Profile picture for rol2292

How do I bid on a short sale? My realtor has "advised" me to bid asking price. Is this normal?

  • April 22 2010 - Jersey City
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Answers (8)

There have been some very good answers to this question.  If an owner has set the list price close to current completed sale values for like properties, if you want the home, putting in a bid as close to the current SOLD per square foot values is advised. 

  • May 09 2010
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All of this is good advise you have received so far.  If the listing agent has done his homework he or she should have in writing what the bank is willing to take.  In most cases  once an offer comes in then it is sent to bank viva the lawyer or the owner; then you need to wait for a response. This can take awhile because most banks will want an appraisal.  However I always have gotten the bank to the appraisal right away, right in the beginning of the listing. You should ask for a copy of the bank appraisal and offer that amount. If they do not have it ask if they had discussed this with the bank yet? If they have not talked to the bank,  ask if they are still  are still paying their mortgage. If the answer is yes most banks will not do a short sale.  I hope this helps,
  • May 09 2010
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Profile picture for Pacita Dimacali

It depends on a lot of factors

1. Market environment -- is it a competitive situation wherein the properties for sale in this area are receiving multiple offers? If so, how competitive can you get, and how much do you want this property?

2. Is the list price realistic, i.e., is it close to market value?

3. How much is still owed? Remember, even though the price may be low, it doesn't mean that the bank will give it away.

4. What are the chances this loan will be approved --- some banks are known for not approving a short sale or even deed in lieu of foreclosure. For example, the former Downey Savings had sold notes to Deutsche Bank who will not do a short sale. So if you know who the investor is, then you can gauge whether or not you have a chance of closing escrow.

Remember: there are no guarantees to a short sale. Don't put all your eggs in this basket. Even if you are accepted, keep your options open in case a regular sale or a foreclosure comes up wherein your chances of closing escrow may be greater.

Good luck!

  • May 08 2010
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A short sale usually occurs when a seller can't make his loan payments because of death, divorce, job loss or other hardship. When homes are rising in value, owners can sell the house and pay back the lender. But when home values are dropping, like they are in many places today, and the owner hasn't built up much equity, that's not an option. So some lenders will accept less than the amount owed to avoid the hassle and expense of auctioning the house, providing the owner proves that he doesn't have other assets to make up what he owes.

Even with experienced people at your side, it pays to arm yourself with facts before you make an offer. Don't assume that the house is a bargain, since the owner may have bought the house at the peak of the housing cycle and may owe so much that he can only discount it to current market prices. Find out what comparable houses are selling for, whether a foreclosure notice has been filed for the property, who owns the loan or loans, and how much is owed -- you'll have to deal with them all.

The seller may eagerly accept your offer, but he isn't the final arbiter of the deal -- the note holders are. So make your offer contingent on the acceptance of the lender or lenders. Since the lenders want to know that you can back up your offer, include as much information as you can on your financial resources, as well as a preapproval letter from a lender.

  • May 08 2010
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Profile picture for Bob Meaux
You don't bid asking price just because it is a short sale. Your agent needs to check with the listing agent to see if this price is the bank-approved price or if the agent set the price based on a good comp. Your agent then runs comps to give you a sense of how good the pricing is, then you decide and let the bank respond if your offer is accepted by the owner.

When your agent makes the initial call, he/she should be interviewing the listing agent to make sure a short sale is feasible and you are not wasting your time, money and energy.

Good luck.
  • May 07 2010
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If the home is being marketed as a short sale, it means that the list price is already below the payoff amount.  The seller has no gain in it.  They will very likely sign off on any offer they receive since the final approval has to come from the bank.

If they had previous offers the listing agent and owner will likely know what the bottom line is to the bank and may have shared that with your agent or they would have priced it very close to that amount .  You should ask your agent that.

The bottom line is you should offer any price YOU feel comfortable with.

Naima
  • April 22 2010
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If the property has been on the market 1 day or 100, it may be under priced, overpriced or just right. I have seen short sale properties drop up to 50 percent in the duration they are listed on the market. But don't be fooled by a low price as often either the price will be bid upwards by potential buyers to correctly reflect the homes true value, or the lender will reject the offer as being too low - even if your offer was made at listed price.

What you offer on a short sale is what you offer on any home. You offer what is the perceived market value of the home (taking into account that short sale homes often have deferred maintenance issues). The lender will run their own numbers before agreeing to any sale price. Their job is to mitigate their loss while still selling the home at a fair market value.
  • April 22 2010
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The formula for the successful acceptance of a short sale offer does not exist. Variables differ from lender to lender, condition of the property, the amount of loans on the property and about fifty other variables that have not been thought out yet all contribute in some fashion to the success or failure of an offers acceptance.

When I am working with a client on a short sale we take in consideration the length of time the seller has been behind on payments and how close they are to trustee sale. My experience has been the closer the better in most cases. Remember the lender does not want the home back if possible they want to hold out as long as possible to get the highest best offer before being forced by it's own court action to take the property back.

Depending on condition and comparable sales data I determine what the balance owed versus the current market value is.  If the buyers purchase price equals 65 -70 % of the amount owed on the property and falls in the comp range the likelyhood of an accepted offer gets better.

I would reccomend interviewing your realtor as to the level of experience they may have with short sales. An Agent with an SFR certification from the National Association of Realtors promotes that specialty. You will need an experienced agent to represent you and educate you. Know what your getting into before you just jump in. Short Sales can be beneficial for all with the right professionals involved or a nightmare for those who are inexperienced.

  • April 22 2010
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