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Lady, Both Buyer and Seller in Kingman County, KS

I am cash buyer - I am interested in a property that is a 'short sale'

Asked by Lady, Kingman County, KS Sun Sep 4, 2011

The property is a condominium and I can pay cash for the listed price. From comparing this property to others, it appears to be listed far less than others similar to it in the building. Is it advisable to pay the listed price or should I try to negotiate for less? Do the bank(s) generally expect the listed price?

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Don Tepper’s answer
Why would you be a cash buyer on a short sale? It'll strengthen your offer slightly, but won't give you nearly as much "bang for the buck" as purchasing some other sort of property.

As for what you pay (and what you offer): Have your Realtor do a CMA on the property. Determine what it's worth. Then pay no more for the property than the CMA. Probably offer less.

Notice that the "listed price" has nothing to do with what you offer? It doesn't. As noted below, the listed price might be too high (in which case you'd be overpaying) or too low (in which case the bank will reject your offer). And if you're paying cash, then you wouldn't be paying for an appraisal (unless you voluntarily chose to do so), so it'd be even easier to overpay.

As for "negotiating for less," what's to negotiate? The seller won't walk away with a penny. Whether the actual property sells for a penny or $100,000, it doesn't make any difference to the seller. It does make a difference, of course, when the bank reviews your offer. But negotiating--not with the seller. You make an offer that works for you--based on the CMA. Then, if the bank doesn't like it, the bank (not the seller) comes back with a higher counter. Then you negotiate--but never going above the CMA number.

Your Realtor can provide additional guidance.
1 vote Thank Flag Link Sun Sep 4, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Good luck with your purchase in Saugus! Often short sales are done incorrectly with the agent / seller putting an unrealistically low asking price on there for an immediate offer and no work. The reality is that the several months extra time is for the bank to review the offfer, and to pay agents or appraisals to compare the price to a fair market price. If they determine it is too low they will reject even if is above asking! The only way to go is to have a qualified local Realtor do a market analysis to try to determine to the best of your ability the lowest price that has a reasonable chance of getting approved.. offer that whether it is $100K below or $30K above the " asking price " ... remember the seller doesn't care about the "asking price" it is the banks money they are negotiating.... but the bank certainly does care and will review it. Good Luck!
1 vote Thank Flag Link Sun Sep 4, 2011
Try to negotiate. If the property has been on the market for a while the bank may be ready to make a deal. However, beware of short sales because the bank hasn't necessarily agreed to sell for less than the current owner paid for the home. What this means is the listing agent/seller have come up with a listing price that the bank may not have agreed to yet. That means, as an example, if you were to make an offer on the property and the seller accepts and signs the offer contract it is non-binding until the seller actually submits all their short sale paper work and gets it approved by the bank. After that process then the bank has to agree to your price. It can take months.

Short of it, before you make any moves / waste your time ask your buyer broker to find out if the bank has approved the short sale. If the answer is "no" understand this may not be worth your time. Short sales have very low probabilities of closing.

Good luck!
Web Reference: http://www.territory.com
0 votes Thank Flag Link Sun Sep 11, 2011
Hello Lady,

It depends...

1) Do you have a buyer's agent? He/she can help you determine the value of the property. He/she can help you put together an offer.

2) There are several components of a short sale to keep in mind. Do you know where the bank is in the selling process...this can be a help in determining the offer price.

I suggest you work with an agent. It does not cost you anything...the bank will pay the agent.

I am available to assist you if you are not working with an agent at this time. Please contact me, at your convenience.

Jessica Harvey
617-650-6750
Keller Williams Realty
0 votes Thank Flag Link Sun Sep 4, 2011
As a cash buyer you are in a fantastic position to get a good deal on a short sale. The banks will respond much more favorably to you than someone who must go through the process of obtaining a mortgage. You must show solid proof of available funds. My experience with cash buyers on a short sale was that negotiated prices were far lower than the listed price. The last two went for $60,000 to $70,000 less than the asking prices of $360,000 to $375,000. It is definitely worth a try. You can always come up if denied.
0 votes Thank Flag Link Sun Sep 4, 2011
Hi Lady,
As you can tell from all the answers, short sales can be challenging and confusing. Listinging prices are all over the board. For a short sale to be completed successfully two main objectives must be meet. The seller must be able to prove financial hardship and the property must be sold at a value acceptable to the lender(s). The fact you are a cash buyer will greatly improve your chances assuming the 2 objectives mentioned above are meet.
Good luck,
Web Reference: http://ocnorth.com
0 votes Thank Flag Link Sun Sep 4, 2011
Hi Lady,

The list price is not necessarily the current market value. Have your Realtor do a Comparative Market Analysis (CMA) on the property using Sold comps within a 1 mile radius of the property (the closer, the better) that have Sold within the last 3 months. This will give you current market value. This is what you should base your offer on. The bank(s) will hire someone (appraiser or Realtor) to determine current market value for them before they will accept an offer.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Sun Sep 4, 2011
The list price is a guestimate of the listing agent. There's no guarantee that the lender will accept the offer at the list price.
Have your agent run comparable sales and make an offer accordingly.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Sun Sep 4, 2011
Lady,

Many short sales are placed on the market at very low prices. The reason for that is to get as many offers as they can, so they can present the best one to the bank. If it has been on the market for sometime, I still may question the low price. Also banks do not necessarily accept an offer even over the asking price. They have their BPO's, Appraisals, etc. 1st step is to get the seller to accept your offer. Then the bank. The fact that you are a cash buyer is also a plus in your favor.
0 votes Thank Flag Link Sun Sep 4, 2011
You can negotiate, however bear in mind that it's likely to take between 3-6 months to get a final answer from the creditors. The Seller may accept your offer in a day, but it doesn't make the deal binding.
The good news is that while you'r waiting to get a response from the bank, you can cancel the contract for any reason or no reason whatsoever.

You really should look into closely into the development your considering buying into. Many condo develoments are not approved for financing for any numbr of reasons and when the time comes for you to sell you'd be limited to buyers who like yourself can and will pay cash. (This is a very small segement of the buyers overall)

Is the condo HAO solvent, are there any pending specila assesments? Is the current owenr current with the HOA fees. What percentage of the owner in the development are investors versus owner occupants? Is the Development FHA approved?

Another considertion is after you have your home inseptions completed who is going to pay for any necessary repairs? If you're informed you're buying the unit "as-is" then I would suggest you take this at face value and factor it in when you're making your offer.

Hopefully you're working with an experienced Realtor who can help you get all of these and other questions answered.

Good Luck.
0 votes Thank Flag Link Sun Sep 4, 2011
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