Follow these steps for how to make an offer on a short sale, which the bank will accept
If you are considering buying a short sale home, you need to know how to make an offer on a short sale, which the bank will accept that will keep you from spending too much money. The process actually starts before you even find a short sale property.
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HOW TO MAKE AN OFFER ON A SHORT SALE – STEP 1: MONEY
The first step on how to make an offer on a short sale is, before you do anything, decide how much money you can spend.
Look at your finances. What can you afford to invest? If you are borrowing money to make this investment, what can you afford to borrow?
As with buying a home under regular circumstances, getting pre-approved for a mortgage is a good idea. Zillow has an excellent primer on the pre-approval process.
“There are many reasons why you should get pre-approved. The most important reason is that you will get an accurate idea of how much home you can afford. This can help to target your home search and ensure you only look at houses that are truly in your price range,” the Zillow report states.
When you decide how much to spend, stick to that. Some properties that are tempting, but are just a bit out of your budget, will come along. Don’t buy them. Short sales happen regularly. Bide your time and wait for one you can afford.
HOW TO MAKE AN OFFER ON A SHORT SALE – STEP 2: FIND SHORT SALES
With your financing set, it’s time to start looking for something to buy. Finding short sale property is a bit different than looking to buy a home through conventional means.
Short sales are not always listed in the real estate Multiple Listing Service (MLS) reports that real estate agencies use. However, real estate agencies sometimes carry short sales, and some agencies even specialize in short sales. Call real estate agents in the area where you want to invest. Ask to be put on the short sale buyer list.
Banks, since they carry mortgages on homes headed for short sales, are an excellent place to find these properties. Speak to the mortgage department and tell them you’re interested in buying a short sale.
In both cases, expect to present your financial information showing that you can afford to buy a short sale property. This establishes you as a legitimate buyer. Also say that you are willing to wait for the sale to be processed.
Short sales often take a long time to complete. A committed short sale buyer is willing to wait a month or longer for the bank to approve the offer.
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HOW TO MAKE AN OFFER ON A SHORT SALE – STEP 3: INSPECT
Another important step on how to make an offer on a short sale is, once you find a house, inspect it if you can.
If you can’t do it personally, hire someone to do it. The American Society of Home Inspectors has a list of certified inspectors in every state.
You want to do the inspection because short sale homes may have problems. Sometimes the homeowner will take frustrations out on the home. Sometimes the short sale is because of damage the homeowner didn’t create. Some issues to look for are:
• Termite damage
• Leaking roof
• Structural damage
• Broken appliances and HVAC system
Just because the house has damage doesn’t mean it’s a bad buy. Get estimates, in writing, for the repair cost. Take the cost of these repairs off what you will offer the bank for the house. When you present your offer to the bank, provide the damage report and repair estimates.
HOW TO MAKE AN OFFER ON A SHORT SALE – STEP 4: BID AND WAIT
Here’s how to make an offer on a short sale. With everything in hand, make a reasonable offer on the house. Find out what other homes in the area are selling for. Don’t low-ball an offer.
There’s no hard-and-fast rule for what to offer. However, for the price to be approved, it must settle the debt with the bank. Anything less than that won’t result in an approval, even if the seller agrees to your offer.
If you’re working through a real estate agent, let the agent guide you in making an offer. If you’re not working through an agent, decide how much you’re willing to invest, including repairs, and let that be your total bid.
If you follow these 4 steps on how to make an offer on a short sale, you increase your chances of success.
Step 1: Money – Figure out how much you can spend, and stick to your budget. If you’re borrowing, get a pre-approved loan.
Step 2: Find Short Sales – Contact realtors and mortgage departments of banks. Let them know you can afford a short sale purchase and that you’re willing to wait for the transaction to be processed. Ask to be put on a list of short sale buyers.
Step 3: Inspect – It’s imperative that you inspect the property for damage before you purchase it. Get estimates in writing of repair costs and deduct them from your offer.
Step 4: Wait – Make an acceptable offer and wait.
We hope you enjoyed “How to Make an Offer on a Short Sale.” If you’d like to know more about discount real estate, Ted Thomas is a specialist in distressed properties and has over 30 years of experience investing in foreclosures, short sales, and tax defaulted properties.
Ted offers full support with home study courses, live tutorials, Q&A sessions, web classes, workshops, and one-on-one coaching programs.
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