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When purchasing a short sale, how do you determine what to bid on the asking price.

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February 22 2012 - Greater Carrollwood
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Answers (6)

Offer the lowest amount a Seller will be willing to "attempt".  Of course it would be absurd to offer too low and most sellers wouldn't waste their time.

You see, your offer will not be considered by the lender until/if the Seller agrees to your price.

You also need to realize you have a lot of risk with the ultimate condition of hte property by the time it gets approved in several months from now.

Now, if the short sale was previously approved at a certain price, the Seller may not want to try to waste time to get a new approval at a lower price and may just wait until a buyer shows up who is willing to pay the "approved" price. 

You need an experienced Reatlor to help you navigate short sales because there are many avoidable and unavoidable pitfalls to be aware of.

Most importantly, even if you have a contract on a short sale, you cannot be guaranteed it will ever close so you need to continue shopping for a home until the short sale approval arrives with your name listed as the buyer.

All the best,
Alma Kee, Tampa
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February 23 2012
Have your agent run some numbers on closed homes in the area that are similar to yours. If a bank can net somewhere around 80% of current market value (give or take a few thousand), there is a good chance it will be approved. Although I've had some go through that netted in the high 50's, it's not ideal for the bank. Submit that comparison to the listing agent by making it part of your offer. If I had a buyer's agent that submitted that with an offer, I sure would send it onto the bank. Although I do that myself on all my short sales, but I don't think many listing agents would refuse to send that as part of the short sale package.
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February 22 2012
Get with an agent that has extensive Short Sale experience.If the seller has not already made a short sale approval request to the mortgage holder it could be a drawn out experience.The offer will need to be reasonable in relation to what is available on the current market. Ironically closed sales are irrelevant to most lenders in assessing the offer. They are more interested in what is on the market. With the recent Bank and the State AG's agreement on foreclosure the banks may be less flexible in the price thay are willing to consider. 
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February 22 2012
We handle short sale negotiations quite often.  I agree that a thorough inspection is quite helpful in substantiating your offer price.  However, the key to any short sale is that the bank must have an offer in hand before the bank will even consider a short sale (there are a couple of exceptions, such as a HAFA short sale).  Once the bank has an offer, the bank will review the seller's financials and make a counteroffer.  You will then know approximately what price the bank will accept.  The key to starting the process is to make an offer, no matter how low the offer price.
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February 22 2012
Do the inspection firs. Count all problems you found at the inspection and substratum it from the asking price. In short sales the seller has no money to address the problems and the bank will never do anything after the price is negotiated. 
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February 22 2012
What you have to keep in mind is that the seller's lender is the one taking a loss. They will have their own agent who will give them a valuation of the property. This is called a Broker Price Opinion. I would recommend offering within 10% of that price or the lender isn't likely to approve the sale. Good luck.
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February 22 2012
 
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