A Good Reason to Not Lowball a Sacramento Short Sale

Some short sale agents in Sacramento might forget whom they represent. In case you're wondering, if you're a listing agent, it's the seller. Because a listing agent has fiduciary with the seller and because MLS requires it, all offers received by the listing agent must go to the seller. Doesn't matter if it's a lowball offer. Doesn't matter if the buyer's agent pecked it out with a dead chicken's foot dipped into blood, all offers go to the seller.

I try to prepare my sellers for the onslaught of offers they will receive. It shocks some. But I send all offers to the seller because that's my job.

The problem that can happen is when a property attracts a lowball and the seller takes that lowball. Why would the seller take a lowball? Especially a lowball the seller does not believe the bank will accept? There are reasons. Maybe the property is close to auction. All bets are off at that point. Maybe the home is difficult to comp, and the seller wants to see what the bank will do. Maybe the seller is just plain tired of buyers traipsing through, you never know.

But the fact remains a lowball offer is a dangerous offer to send to the bank. As a Sacramento short sale agent, I advise against it. Because you can waste a lot of time if it's headed for rejection. Then, you're going back on the market, changing from active short contingent to active short. This makes buyers wonder what's wrong with the property.

But sometimes a lowball can pay off. Especially if that strategy attracts a higher, market value offer. In all real estate transactions, including short sales, the seller has the right to accept a backup offer. There is generally no point to submit a second offer to the bank. I rarely do it, if ever. It's just plain stupid for the most part. But if the offer that is submitted has almost a zero chance of acceptance, it can make sense to send a higher offer.

Buyer's agents, here is a tip for you when calling on status / progress of active short contingent listings. The question to ask a listing agent is whether the seller is happy with the offer that is submitted to the bank. Don't ask if the seller wants a backup. All sellers want a backup because backups don't really mean anything except to put a buyer's name into second position.

I had one such episode happen last week. A buyer's agent submitted a very-close-to-market-value offer on a home that was active short contingent. The seller was in escrow with a lowball offer, which almost never happens. The seller authorized his agent to send the new offer to the bank. But first, I suggested that we give the existing buyers the opportunity to match it. They got first right of refusal, which was only fair. But the buyers rejected it. This means if it had been the bank demanding a higher price, those buyers would have fled like termites exposed to sunlight. We were better off without them.

And see, this is what makes me a good short sale agent.

Would this home have sold at the same price if we had left it on the market and did not take that initial lowball? Maybe not. People seem to want what other people want.

For more information, read: If a seller accepts an offer, can another buyer outbid us?