We recently helped a client navigate the challenging roads of making an offer on a short sale, and we thought we'd share the results for all to learn from!
Q: Is there any difference between a short sale and a short sale where the bank promises a quick response? Are the risks associated with short sales still the same?
Thanks for your help!
A: Most likely, the bank has promised a 'quick response' because they are further along in the negotiation process with the property owner (they are open to a short sale), and are looking to accept an offer in a timely fashion.
All short sales are the same in terms of being risky, because there is no guarantee that the bank will accept the short sale price. That being said, many short sales come with the risk of having to wait months before hearing back from the bank, and a quick response would mitigate this risk.
Does this make sense? Please let me know if I can clarify anything further!
Q: The property is in a great location but it is out of our price range. Generally speaking can you give a low ball offer on a short sale? As always, any information you could provide would be helpful! Thanks!
A: While you can make a lowball offer on a short-sale, 99% of the time it's fruitless because it plays out in one of these 2 ways:
Scenario one: the listing agent has not started negotiating with the bank: In this scenario, the listing agent is just hoping for an offer, so s/he can go to the bank and say, "look, I have an offer, will you play ball?" But since the listing agent has no idea what the bank wants to get out of the property, this is not a smart way to go about doing things because the bank may not even be open to doing a short sale at all, and the listing agent just wasted his/her time and the seller's time and your time.
Scenario two: Most short-sale listing agents have wised up to this, and so the first thing they do when they have a seller who wants to sell, is have the seller start talking to the bank. This is the "hardship packet" that the seller has to fill out, etc. Then the bank assigns a negotiator to the case, and the bank sets a price they're willing to take on the property. So in this scenario, you do know what the bank is willing to take (that's almost always the listing price; it wouldn't be logical to list it for something other than the amount the bank has said they'll take). This is the case the short sale you're interested in seems to be in, where they have some level of understanding with at least one of the trusts on the property is willing to take. In this scenario it's very difficult to offer under that price, because then the bank has to go through the reviewal process all over agin, and that takes copious amounts of time, if you even get a response from them at all. Lowball offers on short sales = very, very low chance of success, unless they're within striking distance of the list price (1% off, for example), and even then it isn't worth the hassle of trying to get that 1% discount.
So main take-aways are that lowballs on regular sales are very good, lowballs on REO properties that have been on for more than 60 days are very good, with short sales we can try a lowball (it never hurts to try) but i would not hold your breath, and it'll be a month-long process at a minimum. Does that help at all? If you really like this property and want to try something, at the very minimum we can try to get some info out of the listing agent.