Bill Smith, Both Buyer and Seller in Goshen, NY

looking at a short sale what is the percentage for negotiating to lower asking price

Asked by Bill Smith, Goshen, NY Thu Jan 13, 2011

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Akil Walker, Agent, Upper Marlboro, MD
Thu Feb 17, 2011
Hello Bill,

I would recommend you submit an offer with a price you feel comfortable with. Keep in mind the seller has to agree to then it is subject to the lender(s) approval. I say go for it. The worst that they can say is no at the price you offer and counter or reject outright. You can always submit another offer. your biggest obstacle will be with the lender(s). I suggest you look at some of the comps in the neighborhood of active and recently sold. this should give a good idea of what to offer.
1 vote
Maureen Dwyer, Agent, Ashburn, VA
Wed Feb 13, 2013
The responses below are excellent. I hope you're working with an agent because this is a different animal and you can either lose time or be held accountable in ways you can't even anticpate now. Your agent will do the due diligence to make sure it is a short sale and not someone using those words. Then remember you are dealing with an institution so any logic you would apply to a homeowner goes out the window. Banks and investors are looking for market rate but extra lien holders can mess up the works by demanding above what their guaranteed minimum is. And just when you thought you had a great deal! The magic words are "approved short sale" and the number you see is what they will get 9 out of 10 times - at least here in northern Virginia.
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Leslie Byrne, Agent, Millsboro, DE
Wed Mar 23, 2011
Bill, Troy's is the best answer - for the buyer you may find that you have gone down a costly road only to have it fall apart because your lender - your lender - asks for the moon or because legalities surrounding the short sale property itself drag everybody deep into the mud. Find an excellent short sale agent or just look for a home that is not in distress.
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Dwayne & Mar…, Agent, Woodbridge, VA
Thu Mar 17, 2011
It's important to find out if the asking price has been pre-approved by the mortgage holder. Bank approved short sales usually arrive at a price as determined by a licensed Realtor who the property owner has used to help negotiate with the bank and a prospective purchaser. The asking price should be near market value. In cases of short sales without bank approval, the property owner may often attempt to price the home higher or lower than market value. An overpriced unapproved short sale listing occurs when a homeowner has to offset his loses because he is an upside-down home owner who needs a higher price than market value to sell the home without paying the difference at the closing table. Listings which are underpriced are marketed with the sole purpose to attract potential buyers. Often these contracts are written and agreed upon between both parties, but ultimately declined by the bank. I would never enter into an agreement on a short sale property without an experienced short sale agent to help you. They are difficult in nature because the contract involves an agreement among 3 parties.
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Sara Rubida, Agent, Arlington, VA
Fri Jan 14, 2011
Hi Bill, I will answer this question as it relates to northern Virginia, which has a relatively robust real estate market--don't know what's going on in Goshen, NY.

In this area--and the closer in you get to DC--the greater the likelihood that the buyer will pay more than the asking price. There are two ways for this to happen. One is multiple offers on a desirable property; just this week I know of two situations of multiple offers on short-sale properties. Another way is that after a contract is ratified, the bank may give its approval contingent on the buyer throwing in more money (I've seen lenders ask for an additional $10K and even up to $30K more).
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Melissa Bark…, Agent, Washington, DC
Fri Jan 14, 2011
As others have mentioned below, it really varies case by case and lender by lender. Each bank has a different threshold where they will re-coup the costs of the loan to a certain percentage. It also greatly varies on which bank it is, as to the time-frame this will get completed. Some banks can take of it as any regular sale, others will take 4-6 months or longer.

Just because the seller might agree to a price that is less than the listed price, it ultimately depends on what the bank will accept and needs to get in order to clear the loan from their books. Unfortunately is seems in the market right now, the listing agent and sellers don't send into the bank all the upfront paperwork, so that delays the process muchless having some idea how much the bank needs, which will ultimately be the sales price.

