Short Sales in Palm Beach County Florida- This short sale series is to help sellers, buyers and their agents understand the complexity of using the Short Sale process as an alternative to Foreclosures.

Here are the links to the Short Sales In Palm Beach County Series:

What you need to know if you are buying or selling.

Do you qualify to do a short sale in Palm Beach county Florida?

What you need to have in your Short Sale Package.

The process of the Short Sale; what happens next. 

This post will be about how to decide what to offer on a short sale, myths and truths about offer prices on short sales. 

There is quite a vast amount of disinformation regarding how much you can buy a short sale for. There are those that are watching too much late night TV about buying real estate at 50 cents on the dollar and with no money down.

MYTH- The lenders are so desperate they will accept any low offer that is offered on a short sale.

TRUTH- The lenders would rather work out a workable solution with the homeowner. There is a formula that most lenders use to determine their loss and what the actual net proceeds they will accept at a short sale closing.

MYTH- The lenders are just jumping up and down to get your low ball offer!

TRUTH- The lenders follow policy. The policy is that we submit the short sale package from the seller along with the short sale offer and package from the buyer. The lender then orders a BPO. The BPO usually comes back in a week to 10 days. The BPO is NOT an appraisal. It is a Broker's Price Opinion. The lender hires an agent to go out and do this Broker's price opinion for the lender. The lender pays the agent somewhere between $50 to $100 to do a BPO.  

Once the BPO is back they work their formula and then send us a statement telling us what they will need to net. The BPO is what the last similar property sold for. They will usually accept about 5% to 15% below their BPO for an accepted offer.

MYTH- You can offer 30 cents to 50 cents on the dollar of what the listed price is.

TRUTH- The above statement is NOT true. The lender will take a small discount off of the BPO value. They want right below market value.

The list price is not your starting point in the negotiations on a short sale offer. You must pull up the tax rolls and check to see how much the owner owes to the lender. You will look to see if Lis Pendens has been filed. You will also need to take into consideration that if this house is in pre foreclosure there are other bills they most likely have not paid for that affect the sale of the property.

Those are:

• Unpaid Property Taxes

• Second notes or home equity lines of credit 

• Unpaid HOA fees and related attorney's collection fees

• Title insurance, doc stamps and other closing costs

• Real Estate Agents' fees

All of these are going to have be paid at the closing. The seller is most likely not going to have all that money to bring to the table. These figures are turned into the lender because the lender will choose which of these closing fees they will approve and how much they will expect these fees to be reduced.

Once you know how much the seller owes on his/her property you will have some idea as to how to structure your offer.

If this short sale is in Palm Beach County Florida it is very likely that you could get the property for 50 cents on the dollar on what the seller owes their lender, NOT what the list price is. The list price is usually right below market value. This is where the misunderstanding comes in for most offers.

You must look at what is owed to the bank versus what the market value is; the list price. The lender is actually reducing the loan down to the market value which can be a reduction of up to 50% as many markets have dropped that much in the last couple of years.

Sometimes you will get a better deal with if you are a buyer making an offer on a property that has equity in it and the seller is motivated to take a lower than market value offer. You must have a lot of patience when making an offer on a short sale. If you need to be in a house by a certain time in the near future trying to buy a short sale if that short sale is at the very beginning of the process and there is no BPO yet on the property, then it most likely not be in your best interest to pursue the offer. 

You can ask your agent to look for short sales that already have a BPO back on them and the original offerer is no longer in the picture. When this happens you will know exactly what the lender will accept as his bottom net and then you can decide if you would like to pursue buying that property. In these situations we can close rather quickly, usually within 2 to 3 weeks.  

So make your offer based on TRUTH not MYTH.  

Disclaimer: This post is not intended to be or to provide legal advice. We recommend that you speak to your attorney and your tax accountant regarding specifics and to find out if this is the best option for you in your situation.

The information provided herein is supplied by several sources and is subject to change without notice. Wellington Homes Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied.  Entries on Wellington Homes Blog represent the opinions and ideas of the author(s).  Wellington Homes Blog does not express the views of International Properties and Investments, Inc or those of the broker. 

Contact Nestor Gasset and Katerina Gasset, CIPS, Realtors®, International Properties and Investments, Inc. Licensed Realtors® in Florida at 561-753-0135 to list your property for sale or to purchase a property in Wellington, Royal Palm Beach, Loxahatchee, Lake Worth, Hypoluxo Island, Lantana, West Palm Beach and the rest of Palm Beach County Florida. We are accepting referrals.

Copyright © 2008 By Katerina Gasset, All Rights Reserved. *Short Sales In Palm Beach County Florida- Part 5 Shor Sale Myths and Truths About Offers. * Contact Katerina Gasset for Customized Business and Personal Coaching.

Visit our profile to find out more about our services. Call us today at 561.753.0135 or Toll Free 800.444.3316. Contact us by email if you prefer by clicking on email me on the right side of this page under our profile.

To view all the Wellington Florida Luxury Homes For Sale Click here and then click on Multiple Listing Search where the globe is on the right side of the screen that opens up. We know Palm Beach County and will help you get your home Sold if you need to Sell your home and help you buy your Wellington Home or Land ; call us today.

P.S. If you are listing your home as a short sale in Palm Beach County Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 561-753-0135 to find out more.