Q: I bought my home just a couple years ago, but my situation has changed and I have to sell as a short sale because I owe too much. I believe the property is worth $220,000 but my agent had me list it at $180,000. We got an offer for $160,000 but my agent told me not to ask for more – to let the bank do it. I think that’s too low. Shouldn’t I be making a counter offer? After all, I am the owner.
A: You could, but do you want to risk losing the buyer? The buyer has made the offer and, because it’s a short sale and you are shorting your mortgage lender money, it is already shaky because it’s subject to third party approval – your mortgage lender. Also, since it is a short sale, you are not getting any money from this sale.
Short sales are generally sold lower than market value for a variety of reasons. One big reason is that it can take a long time for a short sale to be approved by a lender. For that reason, it’s very difficult to find a homebuyer who will be willing to wait around for Short Sale to get approved.
Every homebuyer is looking for a property to either find a home of their own to move into or a property to invest in. Each homebuyer has his/her own timeline and reason for wanting a new property. If a homebuyer is looking for a home to live, and not invest, why would they want to wait for a short sale approval, that might not even happen (they don’t ALL get approved), when there are plenty of other houses to buy in this market?
Making a counter offer to your buyer may risk your short sale. Your mortgage lender will either:
1. Deny the short sale
2. Make a counter offer of their own
3. Accept the short sale.
Your counter offer, if the homebuyer even accepts it and doesn’t walk away, is no gesture to impress the lender since they’re still being shorted anyway. If you scare away your buyer, no buyer equals no short sale.
Tax implications should be discussed with your tax professional.
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.