Why does your SHORT SALE Seller care if we give him a low ball offer?
This is a very common question we
get from buyers' agents and from their buyers when making offers on our
short sales. They don't understand why a seller would care about what
kind of offer they get on their short sale. 
There are very valid reasons why our sellers care about the offer that they get when they are short selling their home.
Before
we talk about why let's make it clear that the offer on a short sale
property is a bi-lateral agreement between a buyer and a seller and
in a short sale the seller is not the bank, the seller is the owner of
the property, the person or entity on the title to the property. This is
based on a deed state- Florida. So therefore, the bank is NOT a party
to the contract. The bank is NOT going to sign the offer. The bank is
NOT going to become a party to the contract.
However, there is a clause in the
contract that states that the seller can not close without his lender
agreeing on taking a lesser amount owed to them by the seller.
The first and most important reason to care about the offer price is if the seller is facing foreclosure. If
the seller is facing foreclosure than time is of the essence. While we
can in most situations get the lender to hold off on final foreclosure
dates there is no guarantee that they will. So getting a close to market
value offer is going to help speed up the process of getting to a
closing.
The banks are NOT approving short sale payoffs based on way below market values. The
lender is approving a net loss. The lender does not depend on the
listing agent nor on the buyers' agent to get a market value. They hire a
third party, either an appraiser or a Realtor® to get them a market
value. Then they look at the market value and the offer and then
calculate the net loss to them, at which time they will reject, counter
or accept the loss.
No matter how many late night get rich quick in short sale shows you are watching you can not make it so.
So our sellers must calculate the risk in any offer they receive. They have a lot at stake in choosing an offer.
For the record, the short sale
listings we have are not on the market very long and most of them will
get multiple offers. While we are in desperate times we are not
accepting desperate measures especially ones that can hurt our sellers.
The next reason for not sellers caring about how much the offer is- is because we are a deficiency state.
Many of our sellers are investors so they will be 1099'd on the loss-
this may move them into a higher tax bracket and that could be
disastrous as they are usually not in a position to pay that increase.
So they must look at the loss that is going to be considered income by
the IRS. Also, if our sellers are investors they must also look at the
chance of a deficiency and they wish to mitigate that amount.
The seller does not want to have their home off the market for a long time while we negotiate a short sale
for them only to have to put the house back on the market again because
their lender rejects the amount of the loss. The closer to market value
we get an offer the more the odds are increased in the favor of the
seller getting their short sale terms accepted.
We are not attorneys. We
are not giving legal advice. The information contained herein is based
on what other attorneys have discussed with their clients and what the
different sellers situations are and how they respond to the offers.
Please seek legal advice.