Sounds crazy right?
As a buyer you have taken all the right steps to purchase a home in this down market. Interviewed
lenders, agents, and have your pre-approval in hand and decide to write an offer on a short sale of which you know to be a great deal financially. You offer the listing price and think you are sure to get the home because " I'm giving the seller and bank the list price".
The home is priced well below any foreclosure that has even sold in that area.
You and the seller agree on the contract. Earnest money has been deposited, inspections are done, attorney has approved the contract. Then you wait for the bank to respond....
and wait, and wait, and wait, and wait.
Your agent finally calls with great news, the bank has come back with a counter offer. It's higher than what the property is listed for. What?! How can this happen? You offered list price! This is outragious, you are furious and tell your agent/attorney you reject the banks counter offer and want out.
Just hold on.....
Banks very seldom set the list price on a short sale. If the bank has, it is in the description for the listing with "price pre-approved by lender" ( or something to that effect ) in the language. More than likely, the seller and agent have come up with the list price.
Banks, upon receipt of a short sale contract, will order a BPO ( Brokers Price Opinion ) or an Appraisal. They will be aware of the area comparables within a one mile radius that have sold in the last six months.
If you are looking to buy a short sale, have your agent show you the recent sale of similiar properties. If the home is well below any current solds, plan on being countered higher than the list price.
Just because the short sale property is listed at a certain price does not mean that is the price for the home.
What if the bank counters back higher than any comparable solds in the last six months within the one mile radius? That issue will be coming in another blog post.