The recent national story about a $12 million sale of a waterfront mansion listed for $40 million six years ago sparked some interesting comments and questions from our adult children at Sunday night dinner.

They wondered about the market and considered real estate as an investment, and calculated the number of individuals who could afford ultra-priced homes and the possible mortgages that might accompany those residences.

“I don’t know anybody who could take a $28 million hit.”

We don’t, either. Perhaps LeBron James.

“Was the seller dreaming at first, or has the higher-end market fallen that much?”

In the “anything goes” days of 2004, people believed just about any asking price was attainable.

“What would the payments be on a mortgage that size?”

We’re assuming the new buyer does have a 20 percent downpayment ($2.4 million), and the contacts to get jumbo financing on $9.6 million. A 30-year, fixed-rate jumbo (5.75 percent) would mean monthly mortgage payments of $56,022.

“The buyer probably is looking at it mainly as an investment.”

The final statement especially rings true and deems to be considered from a few angles.

First, the buyer most likely feels the home will never be worth less in the future. While $12 million is a huge number, it was also the minimum bid set by a noted New York auction house. Granted, all real estate is local, but you can be assured that the East Coast company did its research before setting the initial minimum bid figure at $15 million. When the original deadline passed with no takers, the price was reduced an additional 20 percent to $12 million.

Second, the buyer probably believes the cash is better placed in Mercer Island waterfront than in another asset. While real estate is down right now, some of it will absolutely rebound, especially parcels with specific amenities like waterfront and mountain views. The buyer/investor is considering the home as a long-term hold that he hopefully bought near its lowest price point and will sell at a much higher point.

Third, there’s a chance that the property is held inside a pension plan, limited liability company, 401(k), traditional individual retirement account or Roth IRA. If so, those funds could have afforded the owner the only avenue to purchase the home while providing other opportunities for financing.

While the wealthy typically have more access to alternative financing vehicles, all individuals with IRAs have the option of investing in real estate. If you purchase the property with Roth IRA funds or convert your conventional IRAs to Roth IRAs for the purchase, the appreciation of the property would be tax-free.

Self-directed real estate IRAs are not only relatively easy but they are also not subject to some of the guidelines that apply to employee-sponsored qualified plans enforced by the Department of Labor.

To prepare for your real estate IRA, designate the amount of your retirement funds that you wish to use in the property deal and open a new IRA account with an independent administrator. Three national firms handling real estate IRAs are Entrust Administration, Kirkland, Wash.-based Guidant Financial, and Pensco Trust.

According to David Nilsson, president of Guidant Financial, some self-directed IRA clients are actually buying their future retirement home at today’s prices in highly desirable locales.

“They’re renting out the place for now and will claim occupancy after they take their final distribution after the age of 59 1/2,” Nilsson said “Many of our self-directed IRA investors are buying everything from raw land to condos and beach huts to country estates with IRA funds, and are realizing their profits tax-deferred within their accounts.”

The guidelines covering real estate IRAs are stringent. If you break one of these rules, you could jeopardize your tax-free status on your account:

* The land or house must be treated like any other investment.
* All rental profits must be returned to the trustee.
* You cannot manage the property. But your trustee can hire a third party (a real estate broker, or local manager) to collect rents and maintain or improve the property.
* The house or property (or proceeds from its sale) must remain in the trust until distribution at retirement. If trustee is instructed to sell the property, funds can be transferred to another account for reinvestment.

You cannot use IRA money to buy your own residence or any other property in which you live. It has to be investment property. But when you retire, you can direct your IRA to turn it over to you as a distribution at the current market value.

If you are convinced a piece of real estate will undoubtedly appreciate, check into a real estate IRA. You, too, could buy low and sell high.

Brokers these days have coined a term for a lawyer — or anyone else — who ruins a perfectly good real estate transaction: “deal killer.”

Despite the recent pickup in sales activity, the lingering recession and tough lending climate continue to kick up obstacles for both buyers and sellers — from obscure zoning problems to 11th-hour mortgage glitches.

