If there are two bids on a short sale home - within 5% of each other, but one has a large down payment

Asked by Matt Kohls, 92129 Wed Jul 22, 2009

compared to the other, which offer will a bank prefer?

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Marcie Sands, Agent, Poway, CA
Thu Jul 23, 2009

Your agent should be working with you on writing the most competitive offer you can. There are terms and other items that may tip the scales in your favor, closeability being one of them.

The banks however are unpredictable, and that is one of the risks you take with a short sale property.

Kind Regards,

Marcie Sands, REALTOR
Simply The Best Real Estate Company, Inc.
Rancho Bernardo
0 votes
Jackie, , Santo, TX
Wed Jul 22, 2009
Whoa Trigger….

Banks should not be seeing more than one offer. The seller should accept an offer subject to bank approval. After that any other offers received by the seller should be in a backup position. They should not be sent to the bank.

Once the bank processes the file and either accepts or counters the offer submitted, the party making the offer submitted has the option of moving forward or not. Of they decline, then it should go to the first backup, etc..

Too many agents think they have to send the bank all the offers; they don’t, even if the bank asks for all offers. Sending in multiple offers is not only unfair to the first buyer that the seller accepts, it actually slows don the bank as they now have to evaluate many offers.

KISS --Keep It Simple Stupid -- should prevail.

There are a couple of agents in San Diego that even publish this policy that the seller won’t accept any offer until the bank has given an approval or counter. They then email every buyer that submitted an offer , asking for best and final . When I explain this to a prospective buyer, they generally shake their head and pass on the property. They don’t want to be the crash test dummy and not have right of first refusal.

As many have said, there is no rhyme or reason in how a bank will accept an offer or not. In many cases, they have these overworked, grossly underpaid people with minimal trainings making the first round decision. Common sense would be to accept the highest return with the lowest possibility of falling out of escrow, but then again, most banks have no common sense

Jay Gedanken
Broker Associate, Realtor
SELLSTATE Next Generation Realty
0 votes
Gina Garcia, , La Mesa, CA
Wed Jul 22, 2009
Hi Matt,
It has been my experience that banks want the highest net. I've had all cash offer vs. offer with a large down payment; the latter was accepted, they had the higher offer. I hope this helps.

Good luck!

Gina Garcia, Real Estate Consultant
Lic. #01704251
e-PRO Internet Professional
Keller Williams Realty
Direct: 619-818-6982
Fax: 619-469-0234
Web Reference:  http://GinasHomes.net
0 votes
Joan (JOANI)…, , Boynton Beach, FL
Wed Jul 22, 2009
Each bank has their own guidelines. Some just want the highest & best offer as #1. After that all others become backups. The down payment in all of my cases has not been the most important thing at all.
0 votes
CJ Brasiel, Agent, San Jose, CA
Wed Jul 22, 2009
Matt -

So many factors can influence which offer is submitted to the bank. All of our experiences vary depending on the bank and the listing agent. If there are multiple offers that are close (close enough), I recommend the seller (person on the loan papers) counter all to highest and best. I, on behalf of the seller submit the best of the counters to the bank for approval.

Low downs can mean FHA and in some cases equal longer close of escrow. If you are a buyer with a lower down, make sure your lender is either a.) the bank handling the short sale or b.) is a lender who has FHA processing/underwriting in house with experience at closing around 30 days. (Close of escrow is going to be a huge challenge with new truth and lending rules coming out August 1st. - see link below for more info..)

I have heard some agents have been told by lender seller that they will not even review offers until the house has been on the market 90 days (what??). I have heard some want to the see the top three offers and decide for themselves. I do not see how a loss mitagator (read bean counter) can dictate to the owner of the home what offer to submit. However, it certainly behooves anyone trying to get a short sale approved to be very much within market value, to show due diligence in trying to get the best offer (like you would if it weren't a short sale) and present a well organized complete file for the lender to review.

Good luck,
0 votes
Patti Philli…, , Carlsbad, CA
Wed Jul 22, 2009
Matt, Often with a short sale, the bank only sees one offer. The offer that the listing agent chooses to submit. Most of my banks have asked only to see the best offer, the one that we "accept." I personally also include an Excel spreadsheet to show the bank how the offer I submitted compares to all of the other offers, and to show them that I have, indeed worked to get the best "market value" for the home. I don't know how many other agents do this. Most I have spoken to don't.

So, it may be the listing agent who decides which offer goes to the bank- and typically they will determine which offer they feel is the "strongest". Keep in mind though- you never know who will still be interested in the property by the time the bank decides to look at, and accept offers! I have one right now where I am the listing agent. We had about 14 offers on the property, and all but 1 buyer wanted to be in the "back up" position.

The bank has now screwed around ong enough that 4 of the buyers have taken a walk by now. So, just keep looking, putting in those offers, and see what comes through! You never know at the end of the day who might end up with a short sale home in this wild and crazy process!

Patti Phillips
Advice You Need, Attention You Deserve"
800-680-9133 or 619-507-2100
0 votes
Bill Eckler, Agent, Venice, FL
Wed Jul 22, 2009

It's impossible to predict what the bank will do in these situations.

Our best advice is to present your best offer from the beginning and see what happens/

Good luck
0 votes
Joan Wilson, Agent, San Diego, CA
Wed Jul 22, 2009
Large downs are good. Cash is better. Borrowing from that bank is good. Don't worry about logic...this is a short sale.....Don't hold your breath....this is a short sale.

Good luck...this is a short sale,

Joan Wilson (Realtor, SRES, Ecobroker)

California Cool 4 Sale
Prudential California Realty
Direct Phone: 760-757-3468
Fax: 760-946-7894
License # 01341483

It is my Goal to Increase the Success and Profitability of Those I Serve
0 votes
AJ Anchondo, , San Diego, CA
Wed Jul 22, 2009
You are assuming that the bank will look at offers from the same disposition that a typical seller would. Unfortunately, the banks do not use any rhyme or reason for what they elect to do. That's what makes it particularly frustrating to work with a bank on an offer submission. We often see a bank simply select one offer out of a stack of offers without any logic at all. That's the truth of the matter!
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