Home Buying in 25414>Question Details

Swestphyl, Home Buyer in 25414

when making an offer on a house that is for sale as a short sale, what is a good offer to make? the starting list was 299,000 then lowered twice

Asked by Swestphyl, 25414 Sat Feb 6, 2010

down to 260,000. the property value on the county books is 219,000. so what is a good offer. and will the seller's lending bank take any resonable offer? it is all such a mystery and a waiting game. the recent info from Jefferson county wv that property values way down and taxes to go up. Also the value on the county books is what percent of the houses real value.

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There's no mystery at all.

What's a good offer? Easy. Forget listing price. Forget price reductions. Forget tax assessment. Forget taxes.

Two numbers: What is the house worth? What repairs does it need?

That's it. simple. Accurate. Easy.

Have a Realtor do a CMA on the property. That'll tell you how much the property is worth in reasonable condition (reflective of other properties that sold recently).

Then subtract from that number the needed repairs.

You'll be left with a number. Let's say it's $200,000. Fine. Simple. That's the most you pay for the home. You might offer less. Your agent can provide you some guidance on negotiating strategies.

You ask "Will the seller's lending bank take any reasonable offer?" Who knows? More to the point, who cares? You make an offer that works for you, using the formula above. If the bank approves the offer, that's good. If not, then either the bank will have to reduce the price again or else someone else will come along and overpay for the property.

You ask: "The value on the county books is what percent of the house's real value?" It depends. In Fairfax County, where I am, the county considers an assessment accurate if it's within about 10% of the real value of a property. So a property could be assessed at $200,000, and the county would consider the assessment accurate if the true value were between $180,000 and $220,000. Now, that's for an ACCURATE assessment. There are plenty of inaccurate ones, too.

I don't know if Jefferson County has the same policy. It's probably something similar. But: Who cares? So what if the property is assessed at $200,000. It might mean the property is worth between $180,000 and $220,000. Do you really feel like paying $220,000 for a home that's only worth $180,000? No, I didn't think so.

So: Find out what the comps are. Subtract repair costs. That's the most you should pay for the home. Perhaps offer less--ask your Realtor for advice on that.

And forget listing price. Forget price reductions. Forget tax assessment. OK?

Hope that helps.
1 vote Thank Flag Link Sat Feb 6, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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You have raised several valid questions pertaining to short sales. Property values have declined over the past several years, however we needed this adjustment in pricing. The list prices we are seeing now are true current market values. No two short sale listings are alike, I suggest you work with an experienced byers agent who has extensive knowledge of the anatomy of short sales. This type of listing is not for the faint of heart.
Please contact me directly, if you are not working with a buyers agent, and I will explain in depth how a short sale listing works.
1 vote Thank Flag Link Sat Feb 6, 2010
The seller's lender will order an appraisal before deciding to accept your offer. If your offer is below the appraised value, the lender will probably not accept it, but will give you a chance to make a new offer. You also need to be willing to wait anywhere from 60-120 days for an answer from the lender. Some short sales can take as much as 6 months from offer to the acutal closing.
1 vote Thank Flag Link Sat Feb 6, 2010
S
What does your Realtor say?
You have some great advice here, what you really need is someone that has seen this property, also knows the local market values and trends. Are values going up or done? What have comparable homes sold for recently?

Your Realtor's job is to take the mystery and uncertainty out of purchasing a home. If you do not have one, then find a competent Realtor. They will save you time, money, and stress.
0 votes Thank Flag Link Sun Feb 7, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
The bank will be asking the same question. How much will the buyer pay? The process can take many weeks or even months before you get a response back from the lender or lenders. During this time the property can continue to lose value and your interest rate from your lender may not be as attractive when you first put in your offer. I suggest short sale properties only if you can't find another suitable home that is being offered. DO NOT pack the moving truck or give notice to your landlord that you are moving. The only time you know for certain that the sale is final, will be the day you get the keys at the closing table. Even at the closing table, deals have fell through. An appraisal will give you the best value. The Comparative Market Analysis is also another tool that your agent can provide you at no cost. Keep in mind the bank will want fair market value. If the asking price is too good to be true, you probably will have the bank increase the price to complete the sale. Also, you want to make sure the seller has provided all necessary documents complete to submit to its lender to have the short sale considered. If more than one lender is involved, you have to get approval from both. Banks do not like to lose money. Now more than ever, you will need a knowledgeable agent that has experience and carries the SFR designation to assist you. If my office can assist you please contact us. We have 9 agents that carry the SFR designation and are trained to help you during the buying process.

The other answers posted are dead on. Make sure you have a time that the deal must be accepted by the third party (lenders). You generally will get an okay deal in the end. You do not stand to save a lot of money buying the property. The seller is the one who benefits from the sale. They walk away from the promise they made to repay the bank. Rely on professionals you hire only. The REALTOR, the home inspector and the appraiser are on your side.
0 votes Thank Flag Link Sun Feb 7, 2010
What is your agent suggesting--you should be aware of recently sold similar properties in the immediate area--after reviewing the data a fair offer can be determined, therefore don't rely on the assessed value --keep in mind banks are looking to get as much money back as poosible and remember short sales are by no means fast sales--Your agent will best guide you and if you don't have one, consider the service.
0 votes Thank Flag Link Sat Feb 6, 2010
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