This month, The Real Deal looked at these and other “deal killers” in the marketplace, examining the obstacles most likely to sabotage otherwise on-track transactions. Below is our list of the top 10 deal killers currently plaguing sales in New York, and a look at how real estate professionals are fighting back.

1. Inaccurate appraisals

Industry professionals overwhelmingly named appraisals as the biggest obstacle they face in getting deals to the closing table.

As The Real Deal has reported, rule changes under the new Home Valuation Code of Conduct have created a flood of out-of-town appraisers who, many complain, routinely undervalue properties. That, in turn, threatens buyers’ mortgages, and makes them think they’re overpaying.

But some brokers have now started providing appraisers with reams of information to prevent unexpectedly low appraisals.

“It’s important that you get proactive and provide as much information as possible,” said Jane Greenberg, a vice president at Halstead Property. She gives appraisers “an enormous amount of information” about recent comparable sales and the neighborhood, even pointing out special features that might impact the price, like a Viking stove.

Jonathan Miller, president and CEO of Miller Samuel Real Estate Appraisers, said agents should “always assume that the appraiser knows nothing.”

“You help tell the story by providing them with recent sales, recent listings, contracts you know of and condition information,” he said. He also recommended telling appraisers about bidding wars or multiple backup offers.

Appraisers must verify the information provided by brokers, he noted. But agents can make that process easier by providing sources as well as phone numbers for agents involved in comparable sales.

2. Deal-killing attorneys

Buyers and sellers sometimes don’t put much thought into who does their closing, often hiring a family friend or relative. It’s also common these days for price-conscious buyers to seek out attorneys with low fees.

But in the current climate, closings are incredibly complicated, and the wrong lawyer can spell doom for the sale.

“There are a lot of attorneys [who] can kill deals,” said Kathy Braddock, the co-founder of Charles Rutenberg Realty in Manhattan.

It’s important to hire a New York City attorney who “does closings day in and day out,” Braddock said. “If you only do one a year, as brilliant as you are in law, you sometimes miss what you should be looking for.”

Attorneys need to be able to spot potential problems with a building or apartment, but not get so overzealous in representing their clients’ interests that they harp on insignificant details, or try to re-negotiate the deal.

“I’ve had attorneys kill deals based on things that, in my mind, didn’t make any sense,” said Scott Klein, an associate broker at Prudential Douglas Elliman. For example, in one transaction involving an all-cash buyer (a graduate student with a trust fund), the co-op board asked the buyer to put a year of maintenance in escrow, which Klein thought “was totally reasonable.”

But the seller’s attorney then asked to increase that to two years, which did not go over well with the buyer. The attorney “almost killed the deal,” Klein said. “If the co-op was okay with one year, what does he care? It was ridiculous.”

Brokers should always be ready to recommend a good local attorney to clients, Braddock said.

3. Spooked buyers

Buyers today are much more likely to get cold feet than in the past, even after a bidding war or accepted offer, brokers say.

Thanks to low interest rates and low prices, buyers are now confident enough to re-enter the market and even make aggressive offers. But they still get nervous about job losses and the economy when it’s time to sign on the dotted line.

Ric Swezey, a vice president at the Corcoran Group, said he’s had a number of deals fall apart recently when the buyers backed out at the last minute.

“There’s a fear of pulling the trigger,” Swezey said. “I think they want to be more comfortable than they are.”

Antonio del Rosario, president of the sales division at A.C. Lawrence & Company, said one of his firm’s deals is delayed because the buyer is flying his mother in to see the property, even though his offer has already been accepted.

Even after bidding wars, “anybody who gets accepted is still going to take their time,” del Rosario said.

The best ways to assuage these fears, he said, is to crunch the numbers, using recent comparable sales figures to make buyers confident that they’re getting a good deal. In so doing, brokers must establish their credibility with clients, rather than being focused solely on their own commission.

4. Mortgage snafus

Even if a buyer is well-qualified and is purchasing in a financially sound building, there are plenty of ways that a mortgage — or lack thereof — can derail a deal in today’s market.

For starters, in order to close a deal or even sit for a co-op board interview, a buyer needs a commitment letter from the bank officially stating the amount and terms of the mortgage.

