Buying a Short Sale Part 2: Educating Yourself on Making an Offer
January 30, 2012
In the first part of our “Buying a Short Sale” series, we discussed what a short sale is and how long it takes to obtain approval on the price from a bank. Today we’re talking about educating yourself about how the process works and how to get your offer accepted.
According to Linnie Smith (a Short Sale Listing Specialist with The Sapphire Group), it is important for buyers to understand what a short sale really is, what path the short sale contract will take once you make your offer, and most importantly how to properly assess the market value of the property to make an offer that the bank will accept. “Using an experienced professional to help you with your short sale is essential,” says Linnie. “The process of working with negotiators and other Realtors to get your offer accepted is much different than working through a normal sale, and requires experience and patience on the part of your Realtor.”
In addition to working with a pro, Linnie advises her clients to be realistic about their offer price. “To some it’s logical that the bank should be happy to get any money at all if the seller can’t bear the cost of the mortgage,” says Linnie. “In most cases that just is not true.”
Linnie explains, “The tax ramifications of a bank forgiving a debt are completely different than those where the debt is written off and collateral is taken. Sometimes the advantages and write-offs of foreclosing far outweigh the income generated in a short sale.”
What is the best advice for having your offer accepted by the bank? “Know the marketyou’re shopping in and make an offer slightly below (10%-15%) the market value,” says Linnie. “Since most short sales are sold as-is, and especially if the home is a “fixer” or in poor shape justify a substantially low offer by including an abbreviated cost sheet showing what it will cost to bring the property to market value.”
Short Sale Listing Specialist Linnie Smith is sharing her tips for successfully purchasing Short Sale properties in this series “Buying a Short Sale.”