Five Guidelines For Pricing Your Short Sale
  1. Price it aggressively, perhaps even slightly below market value.
  2. Do not price your home based on your outstanding mortgage balance.
  3. Time is NOT on your side.
  4. It is not your job to get the highest price for your lender(s).
  5. Use recent comparable sales – yes, that can mean REO and other Short Sales.

Consequently, how much should I offer on a short sale?

Check the Comparable Sales Or there's no way the lender will take that much of a loss. Generally, banks approve a short sale that's roughly between 5 percent and 10 percent under market.

Secondly, can you offer less than asking price on a short sale? A buyer may offer less but the bank might not accept it. However, if the buyer does offer the preapproved price, the short sale will be approved, provided the buyer qualifies.

Likewise, can you negotiate the price of a short sale?

It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too.

Is it good to buy a short sale?

Why a short sale can be beneficial An interested buyer typically makes an offer in line with property values, but the seller is not in a position to accept the offer. If an appraisal of the home closely matches the buyer's offer, the lender may accept it, though the process can take months.

Related Question Answers

Who pays liens in a short sale?

The owner is still responsible for the debt and any other such obligations that can become real deal breakers in a short sale if the financially strapped seller can't satisfy them or the lender is unwilling to intervene. Once you close on the short sale, you'd likely be held accountable for any unsettled liens.

Are short sales cash only?

A short sale is when a home owner sells his or her property for less than the amount owed on their mortgage. In other words, the seller is “short” the cash needed to fully repay the mortgage lender. Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them.

Why do banks prefer foreclosure to short sale?

Banks are run like a business because they are a business looking to earn a profit. If it costs more to foreclose over agreeing to a short sale, the bank is very likely to favor the short sale. With foreclosure, a bank takes possession of the house, then resells it at a mortgage auction to the highest bidder.

Why is a short sale bad?

A short sale results when sellers don't receive enough cash from buyers to pay off their mortgages. Maybe the seller paid too much or borrowed too much for the property to begin with, or the market has dropped so the property's fair market value is less than the existing mortgage balance.

Can you make a contingent offer on a short sale?

Making Offers on Active Short Sale Contingent Listings

When another offer gets accepted from these types of buyers, the buyers then withdraw their outstanding contingent offers. But it doesn't mean a buyer in this position will be any closer to short sale approval.

How long can a short sale take to close?

Once an offer is received and signed, I send it to the bank, along with the seller's short sale package and a prepared HUD. From that point to the time of short sale approval, the average timeline is about 60 to 90 days. It means 30 days to sell + 60 days for approval + 30 days to close escrow = 4 months, on average.

What exactly is a short sale?

Short sale (real estate) A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. In this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished.

Can you buy a short sale with an FHA loan?

Buyers seeking a bargain can get a short sale for about 25 percent less than a non-distressed sale. Buying the home with a loan insured by the Federal Housing Administration (FHA) can save you additional money up-front on the down payment.

Can a bank counter offer a short sale?

Be aware that there is usually no counteroffering in a short sale when you first submit an offer. Therefore, if there are multiple offers, the Seller usually picks the “highest and best” and submits only one offer to the bank for short sale approval consideration.

Does Realtor get commission on short sale?

In a short sale, bank pays all the costs including real estate commissions, closing costs for seller, etc. You should not have to pay for your Realtor's commission in a short sale – not ever. The Realtor's commission comes from the proceeds of the sale. Banks will pay commissions.

Who pays closing costs in short sale?

Typically, in real estate short sales there are three parties to the sale; the seller, the buyer and the seller's lender. Mortgage lenders must approve the short sales of their borrowers, and while they will pay sellersclosing costs, they might hesitate to pay any buyers' closing costs.

What happens if bank does not accept short sale?

If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer, the buyer may counteroffer or end the process.

What does approved short sale price mean?

When the house you want to buy has been approved for a short sale, it means that the lender holding the mortgage has agreed to sell it at price that's less than the outstanding mortgage amount.

How low will a bank go on a short sale?

If the house is shortsale approved, the lender has agreed to sell for a pre-approved price, eliminating the need for extensive offers and counter-offers. Bid 10 percent lower than the approved price.

What is a BPO in a short sale?

In real estate, BPOs are often associated with foreclosures and short sales, but other companies such as relocation firms also order BPOs. A BPO stands for “broker price opinion,” and it involves using a process very similar to a real estate appraisal, although not as involved nor complicated.

Who accepts the offer in a short sale?

If you make an offer to purchase a short sale home, it must be approved by the seller and the seller's lender. If the property owner accepts your offer and agrees to sell the property to you, it may take at least two months before the lender makes a decision to approve or reject the short sale purchase agreement.

Is it better to do a short sale or foreclosure?

A short sale transaction occurs when mortgage lenders allow the borrower to sell the house for less than the amount owed on the mortgage. The foreclosure process occurs when lenders repossess the house, often against an owner's will. Furthermore, a short sale is far less damaging to your credit score than foreclosure.

Can a seller cancel a short sale contract?

Although it is more common for a buyer to cancel a short sale contract, sellers may have the right of cancellation as well. Sellers typically do not sign a purchase contract without specifying that the contract is subject to lender approval of the short sale.

Why do short sales take so long to close?

Short sales happen because the loan on the property is larger than the sale price minus all the sale expenses. With a short sale, the seller is asking the bank to take less than the amount owed. The seller's bank must approve the sale, and this is where the big delays can happen.