In the past, that letter was as good as money in the bank. But these days, commitment letters often arrive with conditions the buyer must meet, or the deal’s off, said Debra Guzov, an attorney at Manhattan law firm Guzov Ofsink. Sometimes the requirements are “very benign,” such as a signed copy of a tax return, she noted.

But at other times, the conditions can be more difficult to meet. For example, if the buyer is selling an apartment, the bank might require the sale to close before the new mortgage can go through. As a result, “even if you get that letter, you may not get a mortgage at the end of the day,” Guzov said.

If both the buyer and seller want the deal to proceed, they can usually find a solution, such as allowing more time for the buyer to find another bank. If not, they can end up in court, she said.

Today’s tight-fisted lending climate can even ruin deals where the buyer plans to use all cash.

Some buyers — even all those not planning to get a mortgage — are using now-ubiquitous mortgage contingencies as a sort of escape hatch.

Corcoran’s Swezey said he’s working with one buyer who plans to pay cash for an apartment, but insisted on a mortgage contingency anyway. The buyers don’t want the apartment unless banks will do mortgages in the building, because “they don’t want to be stuck in an apartment that they can’t sell,” he said. Plus, “they want an ‘out’ in the contract.”

Sellers often have little choice these days but to allow mortgage contingencies. But, lawyers said, they can protect themselves somewhat by wording contingencies very specifically so buyers can only back out under a limited set of parameters.

5. Greedy buyers

Today’s purchasers are fanatical about getting a good deal. In response, many sellers have finally cut their prices to levels appropriate for the market.

But in their haste to get the steepest possible discount, buyers sometimes push these sellers over the edge by making additional demands after the initial meeting of the minds.

“If a (buyer) says, ‘Now I want you to pay a year of maintenance or I won’t take this apartment,’ that can really turn someone off,” said Maggie Kent, a sales associate at the brokerage Core.

Sometimes, if a seller has accepted an offer lower than the asking price, “when the contract comes before him, he says, ‘Wait a minute, don’t I really deserve more than this? I’m not signing,’” said Noel Berk, co-founder of boutique brokerage Mercedes/Berk.

In one instance, a buyer noticed a scratch on the floor during a walkthrough of the apartment and demanded $10,000 from the seller to fix it, del Rosario said.

Buyers today “want to (save) as much money as they can,” he said. But while $10,000 may seem like a relatively small amount of money, a request like that in the current climate “could kill the deal.”

To defuse the situation, he recommended getting a contractor’s estimate of how much it would realistically cost to fix the scratch, and asking the seller to pay that amount. “You have to calm them down with logic,” del Rosario said.

6. Zoning

In the current climate, zoning problems that might otherwise have gone unnoticed are becoming insurmountable obstacles.

“Buyers’ attorneys are pickier because banks are pickier,” said Soho-based real estate attorney Margaret Baisley.

Guzov said her firm has recently encountered a number of real estate deals that have gone awry because of zoning. In one case, a family was in contract to purchase a maisonette in a co-op building that the seller was using as a residence. They didn’t realize until they conducted their title search that the property had previously been used as a doctor’s office, and was not zoned for residential use.

The seller had changed it to a home without getting the proper approvals, but that meant the buyers couldn’t legally live there as they had planned.

“It put the kibosh on the deal,” Guzov said.

Zoning issues are particularly problematic in Soho and Noho, which are still zoned for manufacturing, not residential use, Baisley said. For years, these rules weren’t enforced, but a recent crackdown by city officials combined with buyers’ increased vigilance is now causing many transactions to run aground. Baisley said she is currently working on two multimillion-dollar deals that have run into trouble because of zoning problems.

“More people are scrutinizing deals more thoroughly,” she said. “Buyers are nervous that their apartment will lose value, or they will not be able to resell them.”

To head off these difficulties, Guzov recommended that buyers check the zoning on a building’s certificate of occupancy before signing a contract.

In many Soho buildings, homeowners must have an “artist in residence” certified to occupy the space. “It just makes life more difficult,” Baisley said.

