Short Sale SellersWhat to Offer on a Short Sale?
When you make an offer on a short sale, be prepared to wait. It can be quite a long process and many times real estate agents will price the homes well below market value to get many offers on the home.
The bank isn’t going to to just give away the property, and will want to get the most return on their lost loan as they can. Since they are taking the greater financial loss, the bank has the final say and will try to wait out for the best offer as long as possible. The lender’s decision is based on not selling the property below a certain percentage of the appraised value and this guideline may be different from lender to lender.
When making an offer on a short sale property, it is important to start with a low price since a lender will typically counter with a higher offer, which can take up to 2 to 3 months. Although, it is taking a risk when asking for a low price…as you risk losing the property. Make sure you make your offer even more attractive by either offering a shorter escrow period, more of a down payment or a higher earnest deposit. Although each bank is different and each transaction is different in itself. If the real estate agent for the seller has done their homework and delivered a complete package with accurate information, the bank may be more willing to accept low offers on a listing price. It always helps to get a real estate agent that has the experience to process these types of properties for you.
It may take a month or even as long as 6 months to get a response from the bank after an offer. With any short sale offer remember to:
Once the approval is received from the bank, be prepared to move quickly.
Unfortunately about 80 percent of short sales may end up foreclosing due to Realtors not pricing them correctly or they are not managing the BPO process with the lender correctly. It’s very important for the lender to see that it is more cost effective to close as short sale vs. processing the property as a foreclosure.