However, let me share last weeks story. My buyer placed an offer on a short sale through Bank of America. Two days ago, Bank of America responded.
Bank of America accepted the offer, which was FULL LIST PRICE.
Bank of America, however, added a $91,000 additional cash contribution....from the BUYER!!! This is after they, BofA, paid for an appraisal and found it will not appraise higher than the offered/list price! It should be noted that if BofA was financing this deal they would not approve, yet they will impose it on others.
Moral: Short sales are the Wild, Wild West of Real Estate. There is only an illusion of rules, anything can happen, don't expect things to make sense, after all, the ones who caused this mess are in charge of fixing it.
You can offer anything you want but keep in mind the home owner will select the one they believe has the best chance of passing the hurdles that will relieve them of the deficiency.
Each situation is different. You may want to consult with a pro to weigh your options and likely consequences.
Best of success in buying your Palm Harbor home.
ReMax Realtec Group
Palm Harbor, FL
727. 420. 4041
Therefore you need to go in from a position of strength and do this the right way if you want the bank to except a lower offer.
1. Solid Pre-Approval Letter
2. A substantial Good Faith Deposit (check or escrow letter)
3. Using a Buyerâ€™s Agent that will not only help you find and negotiate your best deal, but will also assist in this way below:
$200,000 purchase = Buyerâ€™s Agent Credit up to $3,500.00 to Buyer
$500,000 purchase = Buyerâ€™s Agent Credit up to $10,000 to Buyer
These Buyerâ€™s Agent Credits are on the Closing Statement/ HUD shown as a Credit to pay towards things like:
1. Buyerâ€™s Closing Costs
2. Interest Rate Reduction
3. Escrowed for Home Improvement and/or Repair
4. Gift Certificate to Home Depot, Lowes, etc.
And much more!
Iâ€™ve assisted borrowers in getting the best deals all over Florida since â€œShort Salesâ€ first entered the scene and I know what works best and exactly what to do!
Pro Option Mortgage
Ph: 888 662 4404
Prior Service U.S. Marine Corps
Annette put it very aptly when she said that "Short Sales are the wild, wild west of real estate". If an agent has a property listed really low it's a dis-service to the Seller and all the potential Buyers who think they are going to get a "steal". The Lenders are looking to see which way they will lose the least- Short Sale or Foreclose. The agent is looking for Buyer's....not necessarily for that one. Most agent's know when it's priced too low.
The list price should be based on the market price or slightly lower. We used to hear lenders wanted 82-93% of market value...now its more like 93%. As Annette pointed out sometimes the lender comes back for requests above market value. There is no one set of rules that all the lenders are following.
Remember when you put in your offer the contract is between you and the Seller ....CONTINGENT upon the
lender(s) approval. The lender is not a part of the contract...but does have the ultimate say so. Even if the record shows only one lender the note could have been sold to multiple investors...all of which must agree to the same terms. This is one of the reasons why it takes so long. Short sales are anything but Short! Think of it like a raffle...you might win OR 4 months down the road the lender may say no and the deal ends there.
If you have any type of time contraints short sales is probably not a good choice. If this is an option, make sure you use a full time professional realtor to guide you through the process. Have your agent screen the ones you want to see. More than one loan and the chances of closing go down dramatically. If there are other liens such as the HOA, chances of closing goes down even more. Focus on homes that have the best chance of closing. Watch out for the ones that ask you to pay for their negotiators's fee.
As far as pricing have your agent do a comparative market analysis and go in with a fair price if you really want the house. Otherwise you are wating your time and the Seller's.
I feel an informed client makes the best decisions regarding their real estate needs. Let me know if I can be of assistance.
Broker Associate, GRI, SFR, NHS
Real Estate Consulting, Marketing & Sales
Prudential Tropical Realty
2539 Countryside Blvd #3 Clearwater, FL 33761
Hope this hleps and best of luck to you as you pursue buying a home.
You CAN offer less than the asking price on anything, short sale or not. How much is a matter of experience and research into market value, as the other agents have said.
