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Manuel, Home Buyer in Arizona

how much to offer in a short sale?

Asked by Manuel, Arizona Sat Nov 24, 2007

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18
Great question that there is no real answer to. Let me explain.

A short sale is where the house is being marketted for less than the lender is owed. Typically, the lender has not disclosed their bottom line, so agents can price it wherever they want to generate interest in the property. Nothing prevents an agent from listing a home with an actual value of $300,000 for $175,000. They may get offers for $175,000, the asking price, but the lender can reject or counter offer all of them. I literally saw an agent do that exact scenario. The only person to benefit was the agent because he was able to receive buyer inquiry calls on the home all day long. He was actually hoping the home never sold. Can you imagine how many calls he was getting???

My advice is to do your homework on the area and bid the price that you would be willing to buy the home for, regardless of the asking price.

Also, be prepared for an extended period of time between submitting the offer and getting a response.

Hope this helps.
4 votes Thank Flag Link Sat Nov 24, 2007
You've received two excellent answers to a difficult question. I'm going to suggest you avoid Short Sales if you can just buy a bank owned (already foreclosed upon) home that's already on the market. As one of my colleagues below pointed out a good number of Short Sales fail to close. They are arduous to work through for the buyer and can fall apart after you've invested a good deal of time and money (inspections etc... ) into the transaction.

With so many foreclosure properties on the market, unless you're in love with the location/floor plan or some other attribute that another home simply will not offer, you'll be working pretty hard and won't necessarily get a better deal on a Short Sale than you will just buying a foreclosure that's already through the courts.

Good luck to you! No matter what you choose to purchase, get your financing cleared before you begin the buying process on anything. Guidelines are much tighter now than they used to be.
2 votes Thank Flag Link Sat Nov 24, 2007
In large part this depends upon the lender, but ultimately agents should try to get an offer at fair market value. Because the property is in distress, there is some reduction in price. We hear some lenders say they want 90% of fair market value, but often times they will take less.

Fair Market Value is determined by an agent (called a BPO agent) who might do a good job, or may just drive by and take a quick look. The banks don't pay very well for this service and often times the BPO agents are overloaded.

That all said, there are really no absolutes with Short Sales, so much depends upon the investor, the servicer, the bank's negotiator, and the skill of the agent/negotiator. What we continue to find is that short sales are a retail product, and many times investor offers are just too low.

NextGEN Real Estate Corp.
http://www.nextgenrecorp.com
877-647-3911
1 vote Thank Flag Link Fri Jan 14, 2011
If you are going to make an offer on a short sale you better have a lot of time on your hands. This can be a long and arduous process. Like others stated before, agents price homes well below market value to get offers on the home, and buyers names for potential clients.

If want to get a great deal on home with out all the hassle, speak with an agent. There are about 50,000 homes for sale, and prices range significantly from area to area. There are new homes that are great deals as well. The choice is left to you, but unless you want have the time an patience to deal with the lender, I would suggest finding a home with out all the hassle.

Ulises Romo, REALTOR®
PRO-formance Realty Concepts
ulisesromo29@yahoo.com
1 vote Thank Flag Link Sat Dec 8, 2007
Great Point Dave Dion. Can someone tell me how that is considered ethical for an agent? There is always someone in the bunch that gives the rest a bad name. What about the poor owner who was in foreclosure? If they want to list short sales they should learn everything there is to learn about them. Short Sales are an unpredictable creature. There are many things going on behind the scene at the banks such as end of month goals, staying within a budget for short sale write offs, current inventories, and the list goes on. Then you have the other side - what is the compelling reason for them to discount? Does the home need repairs? Is the owner experiencing a true hardship? Is the property functionally obsolete? Is it next door to a paint factory?
They need a good reason even with today's marketplace. Yes, they will all short sale, but if you want more than a 10% or 15% discount, you have to be able to back that up with a reason for the discount.
1 vote Thank Flag Link Tue Nov 27, 2007
Manuel,
Every home is different, location, condition, etc... Therefore it is difficult to offer a price suggestion, with such few details.

80% of Short Sales fail to close. Just wait a few months and those Short Sales turn into Lender Owned property's.