7. Fluctuating stock market

The worst of the financial crisis may appear to be over, but memories of wild gyrations in the stock market — and the painful monetary losses that went along with them — are never far from buyers’ minds. Faltering European economies don’t help.

Brokers say they dread stock market fluctuations because they cause even the most eager buyer to panic and pull out of the deal.

“Everything’s done and the contract comes to them and all of a sudden the stock market may go down 200 points and they get nervous and they back out of the deal,” Berk said. The problem is most acute with buyers in the finance industry, who are most attuned to these shifts.

So what’s to be done? A broker can’t do anything about the stock market, but they can spend time making sure their client feels very comfortable with the purchase before these fluctuations occur.

“This is where good brokerage comes in,” Berk said. “The broker has to educate the buyer and the seller constantly to make them feel that they’re making the right decision. Unless the broker makes them feel comfortable, it’s going to be a very rocky road.”

8. The bonus stigma

Working on Wall Street used to be a golden ticket when it came to real estate. But as The Real Deal and others have reported, reliance on bonus income can now sabotage a co-op board interview. Even as the market has improved, the stigma of working in finance has stuck, largely because of the large fluctuations in bonuses over the past few years.

“A lot of people had a drop in income last year because their bonus was lower,” said Richard Grossman, an executive director of sales at Halstead Property. “We’ve had to deal with that as an issue.”

Because of this dip, boards are now suspicious about assurances of future bonuses.

“They want real proof of real income, and really liquid assets,” said Aaron Shmulewitz, a real estate attorney at Belkin Burden Wenig & Goldman.

Bonus income can also be a problem for banks. Core’s Kent said she worked on a transaction where the bank was concerned because the borrower wasn’t able to show proof of at least two years of consistent bonuses.

Wall Streeters can often solve this problem by putting more money down, going to a different bank, or getting a different type of mortgage product.

Still, it’s a little tougher to overcome in co-ops.

“If (buyers) are in finance, they should consider condos,” Shmulewitz said. “If they really want a co-op in a fine prewar, they should have a lot of liquidity, and be prepared for a board demand for a large escrow.”

9. Bank delays

One of the biggest killer of deals these days is time itself. Many deals are falling through not because a buyer isn’t qualified for a mortgage, but because it takes the bank too long to approve it.

The process of getting a mortgage now takes much longer than it did in the past, with banks requesting reams of additional information.

During the boom, a delay likely wouldn’t have killed the deal. But since most buyers now have mortgage contingencies in place, they can pull out of the deal if they don’t get their financing within a specific amount of time.

“If the buyer has second thoughts, they’re well within their rights to say ‘I didn’t want to do this deal anyway,’” said Guzov.

The seller’s attorney can avoid this problem by giving the buyer more time to secure a mortgage. Guzov said she generally puts a mortgage contingency period of 60 days in the contract, but even one additional week makes a difference. After all, a buyer who really wants the property should welcome the extra time.

10. When the building doesn’t measure up

It’s a familiar story at this point in the downturn — a well-qualified buyer loses out on an apartment because the bank is concerned about issuing a mortgage in a certain building. Luckily, agents are starting to find ways to head this problem off at the pass.

Juliet Clapp, a sales manager at Citi Habitats, tells her agents that the moment they sign an exclusive sales contract, they should contact the major banks to find out if the building is on their approval list. If not, the broker can request that the bank start the process of approving it.

Approval may still not be possible — the building may have too many sponsor-owned units, for example, or too small a reserve fund. But if the broker finds out about these problems ahead of time, he or she can find solutions — like warning prospective buyers that they’ll need to put down 40 percent — before a contract is signed.

“At least you know what you’re dealing with,” Clapp said.

Cutting expenses is at the top of most people’s priorities today. Many are putting off major purchases like a new car or home until they feel more secure financially. However, not all buyers are taking a wait-and-see attitude.

They’re casting worries about the home sale aside and are buying now to take advantage of near-record-low interest rates. In order to get a discount in price, a number of buyers attempt to buy without an agent.

Let’s say the sellers signed a contract agreeing to pay 6 percent of the purchase price to their broker when the sale closes. If the property is listed on the multiple listing service, the listing broker offers to pay a portion of the commission to the broker who represents the buyers.

