Why Does a Charlotte SHORT SALE Seller Care if You Write a Low-ball Offer?
Buyers and even, more often than we would like to see. their agents don't understand why a seller would care at all about the Offer which they receive on their short sale home for sale.
Why would sellers care about the Offer they receive on their short sale home for sale?
First of all, let's be clear about the definition of a short sale: A short sale occurs when the seller does not have sufficient proceeds to pay off their mortgage. In order for the transaction to be completed, the bank either has to "forgive" the debt or allow the seller to turn the deficit into a personal loan to be paid off after the home has been sold.
A short sale is a initially unilateral agreement between a buyer and a seller, the homeowner, NOT the bank. The seller is the property owner on the Deed of record. The bank is not a party to the Contract. No one from the bank will ever sign the Contract/Offer, thus never being an actual party to the Contract itself.
However, if you are attempting to purchase a short sale in the state of North Carolina, you will be required to sign a short sale addendum which states that the seller cannot actually sell the property without his/her/their lender agreeing on the terms which the buyer and the seller agree upon. This means that the bank/lending institution/investors will be taking a lesser amount owed to them by the seller, for which they may or may not accept.
Therefore, it is in the homeowners' best interest to recognize that the bank will be extremely diligent about the Contract price, especially if the seller is facing foreclosure. In this case, time is of the essence and the seller doesn't want the bank to tary on their approval of the Contract price. Having a fair price to initially present to the bank can save valuable time for the seller.
The bank is already having to accept a net loss to their investors so, they have no interest in accepting a short sale payoff based upon a Contract price which is well below market value. In order to determine the fair market value, the bank will hire a local third party appraiser or Realtor®, who will provide the bank a fair market value. The bank will then compare the market value and the Contract price to determine their net loss. This net loss will then be presented to their investors who will then either reject, counter the buyers' offer or agree to accept their loss as stated on the Contract.
Sellers must calculate the risk of the Offer received, based upon the information provided them regarding the buyers' lending, the price offered and the buyers' timeline. Upon acceptance of an Offer, the sellers' home will be removed from active listings in MLS. Should the seller accept a low-ball Offer, their home could be off the market for an extended period of time, during which time the bank and your Realtor® will negotiate the short sale Contract. With low-ball Offers, the bank will most often reject the Contract and the home must be placed back on the market, pending another Offer. This time is costly to the seller/homeowner and could very well lead them to foreclosure.
Low-ball Offers on short sales do not accomplish the desired end results for either party. The time delay is certainly a factor and neither party's desired outcome is achieved. This is why sellers who are short selling their homes for sale do not wish to accept low-ball Offers from buyers.
Are you upside down with your mortgage? Do you owe more than your home is worth? Have you suffered a hardship making it impossible to make your mortgage payments? There are other options other than foreclosure; learn what those options are. Perhaps a short sale is your best option. Consult your real estate attorney, CPA and a Realtor® who is a short sale specialist.
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Debe Maxwell, Realtor®/Broker/CRS
Direct: (704) 491-3310
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