Be aware that people other than the property owners are driving the decisions on the approval of the short sale, the property owner's lender and mortgage investor -- two entities that make the initial decisions about allowing the acceptance of an offer.* As businesspeople, they are usually looking for the easiest way to make the best money in the least amount of time. Sometimes that means a lower cash offer is preferable over a buyer applying for a mortgage (for which the buyer may or may not get approval), or a buyer asking the seller to also cover the buyer's closing costs that reduce the net return (what the lender will get after all the commissions, taxes, title insurance and assorted closing costs are deducted from the sales price).
* In a short sale, the property owner can choose to not accept an offer, even if the lenders accept it.
On desirable, well-priced properties, we are increasingly seeing buyers competing, resulting in offers above list price because these savvy buyers recognize the value and they know to act on it quickly. On the other hand, buyers who just assume they can offer $10,000 lower than the sales price are often disappointed, especially on lower-priced properties. A good RealtorÂ® will be able to tell you not only what market value suggests but what the usual list price to sales price ratio is in the area. In many neighborhoods in Pinellas County, that ratio ranges around 95% to 98%. Let's take an $80,000 list price example: an offer at 95% below list isn't $70,00, it is $76,000.
Another potential frustration factor is the practice of some list agents who will slap a low price on a distressed property to get offers. Sometimes it works, especially if the property has been on the market for a long time. More often it does not. It can backfire if that bargain basement price is not within the property owner's lender's expectations. The buyer then gets frustrated when the lender counters at a more reasonable amount. It confounds everyone by making it appear that a property that should short sell at say, $80,000, is listed at half that amount, which encourages other buyers to offer too little on comparable properties based on one inappropriately handled listing.
Bottom line: hook up with one RealtorÂ® who has successfully negotiated short sales, who has taken extra training (such as SFR and BPOR) and then listen to her/his advice.
Best wishes in your search. If I can be of service, you know what to do.
Yes, you can offer a lower price; however, the bank will decide if your offer is acceptable. It's good to find out what had sold comparable to what you want to purchase. As you may be aware of, short sales take a long time to settle so you would not want your wait to be more than necessary by offering a low price. Not to mention, it's always good know that the home in most cases, is still available to other buyers (depending on how the agent who listed the short sale works it out) which can cause you to wait even longer. So, again, as usual, depends on different scenario's with the home you select to purchase. Each file is unique. Good luck to you.
Mary Ann Lemon
Understand that the LISTING PRICE has one primary objective, to attract attention: It is not intended to be set in stone, and in many cases it is not even a good guideline toward the SELLING PRICE.
Some Sellers believe that by setting the LISTING PRICE high, they can always come down, and people will make an offer anyway: WRONG! Buyers will just bypass the property and look at houses that are within their price range. And six months from now, the Seller will slowly start lowering the PRICE, (this is called â€œchasing the curveâ€) and Buyers will be asking the question; â€œWhatâ€™s wrong with that house?â€ and â€œWhy has it been on the Market so long?â€
Other Sellers set the LISTING PRICE low, to attract multiple offers. (The correct strategy.) We are asked; â€œArenâ€™t you obligated to sell at this price if someone offers it?â€ The answer is probably not; for that to happen, you would first have to have only one offer, and secondly, the offer would have be exactly the same, down to the smallest detail, (please discuss this with your Realtor).
Another thought; Buyer will search for potential properties by groups; for example, $400,000 to $450,000, and $250,000 to $300,000. If your house is priced at $460,000 or $310,000, the Buyers will never see it. (something else to discuss with your Agent.)
Different Banks have different philosophies about pricing their properties: You cannot draw any conclusions without a good analysis.
Have your Realtor do a CMA, (Comparative Market Analysis) to help you determine your Offering Price. It is the surest way to determine the Market Value of the property.
Yes, you can offer less than the asking price. Your agent should provide a CMA to determine that the list price is in line with the market value for the property. The bank will do its own BPO and you don't know if the listing agent set a proper price. You just don't want to waste months waiting for approval and then not be able to get a mortgage approval because the property was overpriced.
Millie C Lumpkin, SFR
The Blakely Group,Inc.
Illinois REO Realty
Grande Mission Real Estate
Direct: (312) 217-5644
Office: (708) 206-0905
Fax: (708) 418-2081
Email Me: email@example.com