what happens when you bid on a short sale home?

Asked by Kelly, Hollywood, FL Fri Feb 6, 2009

I am interested to find out if anyone knows if the bank only looks at the price your offering or other items in the contract?

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Bill Eckler, Agent, Venice, FL
Fri Feb 6, 2009

To acquire a home that is being offered as a short sale you need both the approval of the current owners and their loan company.

One of the reasons why it requires so long to get the bank approval is they need to make sure they can transfer to the new owner a clear title. This can sometimes be a difficult process when there are first and second loans, home inprovement loans, marital problems, liens, back taxes, etc.

The closing process for a short sale can span a period of from 4-6 months.
1 vote
Dallas Texas, Agent, Dallas, TN
Fri Feb 6, 2009
GREAT QUESTION: Bank takes many issues in consideration when you place an offer, includes lender approval letter, closing date, seller concessions, down payment, many other concerns.
Web Reference:  http://www.lynn911.com
1 vote
Ronda Prewitt, Agent, Eugene, OR
Fri Feb 6, 2009
Hello Kelly, Patients is needed when bidding on a repo. It takes time to get a response from the Lender/Bank. At the same time. You can get a good deal in many cases. Having your funds in place and knowing the condition of the property is important also. I always recommend getting a pest & dry-rot inspection as the underneath of the home and the structural/bones are the most important thing to know about a home. Call if you need further help finding an agent in your area. Ronda
1 vote
Susan J Penn,…, Agent, Weston, FL
Fri Apr 15, 2011
Dear Kelly,

When you bid on a short sale home, the seller of the home is looking at the price and terms of your offer, especially in Florida which is a deficiency state.

Susan Penn, PA, SFR, EWM Realtor
2000 Main Street
Weston, FL 33326
0 votes
Pacita Dimac…, Agent, Oakland, CA
Sun Apr 25, 2010
I certainly hope you are represented by a realtor who is experienced and knowledgeable about short sales. Seems like since you're asking this question on Trulia, that you have not been told what to expect in short sales.

Best and highest -- always helps.

Sometimes, properties come back on market when the buyers whose offers were accepted got tired of waiting and walk away

You must have the patience of Job to wait it out

And in the meantime, don't put all your eggs in one basket. If you are accepted on a short sale, that's no guarantee you will close the escrow. Everything depends on the short sale lender who has the final say in approving and accepting a short sale. if the lender isn't satisfied with your offer, they can counter you.

There's nothing short with short sales except tempers!

Good luck!
0 votes
Ligia Guzman…, , Weston, FL
Sun Apr 25, 2010
Hi Kelly,

Banks definitely look at the price but also the terms. The higher the price the better chances you have to get the house. But they will also consider the terms offered:

- Closing date, the sooner the better - 30 days or less
- Closing costs, no seller concessions or 3%
- Earnest Money deposit, the larger the better
- Down payment, the larger the better
- Type of loan: Conventional, VA or FHA. And remember cash is King

Should you have any questions about your offer, please feel free to contact me at lgcrealtor7@gmail.com

Ligia Guzman Chacon, AHWD®,SFR
Esslinger Wooten Maxwell, Inc., Realtors
C 954-540-3624
O 954-515-0100
F 954-515-0200
Web Reference:  http://www.lgcrealtor.com
0 votes
Scott C. Dan…, , Cooper City, FL
Sat Jan 23, 2010
Hello Kelly,
The worst thing about short sales isn't that they're complicated...it's that the buyer rarely has a chance to affect the decision-makers. We as Realtors prepare the offers, in some cases attachs comps in the area to justify a selling price and no matter how reasonable it is, or how well we`ve done our due diligence , we wait for a response from someone we rarely get to speak to.
Then the lender sometimes drops the deal in midstream, to sell to someone else. We can talk until we're blue in the face, but we almost never get to keep a relationship with the people in charge. Good people skills are important, but at some point, the door usually shuts on you, as the decision-making process goes to a closed room with anonymous number-crunchers.

That's why the success rate in short sales is 50% 0r less, even when the offers are fair.
But, as I'm sure you and many people suspect, the short sale process would seem likely to get a bit more expedient and user-friendly, as bank-owned inventories rise, available lending capital dries up, and the regulatory agencies loom over all these lenders . In short, something has to change very soon.

