Master the Short Sale Transaction: Post 6 / Receiving an Offer If you have been reading my previous posts on mastering the short sale transaction, you are probably well-equipped to take a short sale listing and now have your listing on the MLS. Post 5 reviewed what should occur after the listing appointment.
Post 6 will cover what to do next: wait for an offer. If you followed my pricing strategies from post 3 and you are working in an active and fast-moving market, then you should expect multiple offers in the 14-21 days. This is great news! Since time is of the essence as foreclosure may be looming, you have to time to waste.
But, which offer should your seller accept? Which one should be sent to the bank? Should you send all of them? There are many theories about how to deal with multiple offers. Having closed many, many short sale transactions, this is the one that seems to work best for me:
Counter each of your multiple offers. Do not just work on the price, but consider what the bank may or may not pay. Does the buyer want the bank to pay for termite repairs or a home warranty? Will that impact the bank’s bottom line? What will happen if 3 months down the road the bank says that they will accept the offer, but they will not pay termite? Carefully look through the offer and think about those kinds of things. Write a clear counter offer after consulting with the sellers.
Another item to consider in the counter-especially if you have multiple offers-is whether the buyer is willing to stick around for 2-3 months while you obtain the approval letter from the bank. How can you determine that? One way to do so would be to test the waters by asking the buyer to put an initial deposit into escrow. A buyer who wants to remain in first position and is willing to wait should probably feel comfortable putting a small deposit into escrow in order to “seal” their position.
What happens if you have not received an offer and it has been three weeks? Well, if your property is in good condition and shows well, then perhaps the price is too high. Consider lowering the price in order to generate activity.
I hope this post will help you to deal with offers on your short sale listing. The final post in the series will address what to do when buyers walk away during the short sale transaction.
If you ever need any help or advice on short sales, feel free to contact me.
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{ 5 comments… read them below or add one }
By taking multiple offers you are causing the transaction to fail right from the start, your buyer can tell you are committed to them and they walk. If all you are looking for is a higher offer over a 4 to 9 month period why would you expect a buyer to wait if you are not representing them fairly.
A Short sale is a Negotiation not an Auction, the Bank negotiators don’t like more than one offer that is why the paperwork gets lost.
By time you are done the offer price isn’t low enough to appraise for a loan, you are not looking at TIME over VALUE. Value or Equity is assumed over time, when the time line is shorter so is the Value, you negotiation is based on a BPO which is an Opinion not an Appraisal 4 to 9 months in the future.
Back before the Realtor was needed to do Short sales the transaction was smoother, now you have a third party that has no skin in the Game acting on behalf of the bank that isn’t part of a Contract that Realtor’s are trained for. Contracts Between Buyer & Seller, now you have a Realtor adding a third party that has a Lawsuit against one party in the Contract.
I love how a third grade educated GED Grad can practice Law without any knowledge of what it takes to represent someone fairly, like the oath we should use on client relationship agreements.
Oh yes you have to remember a Short sale is Cash only, so your Client should get more respect from you.
Think about it…
Richard: Just to be clear–I believe the intent of the article is presenting multiple offers to the seller, but only sending one to the bank. As far as cash goes, there are pros and cons to cash offers (buyers walk more quickly because they have more options vs. buyers that can close more quickly). Some banks currently theorize that all offers are cash at the end of the day. And, yes, I suppose that is true. At the end of the day, your offer (whether you obtain a loan or not) will be received as cash. Thanks for your regular comments on the blog and your feedback!
Sorry,
I am just confused why it says that there has to be a listing agent that thinks they must negotiate the Short sale, but I just can’t find where is says that the Listing Realtor is the best party to Negotiate the transaction. I just know a large group of Realtors that just list short sales and never give more than 50% effort to them, I just wish they would leave them to more experienced Realtors or Buyers because you see I would use a third party like your company or your competitor. the problem is the listing agent thinks they are more qualified than someone who specializes in short sales only. That is why Buyers are walking away, I’ll bet you don’t have that problem because you are an experienced Negotiation Team. You do know that Buyers with Negotiation teams close 90 to 95% of all transactions, and Realtor only close up to 15%. What is this, a ploy to let the listing go back so that Realtor can re list an REO. I just feel if you take a short sale listing you should be responsible for the outcome, and share in the Damage caused to the Owner bottom line..
I agree with you: some listing agents are probably not well-qualified to negotiate short sales. It takes a certain kind of person to negotiate a short sale effectively and efficiently.
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