Approved short sale where the minimum is spelled out

[Sam Leon]

I have done short sales but this is the first time looking at an approved short sale, the listing agent says the offer price cannot be less than X.

So in the case where the bank has already approved the price, does the offer price ABOVE THE MINIMUM still meaningful?

In the event of a multiple offer situation, where the home owner seller would select which buyer, what is the difference to the seller if the offers are X, X+$100 and X+$50000? There is no substantial difference to the seller correct? This is of course, assuming, the lender fully releasing the mortgage and seller released from all obligations under the note and mortgage and the lender waive all rights to collect on any deficiency amount.

In other words, the only thing that matters to the seller is the terms - the contingencies, is there an inspection? Is there a financing clause etc...

Or does the offer price still matter, I guess if the seller has to pay tax on the shorted amount then that amount would be different.

Thoughts?

[Patrick L.]

I've been in this situation many times.....here's how I get my offer selected without over paying if the approved price is a killer deal.

1. Cash (anything but cash in a multiple offer short sale situation is going in the trash).

2. Waived Inspections. I self inspect and can do this prior to my offering being accepted. If there are multiple offers the fact you aren't going to bail once the paperwork is approved will set your offer apart from the others.

3. I will add a clause in an addendum that I will pay up to X amount (generally $2-3k) over and above my offer if additional costs come up that are necessary to close the transaction. Sometimes liens aren't found initially when the preliminary HUD is submitted to the bank for approval (such as a utility lien for a few hundred, a city lot clearing lien, etc). The bank's net can't be changed without going back for approval again which will cause a big delay and may end up with the deal not going through.

4. Talk to the listing agent. I will always make contact to go over any issues and make it clear that I will close the deal and don't play any games.

5. Offer to let the listing agent have both ends of the commission (if you're not already working with an agent).

The bank has already set their minimum net so price isn't an issue on that end. On the seller's end the only reason price would matter is the bank may or may not have agreed to forgive the deficiency. The seller will get a 1099 for the difference between the balance and the amount the bank accepted. This may or may not matter to a seller depending on their financial situation. An investor who has a good income but was just upside on the property and let it go may end up with tax hit while others may not. Through 2013 the Mortgage Debt Relief Act protected owner occupants but that expired at the end of last year so I've yet to see how that's going to effect sellers this year.