Scott Daniels
The Scott Daniels Real Estate & Investment Group.
S.Florida List for Less Realty Inc.
954-275-0200 Cell
954-874-3600 Office.
954-874-3601 Fax.
0 votes
Susan J Penn,…, Agent, Weston, FL
Thu Oct 22, 2009
The bank is looking at the price, they look at hardship, taxes, leins, and the type of loan. If your price is not high enough the lender can reject it. They also require patience on the buyers side, as they can take 4 to 6 months.
0 votes
Carla & Marc…, Agent, Cooper City, FL
Mon Mar 9, 2009
Hi Kelly,

They look at the other terms also. But the reality of short sales is that unless a seller can prove hardship to the bank and is not upside down for not too large of an amount, the conditions on your offer will not make much of a difference.
Do you know how many lienholders are there? How much do they currently owe on the property? Is the seller on a position he/she can prove hardship? You should check these to try to figure out if you have a chance there.
Good luck on your search. Feel free to contact me if you have any other questions?

Carla Rocha
Coldwell Banker Residential
0 votes
Paula Bean, , Orlando, FL
Fri Feb 6, 2009
Kelly, as an 30 year veteran of real estate in Florida, and as of late doing many short sales, let me tell you what I know.

First of all, the bid depends on whether it is a Freddie Mac or Fannie Mae loan. Unbeknownst to many agents who do not work with short sales, these are government loans and have different requirements than other loans.

If it is a Freddie Mac or Fannie Mae loan, it would be to your advantage to know this as they are only allowed a certain percentage of 'non performing loans' ie: short sales and foreclosures, in their portfolio's or they can not borrow more money from the Fed's, which is where they MAKE their money - by loaning out money at a higher rate than they get from the Fed.

Having said that, a short sale is also looked at by the investors, lender and the PMI company if there is one, to determine the loss of the offer against the cost of a foreclosure.

If I were you, I would contact an agent in your area that is experienced in short sales, foreclosures, reo's, for sale by owners, auctions, and regular MLS deals and pick the one that is the best deal for you. Why limit your options when it is a buyers market, rates are low, and if you are a first time homeowner (or haven't owned a home in the last 3 yrs) there are great tax incentives available for you to buy?

If you need a recommendation on an agent in your area, let me know I've worked in Florida for 30 years and deal with buyers or sellers that I get via internet and have to refer out to a reputable agent in another area, so I can give you a few names to help you out.

Best wishes and I hope this helped.
0 votes
Stefanie Coh…, Agent, Weston, FL
Fri Feb 6, 2009
The bank will look at more than the price when considering a short sale. They will want to see a pre-approval letter from the buyers lender, or if you are paying cash, the proof of funds. They also have to approve the short sale, meaning that the seller has to prove a hardship. When the contract is submitted so are all the documents that the seller has to provide to the bank to prove that a short sale is necessary. It can be a long process just to find out if the bank will approve the short sale and the price. In many cases it works out fine, and the buyer gets a property for a good price. Each short sale is different though...some have already been pre-approved and may not take as long to close.

I hope you found this to be helpful, but if you have any other questions you can contact me.

Best regards,
Stefanie Cohen
Prudential Florida Realty
0 votes
Jaime Flaste…, Agent, Pembroke Pines, FL
Fri Feb 6, 2009
Up untill a few months ago, It has been my experience that When the banks look at the short sale offers the single most important item in the contract was the bottom line price( i.e. the price and whether or not the buyer is asking for seller contributions). Lately they are also taking in consideration whether the offers are cash or financed. When sendinga short sale offer to banks, most of them require either a closing statement or a netsheet form, that will allow them to better understand how much they are going to net from the sale. Bare in mind that items like delinquent taxes, association fees and any other delinquent liens would reduce the amount the bank "nets" are EXTREMELY important and those items are not part of the contract.....

ANyway, our office is in Cooper city as well, if you are not working with a realtor feel free to contact me. If you are, I'll be glad to talk to your realtor and answer any questions he/she may have - Negotiating short sales for my clients and other realtors are an important part of my business(at least since October 2006) my email is jflasterstein@gmail.com
0 votes
Patrick Dugan, Agent, California, MD
Fri Feb 6, 2009
daer home buying, the bank will look at all the terms of the contract. They cannot ascertain the bottom line without looking at all aspects. The bank will more than likely respond with a form telling you that home inspections are fine, but that they are not fixing anything you find wrong. the bank will look at the timelines you have, they will look at your pre qual letter from your lender. The price is important, but the bottom line is where they will focus their attention.
Hope this helps,
0 votes
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