It really pays off if you're thinking about buying a Sacramento short sale to hire an experienced short sale agent. An agent emailed me yesterday to say her Buyer B had made a backup offer on a short sale. It's a situation in which the previous buyer walked away after receiving the short sale approval letter from the seller because he lost his job. The short sale was approved at, let's say, $300,000.
So, that particular Sacramento short sale agent (not me) put the home back on the market at, say, $295,000. Now you might ask why would an agent list the home for less than its approved price? That's a good question. An agent would ask the seller to lower the price if the agent felt it was the best way to attract an offer. Maybe there are not a lot of buyers looking at the $300K price point but they would be looking up to $299,000, and the seller would lose those buyers otherwise.
Along comes Buyer A. Buyer A offers $275,000. For some unknown reason -- and it's not a practice I condone -- this particular short sale agent did not send the offer to the bank. She sat on it for 3 weeks to see if a better offer came in. No better offer came in, so the agent sent Buyer A's offer to the bank. The listing status is now changed to Active Short Contingent.
This is where Buyer B shows up. Buyer B can afford to pay more than $275K. In fact, Buyer B can pay $300,000. Because the seller accepted the offer from Buyer A, the seller cannot accept a second offer, unless that offer is in backup position. Because this is a California short sale, it is subject to the short sale addendum. Section 6 of the short sale addendum allows the seller to send more than one offer to the bank.
This listing agent can indeed, with the seller's permission, send an offer for $300,000 from Buyer B to the bank. Of course, the agent must inform Buyer A of this action. Once informed, Buyer A is likely to cancel.
Why would the seller and why would the seller's agent want to send a second offer to the bank? Because this is the offer the bank has said it will accept. Do you want absolute certainty or do you want to gamble? Do you want to close that short sale?
You might also ask what happens if Buyer A refuses to cancel the transaction? This is the real world, regardless of a buyer's irrational behavior. Buyer A's deposit can sit in escrow until the cows come home. The real world is the bank will accept Buyer B's offer, thereby rejecting Buyer A. Since the entire short sale is subject to bank approval, Buyer A doesn't have a leg to stand on.
The moral of the story is Buyer A should have offered the short sale approved price. Because if Buyer A had listened to his agent's advice, Buyer A would still be in escrow. Sometimes buyers don't want to offer even list price on a short sale because they don't understand real estate or pricing. If that $300,000 home is under market, then $300,000 is a great price. Check the comparable sales before writing an offer. I say that over and over, but few do it.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
