As a guy who has been buying some short sales of late, I have finally figured out how the banks calculate how much they are willing to take for a property. Ask anyone who has ever offered on a short and they will tell you that after you make your offer, you do not get to hear any news for at least 3 months. When the bank does get back to you, your offer is considered a joke, and the bank would like lots more. Or your comlletely lowball offer is accepted. Even if your offer is the only one that they have ever had in the last year, and you are right where market seems to be, the bank does not like it. Here is the dirty little secret:
The bank does not use any complex formulas to do its' figuring. It does not hire any acccuntants or economists, or even MBA's in Finance in order to come to a price. The banks hire monkeys. Yep. Thats right. Monkeys. The monkey is then put in a room with a whole bunch of bananas. All of the bananas are labelled with dollar amounts. The amounts could range anywhere from $20K all the way up to $10M. The banks short sale team gives the monkey a bit of help at this point. They remove all of the bananas with prices on them that would not work for the next property on the docket. So, if the next property is around the $200K market price, they would only keep bananas in that range. You know, like say $140K- $260K bananas would get to stay. Then the monkey is allowed to pick a banana and eat it. Voila. That is the price. At this point the bank will not negotiate at all. Pay or cancel your offer.
One of the reasons that offers take so long to get accepted or rejected is the capacity of the monkeys stomach. The poor monkey can only eat so much per day so the banks have had to limit the number of decisions the monkey can make. As of right now, the banks have no plans to hire any more monkeys.