I'm looking at buying a short sale in Denver. How should I decide on what to offer? This is a great question. As if the actual process of going through a short sale isn't enough, deciding on what a fair offer price is can be just as confusing. The issue with pricing on a short sale is that nine times out of ten, the price the short sale is listed for on the MLS is simply an estimated price the listing agent thinks the bank might accept. There is no guarantee the bank will accept this price, and there is no guarantee they will accept say10% less than that either. So what are you supposed to do?
I was discussing this with a short sale expert in our office, June Schlesinger, and she hadsome great recommendations. The first thing June recommends is throwing the listing price out the window. Sometimes you will find a listing agent that prices it way below market value in order to get a lot of offers on the property. While this can be good to get the ball rolling and get the bank working on the short sale process, it can also back fire when the bank comes back significantly higher and the buyer has just waited three months with nothing to show for it.
The second step, and most important, is to have your agent do a Comparative Market Analysis for the home. Through this, you can decide on what fair market value is based on what has sold recently and what is currently on the market. Once you have this number decided on, it becomes much easier to formulate a true offer for the property and try to get as close as to what the bank will really accept. It is even a good idea to include the CMA with your offer. No guarantees the bank will take it into account or even look at it, but if nothing else is shows that you have in good faith considered the true value of this home and that you aren't just throwing a random value out there hoping it sticks.
Short sales can be a great way to get into a home at a price that isn't always possible with a normal sale. Just remember that the house is an asset to the bank and if it doesn't make financial sense for them to sell, they aren't going to.It is a risk to wait up to3 months for an answerwhile potentially missing out on lots of other great homes. So just make sure the reward is worth the risk and provide the bank a real offer for the home, one that has a good chance of being accepted and still gets you a good deal at the same time.
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