If there are 3 offers on a short sale property, are the offers dealt with one at a time. Or, are all 3 offers presented at once and the bank

Asked by Geri, 91301 Tue May 25, 2010

negotiate with the highest offer? I was the first offer and made a low offer to help the sellers keep from forclosure. I will go up in price. But, a 3rd offer came in $25,000 over list price. The property is in Florida but the negotiater is in California.

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Daniel Magallon’s answer
Daniel Magal…, Agent, Dana Point, CA
Tue May 25, 2010
Every Bank has their own rules and I am sure their rules vary state to state. Some banks want to see all offers some banks want highest and best terms. Ultimately the seller/owner is the one who approves or accepts the offer which then goes to the bank for their negotiation. The bank usually has only one offer on the table they are "working" on at a time. Due to the length of time involved for a short sale the current buyer/offer may back out so hang in there. As of April 2010 most banks are on board with the Home Affordable Foreclosure Alternatives Program (HAFA) and are working short sale quicker.
0 votes
Harold Sharpe, Agent, LAKE HAVASU CITY, AZ
Thu May 27, 2010
HI Geri,
You stated you are doing the sellers a favor.
Do you know the sellers?
If so you can not buy the property.
Aside from what you read below ask your agent to ask the listing agent what is going on exactly.
all we can do is guess.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate License # 01312992
1 vote
Scott Godzyk, Agent, Manchester, NH
Tue Nov 16, 2010
Each bank has their own policy, some banks will only want 1 offer submitted at a time while other banks will want all offers submitted as they come in. You will need to ask the negotiator for the sellers bank how they want to handle this. This is one of teh first questions that should be asked before any offers come in.

Please see my blog for more info, advice and tips on getting a short sale approved
0 votes
Bandele Ogun…, Agent, Woodland Hills, CA
Tue May 25, 2010
Yep, the homeowner still owns the home, not the bank in a short-sale situation. So the homeowner and his/her agent selects the most viable offer to send to the bank for approval. What this means is that the homeowner is the only one that can legally ACCEPT an offer as he/she is the legal owner of the property. To accept an offer, the homeowner's agent (listing agent) will analyse the offeror's offered price, down-payment, deposit, credit scores, proof of funds (bank statements, 401K statements, CDs, etc), percentage of loan for the loan type (eg 80% loan for a conventional loan), then the listing agent will also analyse the property value to ensure that the offerred amounts will appraise (thus if an offerror overbid significantly, that offer may not be accepted if the listing agent feels it will not appraise); then the listing agent will interview the buyer's agents to determine which buyer will stick with the sometimes lengthy short-sale process and not flake out. Based on all of the above, the owner in consultation with his/her listing agent will select the most viable offer to officially accept and then send that accepted offer to the bank(s) for approval of the shortsale.
Thus to answer your question specifically, the owner (in consultation with his/her listing agent), not the bank negotiator selects the offer.
0 votes
Emily Knell, Agent, Huntington Beach, CA
Tue May 25, 2010
It doesn't matter what the banks' "rules" are with regards to offers. It's up to the experience of the listing agent. The listing agent doesn't have a listing contract with the bank, their fiduciary duty is not to the bank but the owner.

Personally, I work with 1 offer at a time and only submit 1 offer to the bank. I know people are out there overbidding for properties just to be in first position,,but ultimately the home has to appraise for the buyers' loan (if it's not a cash offer) The bank must accept a fair market value offer.

I suggest you bake some cookies for the listing agent and work with a Realtor that prepares a BPO for the listing agent to show that your offer is good and at a # that the bank will like, and that the home will appraise for, for you loan....that you're serious,,,loyal,,,and willing to stick it out through what could be a lengthy short sale process,,,up to 120days if necessary.

You can't lowball in this market UNLESS you can prove that the original list price of the property was out of whack.


P.S. Sign an addendum with the listing agent stating that ONLY your offer is submitted to the bank!
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Emelia Sanch…, , Ontario, CA
Tue May 25, 2010

The seller is still the homeowner and the bank needs to approve the short sale. It is up to the homeowner and their realtor to pick the offer that nets the most to the bank within what they feel the home will appraise. Therefore even though they have an offer that is 25K more than listing price, if the buyer does not have the cash to close the gap between appraisal and what they offered it may not really be that great of an offer. Whenever you make an offer make sure your agent checks the comparables to see if you are offering at a minimum market value. Always Always write up your best and final offer so that you do not go through I could have offered more money scenario you are not always given the opportunity of a counter offer.

Good Luck!
0 votes
Eric J Soder…, , Pleasanton, CA
Tue May 25, 2010
Offers are dealt with in two different ways.

1) there is a deadline for all offers. At that time all offers are considered.

2) They are dealt with as they come in and the seller can accept one at any time

Now with a short sale things are a bit more complicated. If a short sale addendum is used the seller can continue to market the property until the offer is accepted by the bank. This is one of the frustrating aspects about a short sale. Especially when the bank takes 2 months to accept or reject. The Government HAFA program is designed to help the situation as is the new Residential Purchase Agreement (RPA). One of the goals of the HAFA program is to have banks respond within 10 days. An aspect of the new RPA is that people are working in good faith.

Best Regards,

Eric Soderlund
Web Reference:  http://www.ESoderlund.com
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