How can buyer write strong short sale offer in a competitive situation
It used to be that when a home for sale is identified as a short sale, buyers and their agents stayed away because they didn’t want to wait and perhaps also because of fear of the unknown.
Today, in our market, it's a seller's market. There is so little inventory, and we are experiencing multiple offers at above list price on everything.
So how can one increase his chances to get his offer accepted on a short sale?
Knowledge is everything.
...property market value
...banks and how they typically handle short sales
... agent's know how of the short sale process
...resources to tap as needed (for example, www.CDPE.com)
...pricing strategy. Is the price low in order to entice buyers?
Here are some hints on how to write a strong short sale offer.
Offer close to or at market value. Don't go by list price alone
- The banks will get BPO (broker’s price opinion) which will be based on current market values
- Open escrow upon acceptance by the seller and before receipt of short sale approval. This shows total commitment on the buyer’s part
Agree to wait for 60 days or longer to for short sale approval. California Short Sale Addendum has 45 days. Depeding on the lender, it can take longer than that.
- Shorten your buyer investigation contingency
- The shorter the inspection period, the sooner buyer can decide whether to move forward or not
- If not, the seller and the agent can immediately put the property back on the market
- Higher initial deposit and down payment -- the stronger the offer.
- This perception is true in all offers
- Specify willingness to contribute towards payoff of a junior lien if there is one
- Some junior liens may demand a higher pay off than what the first lien holder is willing to pay, so it may help if the buyer contributes towards that payoff
- Note that the first lien holder will need to approve this contribution
- If such contribution is not needed, then you would not have lost anything...but you have gained the confidence of the seller
- AS IS sale.
- Ask seller to pay for expense not customarily paid by the seller. If buyers customarily pay for their share of city and/or county transfer tax, then buyer should assume that responsibility
- Ask seller for repairs, credits or compliance with local government ordinances (such as testing/replacing sewer lateral lines). Seller can’t afford them, and short sale lender won’t pay for them
Ask seller to pay for buyer’s closing costs such as escrow fees and title insurance,
Offer too high above market (not list) price. If the short sale lender approved your offer price but the property doesn't appraise that high, will the short sale lender reduce the price? Not likely.