Why Banks Counter Short Sale Offers That Make No Sense (And What’s Really Going On)

If you’ve ever submitted what looked like a clean, market-value short sale offer—only to get a counter that feels completely detached from reality—you’re not alone.

Agents and buyers often ask the same question:

“Why would the bank counter at a number no buyer would ever pay?”

The short answer: it’s usually not personal, not emotional, and not random.

The long answer is where things get interesting—and where most short sales either die or get saved.

Let’s break down why banks counter short sale offers that don’t make sense, what’s really happening behind the scenes, and how experienced short sale negotiation can flip the outcome.

The BPO Is Driving the Bus (Even When It’s Wrong)

Most short sale counters are rooted in one thing: the Broker Price Opinion (BPO).

Here’s the problem. BPOs are often:

- Rushed

- Based on bad comps

- Completed by agents unfamiliar with the neighborhood

- Influenced by outdated or irrelevant sales

Yet once a value is entered into the lender’s system, it becomes the anchor for the entire negotiation. The negotiator may not have authority to ignore it—even if the offer makes perfect sense.

This is why banks counter at numbers that feel inflated or unrealistic. They’re reacting to an internal valuation, not the open market.

A big part of helping real estate agents close short sales faster is challenging bad BPOs early, before the file gets locked into an unrealistic number.

Automated Valuation Models (AVMs) Add Another Layer of Confusion

In addition to BPOs, many lenders rely on AVMs (Automated Valuation Models).

These tools:

- Don’t account for condition

- Ignore layout issues

- Miss deferred maintenance

- Assume uniformity across neighborhoods

So even when the BPO is decent, an AVM may still push the bank higher. When the two don’t align, banks often default to the higher value “just to be safe.”

From the outside, the counter looks absurd. On the inside, the negotiator is just checking boxes.

This is where short sale processing and negotiation experience matters—because knowing why the number exists determines how to dismantle it.

Investor Overlays: The Hidden Hand Behind the Counter

Many short sales are not controlled solely by the servicer. They’re subject to investor overlays.

That means:

- The servicer wants approval

- The investor sets stricter thresholds

- Negotiators have limited flexibility

- Logic doesn’t always win on the first pass

Some investors require:

- A minimum net

- A percentage of BPO value

- Multiple counter rounds by default

So even if the bank expects to accept your price later, policy forces a counter first.

Understanding these rules is a core part of short sale approval assistance, especially when trying to keep buyers from walking away out of frustration.

Why “Just Countering Back” Often Makes Things Worse

A common mistake agents make is responding emotionally:

- Immediate counter-back

- No supporting documentation

- No value narrative

- No condition breakdown

That approach almost never works.

Banks respond to evidence, not opinions:

- Repair estimates

- Condition photos

- Market time data

- Failed previous listings

- Buyer fatigue indicators

When we step in to help with a short sale, our focus isn’t speed—it’s leverage. The goal is to reset expectations inside the lender’s system, not just react to the number they sent.

The Buyer Psychology Factor Everyone Ignores

Another reason banks counter high? They’re testing buyer commitment.

From the lender’s perspective:

- Serious buyers stay engaged

- Weak buyers disappear

- Time filters out noise

The danger is that many good buyers walk—not because they aren’t serious, but because no one explains what’s happening.

Part of effective short sale coordination is managing expectations on all sides so deals don’t collapse due to silence or confusion.

How Experienced Negotiation Changes the Outcome

Here’s the difference between stalled short sales and approved ones:

- Challenging the BPO instead of accepting it

- Reframing value using lender language

- Escalating intelligently (not emotionally)

- Timing counters strategically

- Keeping buyers engaged through uncertainty

This is exactly why agents partner with specialists instead of trying to fight these battles alone.

If you’re handling multiple listings, managing showings, and keeping buyers alive, adding lender negotiations on top can derail everything. That’s where short sale transaction management becomes less of a luxury and more of a necessity.

When a “Nonsense Counter” Is Actually a Good Sign

Believe it or not, some of the strangest counters mean:

- The file is active

- The negotiator is engaged

- The investor is reviewing

- Approval is possible

Silence kills deals faster than bad numbers.

Knowing when to push, when to wait, and when to escalate is the difference between months wasted and a clean closing.

If you want a clearer picture of how this works behind the scenes, take a look at how we handle lender negotiations and short sale approvals from start to finish on our site.

The Bottom Line

Banks don’t counter short sale offers to be difficult.

They counter because:

- Systems are rigid

- Valuations are flawed

- Investors control the rules

- Negotiators have limited discretion

Understanding this turns frustration into strategy.

And when short sales are handled correctly, those “nonsense” counters often become approvals—without burning the buyer, the agent, or the seller in the process.

If you have a short sale where the bank’s response feels completely detached from reality, it may be time to start a short sale review with an experienced negotiator and reset the conversation before the deal falls apart.