Like buying any property, to increase a buyer’s chances of success, the offer needs to be competitive. In the case of a short sale, the offer may need to be closer to the market value of the property rather than the list price. Short sale listings are often priced low for the purpose of attracting multiple offers. But this doesn’t mean the property will sell at that listed price. Note that most banks will not evaluate the seller’s request for a short sale until there is an offer on the table.
The property’s market value can easily be gauged by looking at comparable homes that have sold in the area recently. In today's improving market, short sale prices have risen dramatically. An experienced real estate agent will provide the best advice about how to negotiate a reasonable sales price.
The seller's mortgage lender will check property values in the area so a lowball offer is not recommended. Many banks are so overwhelmed with short sale requests and multiple offers that they will most likely not even counter-offer if you submit a lowball.
The most common reason is simply that the offer price is too low. If the short sale will make the lender take a bigger loss than foreclosure, the lender will usually have to foreclose. Both the seller and the buyer need to make sure the sale makes sense for everyone, not just the seller. Other reasons include:
Note that it is not uncommon for the lender to respond with a counteroffer. As with any real estate transaction, buyers will need to know beforehand what their limits are so they can either accept the counteroffer or walk away.
Short sale buyers, with the help of an experienced real estate professional, may increase their chances of success if they:
Should I start shopping for a lender even if the property I am interested in has not been approved for short sale? Yes. In evaluating a buyer’s offer, the seller’s mortgage lender will consider the buyer’s ability to purchase the property. Ironically, after a long wait for the lender’s approval, buyers are also expected to move quickly to closethe deal. It is therefore recommended that buyers work with a reputable and flexible lender and secure pre-approval for financing by the time an offer is submitted