The Bank is not going to give away their money. Phoenix is loaded with Lender Owned / REO`s Property`s that is where you should be looking. If you are not working with a Realtor, email me and I will send you a current list.

However if you insist.
The Comps are a good place to start.

Good Luck
Patrick Mahony
480-543-9899
http://www.ITSRealEstateAZ.com
PjMahony@gmail.com
1 vote Thank Flag Link Sat Nov 24, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
The foreclosure crisis has been over in Metro Phoenix for some time. Lenders no longer have to rid themselves of excess inventory. We find they have been asking for reasonable market value. That includes making adjustments for deferred maintenance.
0 votes Thank Flag Link Sun Aug 10, 2014
There aren't very many short sales left here in the Phoenix area. The number of distressed sales has gone down significantly.
0 votes Thank Flag Link Wed Jul 23, 2014
Manual, your real-estate agent should be able to advise you on the best way to approach.

Hope your transaction went good!
0 votes Thank Flag Link Mon Jul 14, 2014
You can offer what ever you feel the house is worth and most likely the seller will accept your offer. Unfortunately the seller cannot make a final decision, the bank who holds the trust deed makes that decision. The bank will order an appraisal and or Broker Price Opinion (BPO) to determine market value. The bank will consider offers near to actual market value.
0 votes Thank Flag Link Thu Jun 26, 2014
I'm curious about a short sale I am currently looking into. Asking price $62,00 which was decrease from the original asking price (a month ago) of $65,000. Auditor website shows home valued at $63,700 in 2011. Home value in the area is generally about the same, or slightly lower than in 2011 according to the market value graphs I have seen. Made an offer on the short sale of $60,000 plus closing costs. Is this a relatively decent offer?
0 votes Thank Flag Link Tue Jun 24, 2014
also, my offer is the only one that has been made
Flag Tue Jun 24, 2014
In this market even on short sale's properties, lenders will not accept offers that are too low. It really depends on the location, features and benefits. The house inventory is low and sellers are getting bidding wars on their homes.

Best Regards,

Real Estate Professional / Prestige Realty
Bianca Bennett / 602-570-7898
Bianca@InvestInArizonaHomes.com
Website: http://www.InvestInArizonaHomes.com
0 votes Thank Flag Link Tue Jun 25, 2013
I had a short sale last year and my Realtor recommend http://www.cfs-mortgage.com/flex for a home loan. I am very happy to be able to purchase again.
CFS Mortgage assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
0 votes Thank Flag Link Sat Jun 22, 2013
About 90% of market value is usually requestet, but shortsalecenter.net regularly does much better.
Web Reference: http://shortsalecenter.net
0 votes Thank Flag Link Wed Jan 4, 2012
I agree with Dave. Your best bet is to have your agent put together a comprehensive comparative market analysis showing a good estimate of the current value of the property. Unfortunately, the price the bank will accept is largely driven by the Broker's Price Opinion (the "BPO") that the bank will order when they receive your offer. If your offer is way below the results of the BPO, the bank will certainly counter. If your offer is in line with the BPO, you have a much better shot at getting the offer accepted quickly.

I have done lots of BPOs and would be happy to help you figure out a good offer price for the property in question. Let me know if I can help.

Thank you.
0 votes Thank Flag Link Mon Feb 14, 2011
Good question. Have your Realtor run the comps but keep in mind the listing price has not been approved by the mortgage holder (most are a bank). The sellers would literally accept $1 in most instances, but they dont have the final say, the bank does. I think it is very important for buyers to realize on a short sale, the listing price has not even been approved yet.

Good luck
Spirit Messingham
Tierra Antigua Realty
Tucson, AZ
0 votes Thank Flag Link Mon Jan 17, 2011
I don't even bother to look at these low priced short sale any more ... In fact I wish Trulia has a feature which I can identify these properties individually and block them out the next time I run a query. Good REO properties if priced right (or reduced price right) will have an offer in less than a week. Any thing last more than a couple weeks is a troller.
0 votes Thank Flag Link Fri Jan 14, 2011
i have found a home and the asking price is $60,000 on a short sale--How much should I offer?
0 votes Thank Flag Link Sun Aug 1, 2010
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