Just wanted to point out that if the short sale says the price is approved, the seller may not consider an offer less than full asking price. If it isn't approved, you should also ask your realtor to see how many days the house has been on the market and if it has ever been moved to "pending" sale. If the Seller is not actually signing any offers or if there is a middleman investor who will attempt to flip the property after getting the lender to accept the lowest possible price, you may not be able to get an exceptional bargain.

As a rule of thumb, unless the listing says the price is "approved by the lender" and will also provide a copy of the prior approval letter, you need to ask your Realtor to do a comparative market analysis to arrive at a market value and then offer about 80% of market value. This may actually be more than the list price! I often see Realtors listing short sales so far below market price that it is very unlikely to ever get approved at full asking. Again, the listing price may not be in the ballpark.

Bert and Jan,
There has been lots of great guidance offered here. Now, may I ask a question of you?
Why do you think purchasing a short sale, with all the time, uncertainty and unknown costs, is a better value than traditional sale or even a bank owned property?

Bert & Jan,

Remember on a short sale property the Seller still owns the house, but owes more than the market value. This is why it is contingent upon the Seller's Lender's approval of the sale. Before even viewing the house in question, check the number of loans on the property. If there are multiple loans with different lenders, all lenders must approve and the chances of not closing increase. Every lender is different and the loss on debt ratio varies. Remember the Lender's goal is to lose the least amount of money. Have your agent do a comparative market analysis for the home to determine where you should make your offer. If it says it is an "approved short sale" ask for what price the lender has approved it at. The approved price may be higher than the list price. Depending on how old the approved price is will help determine its current validity.


Pam Cohn
Broker Associate CDM, GRI
Prudential Tropical Realty-Countryside
pcohn@prutropical.com

I have experience with working with short sales on the sellers and buyers side respectively. In my experience it is wise to ask a realtor ® to ask the listing agent if they have done an internal appraisal. That way you will know how far along the seller is in the short sale process. This helps to gauge your offer on a short sale property. When working with buyers I ask the agent if there are other offers on the property. If there are other offers on the property that is a red flag to me that they may be fishing for higher offers. I prefer to work with one offer at one time on one property as both a listing agent and a buyers agent respectively. (In Florida dual agency is forbidden.) There are so many short sale properties out there so if I know that there is more than one offer than I tell my client immediately. I would not waste their time so that is what I would suggest that you try to find out before deciding on an amount for your offer.

Your offer depends on so many factors. For example does the house need a new refrigerator, stove, and/or dishwasher? Does the house need its carpet replaced? For how much have comparable homes sold in the area in the last 30 days? If that is not possible then in the last 60 days??? That is where a realtor ® may help determine that by looking at the tax records as well as recent sales. FWIW they are some of the few people who have access to this data and may translate this data for you to decide on the offer.

Conversely I have heard some people advise buyers to offer $30,000 or $40,000 less which is not great advice. It depends on the house, on the market, and on the recent sales. Another factor is that the lender ultimately decides whether to accept the offer... or not. Far too often I have seen some buyers make low ball offers only to lose the home to another buyer who offered a few thousands more.

If you are not currently working with a realtor ® then I would highly suggest that you find one 1) Who has experience with short sales on the buyers side 2) With whom you trust and 3) With whom you can relate meaning that they will translate the numbers for you and communicate this to you.

Another piece of advice is that I highly suggest that if you are serious about buying a short sale to be patient. In my experience working with buyers it is not necessarily the highest offer that "won." Sometimes it's those who wait sometimes three or four months. Sometimes longer so patience sometimes pays off with short sales because while you may make an offer the lender or lenders are the ones who will look at it. Sometimes when the offer is a low ball offer they will ask the buyer to raise their offer and I advise those buyers who are looking to buy a short sale not to be afraid to make an offer but at the same time try not to make low ball offers so that the lender or lenders take the offer seriously.

Then of course with short sales is the cash versus financed offer dichotomy. It helps having a cash offer without any financing contingencies but in my experience offers that are contigent upon on financing can be successful too. It depends on so many factors but I have worked for some buyers with 30-year fixed mortgages as well as cash buyers and they were looking for short sales and were successful in buying one. It depends on many factors. Best of luck to you in your search and with your offer.

~ Lana

Bert & Jan,
Lots of good advice has been provided. It boils down to your purpose for the property. Homes in good condition in the right location are going fast! Many eventually sell above the listed price. So it's back to:
* your urgency
* your objectives
* your resources
* your requirements
A little tolerance for fix up pay off BIG!
Good luck in finding your jewel.

Annette Lawrence
ReMax ACR Elite Group, Inc
727. 420. 4041

Your upper limit should be the fair market value of the property, as determined by a CMA. Not a penny more.

Your lower limit depends, in part, on how much you really want the house. If you're an investor, 65%-70% of fair market value is a place to start. Or, if you're planning on renting the property out, determine rents for comparable properties in the area. Take 90% of that. Then back out utilities, maintenance, upkeep, etc. Then back out at least a few hundred dollars for a positive cash flow. What you're left with is what you can afford to pay for mortgage and taxes. Take that number, and determine how large a mortgage you can handle with that number. Then your offer should be no more than that.

Notice that none of these calculations even mentioned the listing price. Why? Because the listing price is absolutely, totally, 100% irrelevant. It may or may not be a fair reflection of the home's value. Similarly, what the sellers owe on the property is meaningless. That's their problem. Your problem is making sure you don't overpay for the property. Period.

Hope that helps.

B & J,

This depends upon a number of factors the most important of which is the local market and what homes have been selling for most recently.

As a buyer in today's market, whether considering, short sales, foreclosures, or traditional sales, all buyers should be aware of the property's "appraisal value" since banks will not finance property that does not appraise for the sale price.

Since appraisers use recent sale to generate their appraisal information, buyers should be considering their offer from a number of factors.......the most important of which may be appraisal value.

A local real estate professional can assist you with this.

Good luck

The Eckler Team

Hi Jan & Bert,
It all depends what the current owner owes, you can go to public record to find out. The less they owe the better “deal” you will get, the more they owe the actual value you will pay. Good Luck!

Melissa Antenucci
561-716-0792
Ameritrust Mortgage Associates, LLC

Bert,

Your realtor should help you with this. It depends on whether the listing price is the appraised value of the home from the 3rd party lender or if it was picked out of the hat by a seller or a competent realtor did a CMA and listed the home properly. If the first or last was done, then 10% below listing price is a good starting point. If a CMA shows the buyer is too high in price than the CMA will help you figure out the price. Also, your realtor should find out if there are any offers currently on the home. Then your bid will depend on how badly you want the property.

Let us know if we can help.

Bill Szydlowski
The Szydlowski Team
Future Home Realty
813-323-4443