Banks Are Now "Fishing" to Negotiate Short Sale Prices With Buyers

We handle a lot of short sales and have been seeing a recent trend called "fishing."  Let me explain how this works and how banks are using this to get more money out of their short sales.  Let's say we have a home that is put on the market for $500,000 and an offer is received for the same amount of $500,000.  A short sale packet is sent to the bank which consists of the signed offer from the seller, the seller's hardship letter, last two months worth of bank statements and last two years of tax returns.  The bank then does their internal review of the property.  First, they order a BPO, or better known as an appraisal.  This appraisal is done for the banks purpose only to see what they think is market value of the home.   Once complete, the bank will then do their internal evaluation of the seller to see if his/her hardship is adequate to justify the approval of the short sale.  Once that has been complete it's just a matter of approving the short sale.  This is where the "fishing" game comes into play.  Let's say the internal appraisal came back at $550,000 for this home.  The bank will then say they won't accept the $500,000 but will only do it for the $550,000.  But then, there is a subtle gesture that is added saying "or whatever the buyer can come back with."  At first, we thought this was just a normal negotiation play that any seller would do when negotiating a sale.  Since we handle a lot of short sales we have seen many banks use this "fishing" game to see how much more money the buyer is willing to pay.  We have seen a lot of buyers come back with a short increase in price and get the short sale approved.  In this case, a counter is made of $509,000 and the bank accepts it even though the just said they would not do the deal unless it was $550,000.  Case in point, everything is a negotiation in a short sale.  Don't feel like you have to cave into a price with the bank.  Make sure you short sale agent negotiates on your behalf to get you the very best price.  For more information on short sales and how to short sale your home please contact Sam Smith at 949-291-0424 today.  We specialize in short sales and look forward to assisting you