A brief history: made an offer on a short sale property 7/5, according to realtor representing the seller, ours is considered #1 of three offers. Updates to us have been via a website every friday,in addition to my realtor contacts with seller realtor. Latest update has "negotiator reviwing BPO, second lien company has ordered a BPO". Now, just yesterday, my realtor contacts me and says the realtor for the seller (short sale property) called him and told him they ( the bank) want a counter offer for $10,000 more. No problem with us. However, my realtor requested from the realtor paper work from the bank for counter offer so we can make the changes. A day later, no fax with the papers. So my realtor called the realtor back, and the realtor says to just change the amount on the first page of contract and fax it to them. Now, my concern is are we being set up for a bidding war? Is the rep for the seller going to take that inreased offer to the other two offers on the home and try to get more? Why wouldn't the bank contact us in some official way with a counter offer request?

Do not expect the bank to contact you directly as the negotiation will be passed through their listing agent and then through your agent.

I doubt this is to set up a bidding war. Particularly when you are dealing with a short sale the seller will try to minimize the loss. Since you were supposedly at the top of the bids received they are looking to see if your offer is your final position or if you will pay more. The risk of not going the additional $10,000 they have requested is that they might then start testing whoever was #2 for their final position. If they have requested the increase, and you are willing to pay it, then I would suggest you follow the instructions to update the price on your contract (the change should be initialled) and get on with purchasing the property.

The suprising statement in your post is you say the second lien position is just now ordering a bpo.

Usually the first mortgage AM will not even work on a short until they know in writing what junior lienholders will agree to as far as losses.The reason is if they do all this work only for the junior lienholders to say NO the file was a complete waste of time as they will now have to foreclose to wipe out there interest.Usually alot of things are verbal by Am until prices and terms are agreed to then it goes under contract with full addendums and signatures. All banks are different and it's one of the last unregulated processes out there.

I liked Mr Foreclosure's comments on this. This too is my experience.

Here is what we tell our buyers: if the bank responds to your offer, and you are willing to go with it. Go ahead and make the necessary changes to the paperwork and get it over to the listing agent.

Our short sale listing team only works with the BEST offer. The offer is executed immediately, sent to the bank for approval. If the bank approves, great. If not, we let the buyer know where the bank is at. That buyer has the first right to go with the new offer as they are in an executed purchase agreement.

I can't get over home many short sales however our team and others are doing right now. If a home on the MLS is not an REO, it seems like it is a short sale!?!

Hope this helps!

I agree with one of the comments about how the second lienholder is just now ordering a BPO. The listing agent should have some sort of contact with the second lienholder. The listing agent should already know how much the second lienholder is willing to take in order to release the lien. If that info is not already known, the listing agent should not be trying to work with the first lienholder's demands yet.

What if you go up in price the $10,000 they are demanding and the second lienholder wants $10,000 to release their lien? Let's say the first lienholder isn't willing to give them the $10,000, but only $2,000. Now all of that has to be negotiated too. I would just make sure the listing agent is already aware of how much the second is willing to take. This will have an effect on how much the first will make.