How should I put an offer to a short sale house?
August 18th, 2009
I live in central NJ with still high real estate market, but plenty of foreclosure and short sale.
There is a house listed for 509k in short sale. It seems to be in good condition in a nice area. So I was wondering how low offer should I put on this house?
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I specialize in short sales and help people buy them. As a buyer, you will need to have your agent look at the lowest comparable sales and offer 10% below that (for your area). For example, if in the last 1-6 months the low sold prices were 550, 530, 535 your offer will be for 475k (really 477k, but that number looks weird to the banks). You will also need to ask the seller to pay for all cost and 3% for your closing cost. If the home is owner occupied, then you, not your agent, can contact the owner and tell them that you will give them $2,000 if they use your purchase offer only after close of escrow. The seller gets nothing from a short sale and offering them money will motivate them to use your purchase offer for the short sale. Plus it gives them money to move. Now, the only people who will get the house are people who will offer the owners the opportunity to rent it back or offer them more money (homeowners tend to catch on quick when they realize they can profit from a short sale). If the owners are out of state or nowhere to be found, be creative.
The second part is the BPO. The bank sends an appraiser to the home. It is very important that one of the agents meet the appraiser and give them 3 low sold and 3 low active comps. They should let the appraiser know that the house is in foreclosure and any value at or below 475k would be appreciated as it will help the owner out. Ask for a business card and say that when this is over and if it becomes a success, you will like to send the appraiser a special thank you. The business card will also let you know if this an appraiser or a real estate agent. The real estate agent doing BPOs is doing so in hopes that the short sale will fail and that they get the listing. So they purposely give the bank high numbers. So by knowing who you are dealing with, you know what to expect and what your next strategy is.
There’s more, but these two points should help you out.
Good Luck!