: Technically the listing agent is supposed to hold all back up offers in no particular order, so if the first buyer backs out, they go to their pool of back up offers & choose the "best" one to submit, whether that back up offer was submitted yesterday or 2mos ago.

One part of my short sale logic is, I've done my investigations & I know what the comps are. I know what is too high an offer to submit to the bank because I know what the property will appraise for, for the buyer.

Case in point: A property was listed at $455K, the listing agent submitted multiple offers to the bank for upwards of $525K, she represented to the bank that the property was worth way way way more than it actually would EVER appraise & screwed up the whole thing. This was an agent with 30yrs in the general RE business. In the end the listing was canceled & she & the owner thought the bank just wanted to foreclose instead of work with them. Then I came along & set the bank straight, I sold it at fair market value for $460K to an FHA buyer.

Let me know if you need me to hook you up with an aggressive short sale agent who knows what they're doing.
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