What You Should Know About Making an Offer on a Short Sale
First, what is a short sale? A short sale is a home that is sold for below what the current owner owes on the property. And, at the time of closing, the seller does not have the means to make up the shortage.
Now, here are some things that you should know.
It used to be that a short sale would take up to six months or longer to receive an approval. Now, due to programs
like Home Affordable Foreclosure Alternatives (HAFA), the average time is 90 days. Still, every lending institution is
different, so it is important that you have an understanding of timelines, documents that are needed, etc.. Also,
choose an agent that is familiar with the short sale process. Additionally, find out which banking institution is
involved in the negotiation and approval process. Have your agent work with the listing agent to find out what the
average turnaround time will be.
Make your best offer using comparable sold properties in the area over the last 3 months (longer than that does not
reflect the current market) and the appraisal that the bank has done. Lenders want to minimize their losses, so if
you make an unfair low offer, it will most likely be rejected. What the lender wants is a strong buyer and a decent
and fair offer.
In your offer, don’t count on asking for repairs or credits. You will probably have to take the property “as is”.
Know if you are competing in a negotiating or multiple offer market – it matters as to the price you will have to offer.
With multiple offers, the bank will usually pick the highest and best offer.
In the end, if you have the time and patience and understand how to bid, short sales can be a win-win situation.
Related posts:
- What should one consider when placing an offer on a short sale property?
- Buying a Short Sale — The Need for Speed
- Simple Real Estate Definitions : Short Sale
Carole Rodoni was formerly President of Fox and Carskadon Real Estate, Chief Operating Officer of Cornish and Carey Real Estate, and President of Alain Pinel Realtors. She is a renowned speaker on the economy and real estate and is currently the President of her own consulting company, Bamboo Consulting.
Carole has served on the Board of Regents of Santa Clara University, is a Member of the Board of Directors of BayNet and CondoWorks, and has been a guest columnist for the San Francisco Examiner. She also is a frequent guest speaker on several radio and TV programs across the Bay Area.