If there isn’t a broker representing the buyers, the commission can — if the listing broker agrees — be reduced by the amount that would usually be paid to the buyers’ broker.

In this case, if the listing broker agreed to pay 3 percent of the purchase price to the buyers’ broker and there is no buyers’ broker, the sellers would pay the listing broker only 3 percent at closing. On a $700,000 sale price, this would net the seller an extra $21,000, allowing the buyers to pay that much less and still match the price the sellers would receive if they paid the full 6 percent to the sellers.

Whether this is actually a cost-savings strategy will depend on a number of factors. A key issue is knowing how much you should pay in the current market. If you offer a price that’s way under market value, the seller might not even respond, particularly if you aren’t represented by a knowledgeable local real estate agent who can plead your case, or at least elicit a counteroffer. If you offer more than market value, this might negate any savings you’d realize by a commission reduction.

HOUSE HUNTING TIP: Attorneys who represent themselves in a home purchase or sale have an advantage over inexperienced homebuyers. They have legal expertise, especially if they specialize in residential real estate. A buyer with no legal or real estate background should consult with a knowledgeable real estate attorney to draft the purchase agreement.
When no one represents the buyers, the sellers’ broker represents the sellers exclusively. This means the sellers’ agent cannot prepare your contract for you or give you advice. An exception to this would be if the buyers and sellers agreed to have the listing broker represent both the buyers and sellers, which is not permitted in all states. But the listing broker often requires a larger fee for representing both parties.

Buyers who attempt to represent themselves may have knowledge that’s limited to what they’ve read in consumer-oriented homebuying books. Unless these books were published since 2009, they don’t represent the rigors and rules of the current housing market.

The best agents don’t rely on books to learn their trade. As with most professions, agents become experts in their field through years of experience working with homebuyers and sellers.

Homebuyers and sellers hire agents to learn the process, understand current market value so they don’t sell too low or pay too much, and to facilitate moving the process through the various quagmires plaguing the current market-loan qualification, appraisal issues and renegotiations over property defects — to a successful closing.

THE CLOSING: Unrepresented buyers are at a big disadvantage if they’re in a multiple-offer competition. Most sellers and their agents would rather work with a buyer who is represented by an agent, preferably one with a good reputation for closing home-sale transactions.

The number of homeowners missing their first payment on their mortgage ticked down slightly from May to June, but the total number of loans in some stage of the foreclosure process remained essentially flat at nearly 2 million, according to statistics collected by Lender Processing Services.

Among all loans, 30-day delinquencies were down 1.4 percent from May, to 1.81 million, while 60-day delinquencies rose 2.4 percent to 766,158. LPS data showed declines in both 90-day delinquencies (down 3.9 percent to 2.59 million) and loans in foreclosure (down 0.4 percent to 1.97 million).

The total number of non-current loans fell 1.7 percent from May to June, to 7.14 million, up from 6.9 million at the same time a year ago.

In releasing number for June, LPS said foreclosure starts among loans guaranteed by Fannie Mae and Freddie Mac have been accelerating and are currently at all-time highs.

Foreclosure starts are accelerating along with Home Affordable Modification Program (HAMP) cancellations, LPS said, with most of the increase and volume concentrated loans that were delinquent by six months or more.

Among homes in foreclosure, homeowners were behind on their payments by 461 days on average, up from 343 days at the same time a year ago and 274 days in June 2008.

In releasing its latest Mortgage Monitor report, LPS announced changes in the assumptions it makes when extrapolating the figures it gathers from loan servicers in order to get an idea of what’s happening among all active loans.

While LPS had previously estimated that servicers were providing the company with data on 70 percent of all loans, it now estimates the coverage ratio to be slightly smaller — 66.8 percent.

The reduction in the estimated coverage ratio means that there are probably more active loans than LPS had previously estimated — 54.2 million in May, rather than the 51.6 million previously estimated — and also more non-current loans.

