The lender, and in many cases the investor that actually owns the loan, makes the final decision on price and terms, not the seller and not the listing agent. The lender bases its decision on its own valuation of the property.

This misunderstanding causes more friction in short sale negotiations than almost anything else, particularly when a buyer or buyer’s agent tries to negotiate hard with the seller or listing agent over price, assuming that pressure will move the number. It won’t, because the people being pressured don’t have the authority to change it.

Where the price actually comes from

Before approving a short sale, the lender typically orders a valuation of the property, most often a broker price opinion, sometimes a full appraisal. That valuation, not the seller’s opinion of the home’s worth and not the agent’s market analysis, becomes the benchmark the lender measures any offer against. An offer that comes in well below that valuation usually gets countered or rejected outright, regardless of how the negotiation between buyer and seller went.

It’s also worth knowing that on loans owned by an investor rather than held directly by the servicer, the servicer itself may not have final authority either. Many loans are serviced by one company but actually owned by an investor like Fannie Mae, Freddie Mac, or a private investment trust, and the investor’s guidelines ultimately govern what price and terms get approved.

What this means practically for buyers

A buyer’s best strategy in a short sale isn’t to negotiate the seller down as far as possible. It’s to make an offer realistically close to market value from the start, since an aggressive lowball offer is more likely to get rejected by the lender’s valuation review than accepted through pressure on the seller. Buyers who understand this tend to write stronger initial offers and spend less time waiting on counters that were predictable from the start.

Have a question about your own situation? Call or text Michele Lee Scherger at 561-309-2950. As a Certified Short Sale Expert, she can walk you through what applies to your loan, your lender, and your timeline.