Home Buying in Palm Beach>Question Details

Zekedog, Home Buyer in Florida

What's the best strategy to make an offer on a short sale? Should we offer full price? Less? I've heard of

Asked by Zekedog, Florida Sun Jun 1, 2008

some deals where the offer was more.

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Your best chance at being successful is to offer close to the current "market price" of the home is at the time you make your offer. The bank knows what the comparatives are,and so does the agent, and they will make a judgement based on that as well as what other offers are on the table. When you do a short sale offer, you may not get a second chance, so it should be your best offer. Forget about the "percent" discount off the price. Many of the homes offered at short sale are already close to their bottom price.
Web Reference: http://www.MykeTriebold.com
2 votes Thank Flag Link Fri Jun 6, 2008
Many buyers want to submit a "low" offer on a short sale and that contract typically does not go anywhere with the bank. Your offer really needs to be close to the BPO or list price. Again, every situation is different with the short sales and the bank owned. Have had offers on short sales and the bank has had the Listing Agent up the List Price due to lack of comps, or what is owed on the property.

The difference w/Bank Owned properties is they hire Asset Managers to do the negotiating for the bank; Short Sale properties do not, the bank will wait until they get the highest and best offer, that can take a while. So make your Short Sale offer your Highest and Best!
2 votes Thank Flag Link Fri Jun 6, 2008
The best strategy if you really want to own the property is to offer perhaps 20-30% less than fair market value. We really can't go by asking prices anymore. The asking prices that I have seen recently are no reflection of what the lender will approve. A good rule of thumb may be to offer 30% less than the current mortgage balance(s).
2 votes Thank Flag Link Mon Jun 2, 2008
Zekedog, This is a great quesiton and one that really separates the Professional Realtors from the rest of the pack. In my opinion you should really be working with a professional to see what the local comps are coming in at and they make a judgement call. Please remember the bank can always say no and in many cases they will not come back with a counter offer.
1 vote Thank Flag Link Fri Jun 6, 2008
Disregard the list price entirely. It is simply a number that the sellers are using to get people in the door and is no reflection at all of the home's value nor what the bank will accept. As the other people have suggested; do a current market analysis and then offer what you think is fair, what you can afford and what you will feel won't regret supposing that the offer gets accepted ("maybe we could have gotten it for less?") versus if the offer gets rejected ("I wonder if we had just offered $X more, maybe we would have gotten it instead of person B"). Good luck.
1 vote Thank Flag Link Mon Jun 2, 2008
Have you Realtor prepare comparable sales in the area so you know how to price your offer. It is going to depend on the existing price, how long it has been on the market and what the comps say. Good luck.
1 vote Thank Flag Link Sun Jun 1, 2008
Pam Winterba…, Real Estate Pro in ,
Guys...this question is two years old.
0 votes Thank Flag Link Wed Jun 2, 2010
It really depends on how the seller and agent have priced it. It is always smart to have a realtor on your side that can advise you on the value. We have many short sale listings that are seeing multiple offers at full price or greater. The banks are doing full appraisals or BPO's to establish value so if you want the house, it's important to have an agent that does a lot of short sale closings so they understand what is realistic and expected with each lending institution. Our in house negotiator has a 98% success rate at getting our deals closed...that is a record setting number. Good luck.
0 votes Thank Flag Link Sun May 30, 2010
Other offers? If you are not on top of the pile, you will wait a long time, maybe forever. If you know your offer is 2nd, 3rd, 4th etc, in sequence, what is your expectation?
0 votes Thank Flag Link Fri May 14, 2010
There are a few variables to consider when making the offer...
• Is the list price lender approved?
• Is the list price near market value?
• Are there other offers submitted?
0 votes Thank Flag Link Fri May 14, 2010
I think listing agents have wised up and realize that asking a seller to approve a low offer which then goes to the bank, only blocks the completion of the sale. We used to complain that the banks were not responding. That was because the first offer goes on top of the short sale hardship papers and if low, just sits there, unapproved. Now, we wait for a fair offer, close to market and at least list price and attach that offer to the hardship papers. All other offers are backup and should not be submitted to bank because it will only confuse them and get lost most likely. You manage that by goinginto attorney review or pending status so MLS agents can see that anoffer is pending approval. Bank can deal with one offer at a time. I now counsel all buyers to offer at least list price after I check that it is fair market. There are a few instances where the listing agent has no clue about the process. If it needs work, and most of them do, the list price should reflect that. The list price will seem low and when buyers see it, they will understand why. Offering well below that already low price is also fruitless as the bank will not loose any more than they have to, as others have said here.
0 votes Thank Flag Link Fri May 14, 2010
30% is alot, way higher than I would think the banks would be willing to accept. I understand that every bank is different but most of the deals I've seen work have been around 5% less than the BPO (fair market value).
0 votes Thank Flag Link Mon Jun 2, 2008
Zekedog, Short Sales can be a fabulous buying opportunity. Far too often, many assume that because a home is for sale as a Short Sale that you should present a low offer. This isn't a strategy that I would recommend as the Bank who is in the position of approving the sales offer will be looking at the fair market value of the home and will base their decision on that and what the Bank needs to net from the sale. The bank is already losing money in a short sale and they want to get the highest offer possible. I have seen banks accept offers that will net them as low as 78% of fair market value where others will want nothing less than 95% of fair market value. The key is what the Banks are willing to net and this varies from home to home.

If you have a home that you want to put an offer in on and you really want the home it's going to be in your best interest to have your Realtor determine fair market value and base your offer on that and if there are any other offers on the home. If there are no other offers you can start out below the fair market value. Your Realtor will be able to determine fair market value from comparable homes that have recently sold in the area. Your Realtor can check with the Seller's Realtor to see if they have any other offers on the home and whether or not they're accepting multiple offers so you know how to present your offer. If you're dealing with a home that has multiple offers on it than "yes" you could be in a position of having to offer more than the list price. Just make sure that you're working with a Realtor who knows Short Sales - as this can be the difference between owning your new home or not.
0 votes Thank Flag Link Mon Jun 2, 2008
Since this offer will be ultimately accepted or rejected by the bank, your offer should be your best offer, which should be determined by the market analysis of that community. This is what the bank will look at. The seller still has to accept the offer, but the bank also has to approve. Make sure that you have your financial situation ready to go--many times a deposit and a letter of approval from a bank must accompany your offer. So--preparation is the best way to find and complete a successful short sale. Working with a competent real estate agent is the best choice, and as the buyer, this is not an expense that you have to incur--the real estate fee is paid by the seller. Good luck!
Web Reference: http://www.MykeTriebold.com
0 votes Thank Flag Link Mon Jun 2, 2008
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