The U.S. housing bubble, coupled with the mortgage crisis, and subsequent recession have left many homeowners in dire straits. Homes purchased a few years ago might now be worth half of what was paid for them, depending upon the area where they are located. Negotiating a short sale can help you get the home you want at a reasonable price.

Let Them Know You are Serious

When making a purchase offer on a short sale, put down a substantial amount of money, rather than an arbitrary sum like $1,000. FHA loan's minimum down payment amount is 3.5% of the price, and depositing that amount will speak volumes about intentions. Agreeing to deposit that same in trust until short sale approval will prove to the bank your full commitment to the transaction. Obtaining a strong pre-approval letter from a lender tells the seller that this transaction is a done deal once the short sale is approved.

Know What to Offer

Some listing agents deliberately price short sale listings much lower than market value to attract an influx of eager buyers (both for this particular house and others that they have available.) This does not mean that the home will sell at that price, because it is just a guess as to the amount the lender might approve. Keep in mind that most banks will approve a short sale up to 10% under market value, in some areas, possibly as high as 15%. (Not 10% under mortgage balance, but the actual current value of the home.) Conferring with the listing agent before making the offer is a good practice. If there are several offers, this additional one will probably need to be priced higher than the list price. If the seller has accepted one of the offers and sent it to the bank, you probably will want to move on.

Give the Lender Time and Money

Though that might sound silly, it is a good strategy. Being very patient is necessary when dealing with short sales, and buyers should realize that very few get completely finished and closed in less than 90 days. Typically, short sale approval takes at least three or four weeks, and many banks can take six to eight weeks or longer to approve or reject a short sale. Be certain that the seller and the lender both know that you will wait for short sale approval and not get frustrated and walk away. (Again, a large money deposit and pre-approval letter tell the story here.) Don't ask the seller to pay for reports or make any repairs, as that will come from the bank's bottom line. Buy the home in "as is" condition, being certain that the condition warrants the offer being made for the property. You might go one step further and offer to pay some of the fees that sellers ordinarily pay at closing. This will raise the bank's net amount received, and could make the difference if they get two similar offers. Negotiations will probably also go smoother if a shorter time is asked for to conduct inspections on the property. Standard time is generally 17 days, and cutting that by a week can offer greater appeal, as the property is not sold until that contingency is met.

Source:

Short Sale Negotiating Tactics

Kick a** short sales

Short Sales Info

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You Walk Away

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