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What is the proper way to make an offer on a short sale?

I would like to  make an offer on a short sale property that my Realtor has shown me.  However, she has told me that I must make the offer by providing the seller with a complete signed contract, not an offer form and that I cannot make any statements regarding the rationale for my offer (i.e. the documented need for various repairs and other deficiencies that need to be corrected). Is this a common practice?  I have refrained from going through with this because I would prefer to start with an offer sheet and associated documentation (pre-qual letter, etc.)
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February 18 - Ocean City
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Answers (4)

Yes. Nobody at the bank cares WHY your offer is low, or - let's face it - what any of us would "prefer." Buying a short sale is as impersonal as real estate transactions get. Even at the county courthouse steps, you'll at least get to see a real person!

Do it your Realtors® way!

All the best,
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February 18

The paperwork process can vary between regions of New York, New Jersey.  Some areas use Offer to Purchase Forms and others use Fill-in-the-Blank Contracts for Sale.

Typically, you will provide your agent with the following information for them to relay to the seller's associate regarding the paperwork required in their marketplace:

The amount you are willing to pay

Mortgage amount

Closing and occupancy dates

Contingencies, such as obtaining a mortgage, building inspections, and pest inspections to include where appropriate (but not limited to): termite, pest, radon, well, lead, septic, oil tank, etc

Once the seller has agreed to your offer and send it to the bank for approval, the Lenders can often take several months to respond. Some experts recommend giving the lender a response deadline, but the lender might simply ignore this. Once the lender responds, be prepared to increase your offer. The bank almost always counters at this price. However, you usually don't get this counter until a few months down the road.

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February 18
It is perfectly fine and acceptable to go directly to a purchase and sale agreement (its not the "norm" but on short sales, bank owned or auctions it is more typical). The offer to purchase you refer to above is JUST as binding as you signing a purchase & sale agreement (just make sure all the contingencys for home inspection, title 5 system, etc. are in that P & S.)

a few key questions:

#1 Do you intend to preform a home inspection (if so, you want to make sure that contingency is in the P & S with time frames to preform it).

#2 Because short sales take time with no guaranty it will come to fruition at the end of that time, I would try to put as little deposit monies as possible in escrow. (typically 5% is nice, in your case strive for 1 or 2% and see how that works)

#3 Have an "end date" by which the mortgage holder needs to preform... "Subject to approval of first mortgage holder by 5/1/14" or whatever. 

#4 Is their private septic system, if so... what are the laws in your state regarding it?

Short sales in most cases are a larger nightmare then most consumers imagine so prepare yourself and your mind for some frustration. I assume the home owner is "on board" with this and is willing to jump the necessary hurdles? (if not, don't waste your time). Do not expect the mortgage holder to vary much more than 10-15% off the appraised value of the home (Banks are not foolish or easy so if it smells to good to be true it probably is).

Best Wishes, click thumbs up if it helped>>>
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February 18
Your Realtor is correct. It is accepted practice in New Jersey that offers, be they on short sales or normal sales, are made on a formal real estate contract accompanied by a mortgage pre approval or proof of funds and evidence of a good faith deposit.
It is not open for discussion.
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February 18
 
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