Question Details

HomeBuyer, Home Buyer in California

What Makes A Short Sale Offer Attractive To The Bank?

Asked by HomeBuyer, California Fri Feb 29, 2008

My husband and I put in an offer on a short sale for 10% less than asking price with a 20% down. We have no contingencies and want to close right away. There were no other offers before ours. We recently found out there might be a higher offer coming in with a 10% down. I hear the offer is only slightly above ours but I am not positive.

How can we make our offer appear more attractive to the bank? Will a higher down payment (increasing our down to 30%) help with our offer and increase our chances of getting our offer accepted?

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Answers

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"As is" + highest offer is preferred, but a bank may reject all offers if they feel that the price is not high enough. How high? It's sometimes higher than the listing agent's stated price! Yep, sometimes the listing agent has no clue what the bank would accept. One of the reasons why I think short sales shopping is a waste of the buyer's time and emotion. Foreclosure prices are more definite and much quicker to transact.
Web Reference: http://www.condostorela.com
0 votes Thank Flag Link Fri Feb 29, 2008
I think down payment is extremely critical nowadays with the dreaded appraisal box "Declining Market" being checked throughout many areas of the greatest state of California. In our area of Sonoma County when the appraiser checks this box we loose 5% of the appraised price right off the top!! So your buyer has automatically put themselves in a position where they AND the property must qualify differently. a 10% down payment now is 5%!! So your 20% I'm sure is being looked at by the Loss Mitigation department with longing eyes. But that's not really the issue as they are so inundated and under siege they may not even get around to you!! Short-sales DO close but you need to be patient. If short-sales are dominating an area where you are looking I'd consider NOT buying in that area. I think we are just seeing the beginning steps of a long, ugly journey of to many homes being foreclosed upon. it is almost a societal norm to "walk" from your financial obligations. I would advise you to be extremely realistic about actually completing the "short-sale" escrow. As Julie answered below, you've got a 1 in 5 chance of doing a successful "short-sale" deal. Find an REO or better yet a very motivated HOME OWNER SELLER who has equity and needs to sell. Your Realtor/Licensee can search the MLS for these rarities! Good luck. Check out my "Short-Sale" web site. http://www.SonomaCountyShortSales.com It give you great advice and pitfalls to avoid.
0 votes Thank Flag Link Fri Feb 29, 2008
I believe less than 20% of all short sales actually close and the rest end up in foreclosure. It's not just a matter of just your offer vs. the other offer. The banks may reject both. Just be prepared for the harsh reality. Good Luck!
Web Reference: http://www.wnyhomevoice.com
0 votes Thank Flag Link Fri Feb 29, 2008
We are pre-approved but I am not sure if the other offer that is higher than ours is pre-approved. If they can only down 10% then they will need to take out a jumbo loan for this house. We are hoping the bank will see our 30% down as a stronger offer and know that we are able to close and get funding.
0 votes Thank Flag Link Fri Feb 29, 2008
Hi,
Down payment is not a critical factor for lenders. Assuming that both buyers are pre-approved for purchase (not just pre-qualified), lender will be looking primarily on the price and a number and type of conditions. A lower, as-is offer with a shorter time for closing and with the loan as the only condition, has much better chances to be approved that the higher one, but with many conditions. Good luck!
Web Reference: http://www.cimpler.com
0 votes Thank Flag Link Fri Feb 29, 2008
ARTUR URBANS…, Real Estate Pro in Burlingame, CA
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