LPS had previously estimated that there were 6.26 million non-current loans in May, including 1.7 million loans in foreclosure. Using the new extrapolation rates, LPS now estimates that there were nearly 7.3 million non-current loans in May, including 1.98 million loans in foreclosure.

LPS said its coverage ranges from 38.5 percent of subprime loans, to 70 percent for prime loans guaranteed by Fannie Mae and Freddie Mac, and 82.8 percent for non-agency jumbo prime loans. Statistics gathered from loan servicers on
each loan type are extrapolated accordingly.

When the changes are applied historically to data going back to January 2008, the numbers paint the same overall trend: a steady rise in non-current loans that plateaued briefly in early 2009 before peaking in January 2010 and falling sharply in February and March.

In another change in the June Mortgage Monitor report, LPS did not release an estimate on the number of homes in lenders’ real estate-owned (also known as bank-owned or REO) inventories.

Last month, LPS estimated that lenders had 1.13 million REO properties on their hands, roughly the same as April, but up 21.2 percent from a year ago.

The June Mortgage Monitor includes a definition of REO properties — listing status is not a consideration, and the number is supposed to include all properties in lenders’ hands whether they are on the market yet or not — but no estimate for REO inventory.

LPS also said that before March 2009 it assumed it was getting data on 40 percent of REO properties from loan servicers, and that after that it had made an adjustment for “under-reporting by a specific client.”

Ginny: My sister inherited 75 percent of a home from our paternal uncle years ago and his wife’s niece inherited 25 percent. The niece was also willed the furniture in the home, but she never retrieved her belongings even when a legal document was written for her to remove all furniture by a specific date. The house hasn’t been occupied since my uncle expired, and the niece hasn’t been heard from in many years.

The house is located in my sister’s hometown, while the niece lives in another state and has never been involved in the home’s upkeep. My sister spends her hard-earned money on the house paying real estate taxes, lawn maintenance, etc., and does not want to sell the home or buy out the niece. Currently, the house is in need of a lot of repairs.

Can my sister sue the niece for abandonment of property? Does this have to go to court? If so, do you think Legal Aid can assist, as my sister has a limited amount of funds? If my sister stops paying the real estate taxes, she would lose the house. The niece doesn’t deserve the house due to her neglect and abandonment. — Steve H., Santa Fe

Steve : As for the furniture, I would consider it abandoned, and your sister can do with it as she pleases. She can use it, sell it or donate it to a charity.

But as for the house, unfortunately, the niece owns one quarter of the house. The only way that your sister can resolve the issues is to file suit against the niece. Your sister can ask the court to require that the niece either reimburse your sister for one-quarter of the expenses she has incurred or convey her interest directly to your sister in exchange for not making any payments.

Keep in mind that your sister owns a larger portion of the property and is legally obligated to pay her share of the expenses — including real estate taxes, insurance and maintenance.

I seriously doubt that any Legal Aid program will be able to provide free legal services to your sister. My experience is that when a person has an interest in real estate that has value, Legal Aid programs generally are not permitted to assist. It is different, of course, when a person’s home is about to be foreclosed upon, but your sister’s situation is not that serious.

You state that your sister does not want to sell. While I appreciate this, the fact is that the house has been vacant for many years, and is a financial burden on your sister. I assume it has some value, so why not ask the niece if she will agree to sell the house? Then your sister will be able to recoup — through the sales proceeds — the moneys she has already spent.

But keep in mind that in most states, there are statutes of limitation. This means that if a lawsuit is not brought after a certain number of years (often three or five), your sister would be able to be reimbursed only for expenses incurred within the statutory period, but not for expenses that go beyond the statutory period.

Hopefully, when the niece sees that she might get some money from the sale — or at least will avoid lengthy and costly litigation — she might be finally willing to cooperate.

Otherwise, your sister might be able to find a lawyer willing to take the case on a contingency-fee basis. This means that the lawyer — if successful — would get between one-quarter and one-third of any moneys recovered.

But, while some attorneys may be willing to take a contingency on the sale of the house (since that would generate money), I seriously doubt they would accept such a case only to sue the niece for reimbursement.

I strongly suggest you convince your sister that it makes sense to sell the house.

