Short Sale Home » Short Sale Buyers » How Much To Offer on a Short Sale?

This question gets asked a lot.  Speak with a real estate agent and get some comparables in the city and location you are interested in buying a home.  There are some good deals and not so great deals.  You need to be careful of the deals that look too good to be true by offering a low-ball offer price.  That price may not fly well with the lender(s).

1) Determine the Fair Market Value of the Property

Look at the sold properties in the area.  Your Realtor will have access to the MLS (Multiple Listing Service) to create a CMA (Comparative Market Analysis) for your property.  You’ll be able to compare by square footage, bedrooms, baths, garage and other similar characteristics (not upgrades though).  The analysis should pull between a 6 to 12 month timeline for the immediate surrounding areas.

2) Figure out the BPO (Broker Price Opinion)

The BPO is king to the lender and banks.  It’s a generalize opinion of the value of a property to determine the short sale property worth on paper.  The BPOs are ordered by the lender and sent to a Third Party Company.  A BPO can either be done to evaluate the Interior or Exterior.  An Exterior BPO means the BPO agent did not go inside the property to evaluate the condition.   BPO’s usually come in 10-20% lower than Fair Market Value for “pretty homes” – so, don’t expect a huge discount on these non-fixers.

Some Real Estate agents will recommend staying clear from Short Sales and focus on Bank Owned REO’s (already foreclosed upon) since many short sales fail to close.  Although, there are plenty of REO’s getting multiple offers by investors and sometimes choosing a short sale home that you are in love with, may be the better option than getting caught in a bidding war.  Investors tend to have deeper pockets and require a shorter time to close.

Everyone home is different -  it’s all location, condition, schools, etc.  Do your research and price the home appropriately.  It appears that homes have fallen to about 2003 prices, so do your research on Zillow.com and work from there.

Tags: bank owned reo, bidding war, buying a home, multiple listing service, real estate agent, timeline