Majority of our business is dealing with "Short Sales and Foreclosures". Most people who are behind in their mortgage payments fully realize the lenders will finalize a sales price. There seems to be some confusion when it comes to accepting an offer. Some sellers feel that when they receive an offer they should counter. They feel the back will frown upon a "low ball"offer so it`s wise to "Think for the Bank"... Don`t! Take the offer and let the bank decide for themselves if they`ll accept it. It` not feasible for you to negotiate for the lenders nor should you act as a liaison for them.
Last week, we showed a home to our buyer located in Plantation. The buyer decided to make an offer based on the Comps in the area. The home was listed for $329,000. We offered $265,000. Our buyer can close in less than 45 days and is putting down 30%.The seller decided to counter at $310,000 expressing they will refuse anymore offers under this price! The question is why? The home has been on the market for 1 year. The seller has gone through 2 other Realtors and refuses to grasp the market. Rather than accept our offer they counter, it makes no sense.
The lenders are at a point now where if the "Comparables are within the relam of reality they`ll accept them! Why are you fighting a battle you can`t possibly win? The buyer and I were both stunned at the sellers counter. I asked the other Realtor if we can speak to the seller and go over the offer.The seller refused. The home will in all probablity now sell on the court house steps in Foreclosure.
Sellers, don`t speak for the lenders, let the attorneys and Realtors who you`ve hired assist you in the Short Sale. It makes no sense for you to be negoating the sale price any further if you`re mortgage payment is in arrears.
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If the lender just approved your Short Sale offer,why are you countering?
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NB,
It`s a major problem out there. Worse many Realtors are handling these types of sales as a regular sale,hence the seller really believes their doing the lenders a huge favor.. Go figure..
Hi Scott:
I couldn't AGREE with you more!
I have a listing that the seller was instructed by a Title company to come back and negotiate.
I said "are you kidding me?"... "why are we negotiating for the bank?"
So, to appease the Title company's idea, we crossed out some numbers and went back and forth...what a waste of time that was.
The buyer stuck firm to his initial offer..
This just went to the bank yesterday, so we'll see how this one pans out.
Have a Happy Thanksgiving,
That's because they say they know what they are doing when all they know is Jack!...I can't tell you how many times I'll tell an agent on the buyers side that if they tell their client that they'll probably have to wait an average of 90 days for a an answer then they want to walk if they are not willing to stay in the game and it could be a long time...then they walk out of frustration.
This is a failure of the listing agents to fully explain to sellers how Short Sales work. Unless the buyers will be faced with a deficiency claim by the bank, the price is not as important as avoiding foreclosure whick will SURELY kill their credit for 10 years.
Agents who list short sales need to know what they're doing. Unfortunately, that isn't always the case.
If the Short Sale is without recourse its the bank that is losing the money. If the sale is on a primary residence and the sale happens in 2009 there will be no tex consequence due to the Mortgage Foregiveness Act of 2007. If the sale is on rental property and the seller is not insolvent the lower the price the more income that will be reported to the seller if the shortfall is waived by the lender. On rental property this is of some concern. On a primary residence the sellers only issue is that the short sale is without recourse. On a non-recourse short sale if the bank will take a doilar and a box of choclates it is not his concern.
The seller needs a reality check. If there is a completed foreclosure and the house is sold on the courthouse steps he will not get to say no and will be looking at a collection action in years to come for the deficiency judgment. A completed foreclosure accompanied by a chapter 7 to get rid of the deficiency judgment are his worst case scenario. The sellers agent needs to give his or her client some tough love.
For more about the Mortgage Foregiveness Act of 2007 see
http://www.irs.gov/irs/article/0,,id=179073,00.html
For our law firms thoughts on the issue see
http://www.attorneyforeclosuredefense.com/Practice-Areas/Alternatives-to-Foreclosure.aspx