Good luck!
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Bill Eckler, Agent, Venice, FL
Fri Jan 14, 2011

Taking a position of negotiating a "short sale" could be tricky. Simply stated, with a short sale you are actually negotiating with two owners. First, the traditional owner and then the bank. These transaction will not happen without the approval of both parties,

If you are fortunate enough to identify a "bank approved" ahort sale price, the likleyhood of the lender decreasing their previously agreed upon price is suspect. Unless you can demonstrate through records and documentation that the asking price is unrealistic, a decrease may not occur.

Additionally, with most short sales the buyer first negotiates the acceptable price with the owner and then goes through the same process with the bank. It has been our experience that in most cases the bank takes a position of negotiating a higher contract price than the owner.

In these transactions, the owner wants out while the lender wants to recover as much of their investment as possible. Many times there are unseen expenses associated with a property that the loan holder is not aware of until they have sufficient time to investigate. other loans, judgements, liens, damages, legal fees etc. can also add to the final number.

While getting the owner to lower their asking price, the lender must base their price on the local market activity and the debt tied to the property.

Good luck,

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Troy Patters…, Agent, Alexandria, VA
Fri Jan 14, 2011
Bill, I agree with all the answers given so far. You want to focus on two questions with short sales. What is owed and what properties are going for in that neighborhood. Once banks expected to lose about 20% on short sales but that is not the case anymore...I will get into that later.

The bank is going to do two BPOs(broker priced opinions) on the property only once an offer is in hand. You may be the first offer so you will be the guinea pig. Your broker should do a CMA to determine prices for the area. The bank will counter based on the BPOs. You make the offer you think is fair but know they will counter.

You should also find out how many banks are involved and whether this is a portfolio loan with the lender or if they are servicing a Fannie or Freddie owned loan. Only about 20% of short sales in our area go to closing. If the bank is only servicing the loan, in a short sale they take the loss. If it goes to foreclosure Fannie or Freddie takes the loss. They have no incentive to take the loss. If there is a second bank, they or the mortgage insurance company may decide that the loss is better taken later and let it go to foreclosure.

There are a lot of variables and an experienced agent should be able to help you with this process and find out where the seller is in the short sale process.
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Jim McCowan, Agent, Arlington, VA
Fri Jan 14, 2011
Don't think you're going to get a bargin just because it's a short sale! At least around here, most short sales wind up going above the list price. I've found lately that more and more agents are listing these proeprties without the seller even submitting their paperwork to the lender to see if they qualify!

Have your agent check to see if the paperwork has been submitted before wasting your time putting an offer together.
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Dan Tabit, Agent, Issaquah, WA
Thu Jan 13, 2011
Since there is no guide to establish a set price, there is no rule to establish how far off that someone should offer. As the others have said, have an agent who doesn't represent the seller complete a comprehensive market analysis to establish what the market for similar homes are going for.
An agent experienced with short sales will consider who the lender is, how long it may take (just a guess at best, but different lenders have different track records) and what approach may be most successful with the lender and the seller.
One theory however, is that some lenders will approve a short sale if it is within 10% of the Broker Price Opinions. BPO's are not the list price, but another agent’s independent determination of what it might sell for. Discuss this theory with your agent and proceed as you both see best. Good luck.
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Tony McMahon, Agent, WHITE PLAINS, MD
Thu Jan 13, 2011
Hi Bill you should definately work with a Realtor who has experience with short sales or has a broker or manager with experience for a resource. Each loan type that is being shorted has different acceptable thresholds, So it is paramount to know the type of loan or loans you are dealing with to know what the bank needs to net.
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Dave Griswol…, Agent, Bridgewater, NJ
Thu Jan 13, 2011
Hi Bill, The Asking price may not be what is actually owed. More often than not the bank will raise it.
If it is listed with a Realtor then the Realtor listed it at what he/she believes the bank will take unless the short sale already has an approval on it, If it does then the price your looking at is the price the bank will accept.

All the Best
Dave & Lisa
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