i have little experience with short sales so all info is much appreciated...

heres the scenario...submitted an offer at 380k 20% down, on this property only to be informed that my offer was not accepted but would be kept as a back up to a 381k offer with 25 percent down...my client really wanted the property so i resubmitted an offer at 400k 20% down... the agent got back to me today and told me im still in a back up position and they will not be sending my offer unless the bank requests it.

2 problems im wondering about?

1. i thought 400k with 20% down is a better offer for a bank then 381 with 25% down???

2. i was also under the impression that all offers had to be submitted??

thoughts? advice? links to good short sale reliable online literature.....all apreciated thanks !!!!!

A couple of things:

1. First off, did the agent submit to his client (not the lender) your offers; if not, why not? He has to submit all offers unless his client told him not to.

2. At first blush it would appear that your offer is financially more attractive; however, the difference between the offers is negligible in terms of down (cash wise that is), what makes the other offer more attractive to the lender is that 5%, it doesn't so much affect the short sale but it does affect the funding of the underlying loan. No matter what you hear, credit criteria isn't loosening up one bit.

3. Finally have you considered contingencies? Does your loan contingency remain in place until funding? Did you ask for 17 days or 21 days for inspections, or did you waive them? What about closing? In 30, 45 or 60 days? What about appraisal? What if the property doesn't appraise?

Just because it's a Short Sale, it's still pretty much like any other deal, in terms of strongest offer, offer price doesn't always win.


Good luck!

heres what the other agent said

"They put your higher offer in 1st back up position. They are sticking with the other offer and sending it to the bank. If the bank requests to see the other offers, yours would be the best. That's what they wanted to do. Thank you again!"

it was my understanding that a lender almost always cares about what they net... aside from all cash offers...i didnt think that 5% difference would make the other 19k lower offer more favorable?

Do banks usually request to see all the offers? or am i pretty much out of luck unless that offer is rejected?

Here's what you are missing: It is the Seller's choice which offer to accept; NOT the lender's. In a Short Sale, the owner still controls which offer gets submitted to the lender for approval.

Now if the lender doesn't like the offer presented, they can flat out reject and your's would come into play (did you limit when they - the owners - had to respond to the offer or did you leave it open-ended??? If you left it open-ended, your client may be in a world of hurt); or, they could counter. Did you submit the Short Sale Addendum (CAR form) with your offer????? Pay attention to Paragraph E - Other Offers, there may be something in the underlying Purchase Agreement which precludes submission of your client's offer.

I agree with CanDo, in short sale Owner accept the offers, Bank approve them only. I hope you will take this property!

thanks for the clarification i was under the impression that the bank chose the offer not the seller...

is the other offer really more acceptable to a bank then mine though? i would think that the seller would want my offer first...unless its her client etc....

Let's talk about what a Short Sale is and what it means to a buyer, any buyer.

A seller, for whatever reasons, owes a lender $XXX. Seller says to lender, "Look, I know I owe you $XXX. However, I can no longer make my payments. What if I put the property on the market as a "Short Sale"? Sure you won't get the full amount I owe you but you will get more than if you foreclose." Lender thinks it over, looks at all of the documentation and says, "Gee, you might be right. Go ahead, try to sell the property and let us know when you get an offer you like. At that point, we (the lender) will let you know if it works for us."

Offers come in, it is still the seller's property, they approve an offer and once that offer is approved (contingent), they send it on to the lender to approve the "Short Sale".

In your transaction, your client is only bringing $80,000 cash to the table, the other offer is bringing $95,250, a difference of $15,250 CASH. That may be the difference between the 1st and 2nd (if there is a 2nd) signing off on the Short Sale. The difference in the offer amount, before taking the closing funds into account is only $19,000. That $19,000 will probably make a difference in getting the loan funded. Your client needs the house to appraise at $321,000, the other offer needs the property to appraise at $285,750, that is a huge, freaking difference at $34,250. Do you see how all the numbers work????

In a rapidly declining market (which is California and REO dominanted), that $34,250 on the appraisal will make or break the deal.

Without knowing the answers to my previous questions regarding contingencies in your offer, I would counsel my client to go with the offer that had the best down. I say this because at the end of the day the loan needs to fund which means it needs to appraise.

Trust me, even if the bank saw your offer, they'd do the arithmetic just like I did and consider the current market as well. Somewhere there will be a BPO involved on top of the appraisal (BPO for the lender and the appraisal for the new loan)...who knows, you might get to do it!!!!

somewhere in my mind i had thought i had a much closer downpayment to the other offer...but that makes sense...now how likely is it that the bank ask to see the other offers? is it most likely that they only see my offer if they reject the other offer?

in my opinion i feel the other offer is slightly under market value...and my offer is a good offer for what has sold in that area...

me get the bpo haha, i wish...but then i woudlnt be able to do it becuase i was involved in the transaction? or would i?

as for the contingency, ill have to take another look to be exactly sure...to update soon

Sounds like that exra 5% down was more important than an increase in sales price for whatever reason. Sellers have the right to submit offers to the bank or not. Why they would not submit all offers is beyond me...