I recently put together an offer for my buyer clients to a short sale- been in the market for over two years with price rediculously high from 369, reduced to 336, then now priced at $309,000 we offered $270k which for the area is fair.
After three days of waiting, the LA came back with a counter offer of $320k. I asked the LA why is the counter offer higheir than the list price? He said the list price was put by mistake, ok given it was put by mistake, why not advice your seller to accept the offer and let the bank counter to how much will acceptable for them?
Seller countering the offer does not make sense because no matter how much they want to counter, the bank has the final say to how much they can afford to lose.
LA wants to help? I think giving a wrong advise to your seller is not helping but making matters worst. Remember the goal is to sell the house fast- the longer you wait, the bigger HOLE you are creating to your seller.
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I would communicate that you are perhaps willing to pay more than your 270 offer, but that they should submit the offer as is and let the bank come back with terms. Only a fool enters into short sale negotiations at their best and highest price.
That goes for the listing Agent/short sale negotiator as well.
If you are the buyers agent, and say your buyers are willing to go up or wiggle a little, I think you are violating their privacy and squelling on your client. The offer is always been the highest and best. What ever the offer is.
You don't want to say anything about your buyers ability/willingness-you let the offer speak for them. Place it where you need to, but you may want to utilize the verbiage "highest & best" to convey that message to the sellers. Of course the current offer is the buyer's current highest & best, but adding those words conveys a message...adding comps to substantiate why your buyers offer is solid and why they won't do better is just building a good solid picture for the sellers in case the offer isn't being presented in the best light or they are lacking in education & information. Jeff's feed below is dead on-here is a good formula for your comps...3 sold comps, sold within the last 90 days within a 1 mile radius...you can go out in distance but not back in time. The banks will usually take somewhere from 88-100% of that figure...so if your offer falls in that range then be sure the LA is aware of that (again, SUPER NICELY & RESPECTFULLY lol!). I can assure you that when an agent is feeling shaky in their knowledge they are the MOST likely to be hard headed and feel exposed (aka defensive) and the reality is, with the market shifting as much as it does-we ALL feel a little shaky on our knowledge sometimes-don't let this interfere with your buyer's offer making it's debut to the seller. :)
That is exactly why I would tell my seller to counter if we thought the offer was too low, especially if I knew that was the buyers highest and best. If the buyers offer was within the range of comparables, even on the lower end and we could justify how we came to that price with the lender, then go for it. If the offer was lower than you can reasonably justify with good comps then the offer is too low no matter how you slice it. You have to wear several hats, one hat is a newby agent trying to fumble thru a BPO having no real estate experience and the other would be an appraiser doing an liquidation appraisal. As long as your offer fits somewhere in what you think they will value the house at, you have a good shot. If your offer is too low, you will never be able to fight a bad BPO or appraisal.
You never said what the comparable property values were. How did you come to $270,000 and how did the listing agent come to their price. A good listing agent is going to tell you exactly how they came up with that price. Did you provide the listing agent with the comparables that you used to justify your offer?
Exactly my point. The listing agent told me he is protecting his seller because they will be billed for the difference and will be paying on taxes at the end of the year. I am aware of the 1099 to be issued at the end of the year but, there is a form that exempts the owners personal resident.
I am not saying to offer your highest and best price, make an offer on the low end of the range of values. In this case we have no idea how either the listing agent or the buyer agent came to their values. Not enough information to go by. Knowing the buyer will pay more if the bank comes back and asks for more is good practice but sending in offers that dont make sense and knowing the buyer will not come up any more is dangerous to the seller. I had one recently that the cash buyer started squabbling over $2500 even though they knew we had multiple offers, we knew what trouble we would have if the bank asked for more money so the seller accepted the other offer that was financed but the buyer acknowledged that they expect the bank to counter their offer....
It makes total sense to me, the listing agents job is to get an offer that will be acceptable by the lender and not take the house off the market for a low offer, hoping the lender will accept. We often have sellers counter offer with what we believe based on a value range the lender will accept. You offered $270,000 on a $309,000 list price. What do the comparable property values look like and is your buyer asking for any concessions?
Part of the goal may be to sell the house fast but the real goal is to get an offer that the lender will accept and not send low offers in hoping they will accept.
How did you come to $270,000 offer? Were there good comparables? What did the last 3 or 4 comparable sales sell for?
If I were in your shoes I would send over the comps that substantiate your buyer's offer as well as a market letter stating why your customer's offer is at $270K. I would have your buyer's come up to their highest & best (keep in mind, the bank may also counter the price and/or closing costs so you may want to leave a little wiggle room) and make sure you use that verbiage in the counter offer back. In your letter you may want to RESPECTFULLY mention all those things you mentioned above and express to the agent/seller that you and your customer as motivated and understanding to the sensitivity of a seller's struggle with a short sale. It may or may not be the LA you don't know where the problem lies here and guessing will only hurt your buyer's position...try to uncover the real REASON the seller is countering, you may have to ask a lot of questions to do this. But until you understand the LA & seller's motivation behind that stand you won't know how to present your offer in a light they will be able to accept. THINK Honey not vinegar...you will get a LOT further. Good luck! :)
Keri, that is assuming that $270,000 is solid offer :) I have agents constantly send me lowball offers and then try to convince us that it is a good offer. I had one that we KNEW the appraised value that the bank had, $280,000 and it was spot on and had a buyer agent try to convince me that the bank would take $190,000 for it and tried to justify it.
LOL...ok, ok, ok....yes I know I shouldn't assume but yes I was assuming that the buyers agent wouldn't be wasting their time (I hope) working on low ball offers on short sales...you can try that stuff on REO's...but shortsales just aren't usually the market for that. Good point Jeff!
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