Short Sale Obstacles - Part Deux

Since my last post a follow-up questioner asks, shouldn't it be obvious to my lender (in a short sale situation) that the price they want me to sell my house at is just too high? Shouldn't it be obvious to them? Should I tell the buyers to move on and find another buyer willing to pay the higher price?

The listing agent should do everything s/he can to portray the home in the worse possible light to the lender's short sale negotiator and put their buyer's offer in the best possible light. This must be done with an accurate portrayal of his client's home's value, but with the goal of representing his seller-client's best interests.

Being in a distressed situation the seller wants and needs to do everything they can to keep their buyer on the hook and sell the home before it forecloses.

Often, lenders have to be hammered into seeing the obvious. A bad BPO by an agent not familiar with the nuances of a community will throw a wrench into the machinery. Most negotiators are just a stop-gap to the lender and are just trained slightly more than collection agency callers. Since they are off in another state they rely almost solely on the BPO for the home's value. They mostly follow a script and once they have a short sale package and sales price within their script's guidelines they can forward to their "investors" (the lender) for approval or modification. They are also working hundreds of files simultaneously, so they don't have the time (or will) to investigate their commissioned BPO. This responsibility must fall to the listing agent to hammer away at them and convince them of the home's true value.

I've had a couple of bad BPO's in the past where I had to do all of the procedures I mention in my earlier reply and then argue (in the most diplomatic way) why they (negotiator) should accept the offer on the table.

Of course, there are times where the home is already bargained priced and a buyer will come in seeking an unreasonable low sales price, but it is the buyer's option to do so and in this market I can't say that I blame them. If I do not have any other prospects about to make an offer on the house I will go ahead and recommend to my seller-client we submit the low offer for three reasons.

1. Some lenders will place a "working" status on the foreclosure process which doesn't stop it, but it can slow it down while they consider the short sale offer.

2. You just never know. A bad BPO is a double-edge sword. Sometimes it can come in too high, but that same agent unfamiliar with the area can also place too low of a value on the home and the buyer get's a steal.

3. If the BPO comes in at/or above market value, I now have a lender-approved number I can work with (or argue). The buyer can now step up and negotiate their offer higher or move on while I seek additional offers using the lender-approved price.

Either way, the low offer's submission was a worthwhile exercise and benefited my seller-client.