Ginny:  In April I offered $165,000 on a short sale that was listed at $150,000. My offer was for all cash, but we just found out the property was sold in June to someone else for $160,000 — $5,000 lower than my offer! My broker said that banks look at the first in line and try to work with that rather than try to get the best offer or even look at all offers. Is that true?

My offer was third in line, and apparently the bank took a lower offer that came in before mine. Is this really the way it happens with short sales, or should I look for a different broker? –Domi A., Los Angeles

Domi:  I can envision several different scenarios that might have legitimately led to this result. First off, the other buyer might have simply gotten into contract first. Once a seller is in contract with a buyer, they can’t simply cancel the contract with that buyer because they get a higher offer. Some banks require that all offers be submitted by the listing agent so they can select the highest and best offer, no matter when it comes in. Others want only the actual “contract” the seller has signed.

With short sales, there is the additional nuance that once the bank is considering one contract, many experienced short-sale listing agents will not submit any additional offers to the bank unless and until they receive an acceptance from the bank — regardless of whether the bank has requested to see additional offers or not.

Many fear that submitting a new offer essentially presses the restart button on an already interminable short-sale application process. And this is especially so in situations where the new, incoming offers are higher than the one being considered — here’s why.

Short sales take a long, long time. And they are very unpredictable — most of the time, there’s no telling how long it will take before the bank will issue an acceptance, or whether the bank will ever accept the short-sale application at all!

For this reason, buyer’s brokers and listing agents alike understand the reality that most buyers who make offers on short sales continue to look around for other properties, even if their offer was the one accepted by the seller. As a result, oftentimes short-sale buyers make an offer but fail to hang in the transaction for the duration.

So, here’s what happens in a short-sale listing agent’s head. They get an offer for $160,000 that is submitted to the bank for consideration. Then, they receive an offer from you, for $5,000 more. Some listing agents — as backwards as it sounds — would prefer to get the bank to approve the lower sale price, because the approval of your higher offer price ties their hands from ever accepting other offers at a lower sale price than yours in the (quite likely) event that you walk away before the deal can be done.

If you walk away, and the bank has already seen or approved your high price, the listing agent may never again be able to find another buyer to pay that much. And the bank may never accept less than your offer price, once they’ve seen and/or approved it.

Other things could also be at play here that would make your offer less desirable than the prevailing offer. You offered $5,000 more, and were offering cash, but the other offer might also have been all cash — especially at that price point and in that area. Did your offer include a proof of funds — a bank or other account statement documenting that you actually have the cash in hand to do the deal? If it didn’t, and the other offer did, that could cause a seller to select the other offer over yours.

Did your offer contain any contingencies, like appraisal or inspection? If it did, and the other offer didn’t, that could also push the other offer into priority over yours.

Did the listing broker or agent also represent the other buyer? Often, the total sales commissions paid out on the seller’s side go down — and the total commission earned by the listing broker goes up — when the listing agent represents both buyer and seller.

This arrangement — where a seller agrees to pay a 5 percent commission split 50/50 between two agents or 4 percent commission if the listing agent also represents the buyer (the specific numbers are hypothetical) — is called a dual/variable commission structure, and can also result in preferential treatment to a lower offer because the costs are lower to the seller on the transaction that included dual representation.

There’s no way to know for certain — other than asking the listing agent, who may or may not elaborate — exactly why the lower offer was preferred over your higher, cash offer. But I would encourage you not to shoot the messenger!

I don’t know if you’ve heard or read, but short sales are notoriously difficult to buy. Google it, and don’t fire your agent over something that’s totally out of their control. Unless, that is, you have an ongoing trust crisis — even if it’s unwarranted, that’s a good enough reason to get referrals and do whatever it takes to find an agent you do trust.

The homebuying process is difficult enough — for both you and your agent — without you constantly questioning whether your agent’s on the up and up and threatening to ditch her when things don’t go your way.

If you’re trying to buy a short sale or REO, the one thing I can guarantee you is that something — or many things — will not go your way. C’est la vie on today’s real estate market (and that’s not your agent’s fault).