Getting Your Short Sale Accepted
By JD Esajian on November 4, 2013
As the market inches towards recovery, the amount of short sale closings have dramatically decreased. That being said, they are still being closed under the right situations. Now, more than ever, your presentation will impact whether or not it is accepted. Because of the high demand for these properties, coupled with the reduced inventory, lenders do not have the time to go digging around a file looking for items. You may only have one chance to make an offer and you had better make it count. A good presentation is the best way to get a short sale offer accepted.
It is a common misconception that sellers are willing to practically give their property away. The property is a short sale, but that does not mean it’s a fire sale. Your first offer should be your best. If the home has just come on the market, you can expect the lender to take their time to find the best deal. If you offer 20% or more below the asking price, you may not even be given the chance to make a counter offer. Cash offers and quick closings are nice, but most offers will be that way for a new listing.
Instead of trying to play the offer game, come in with a price that you can live with on your first try. You are still trying to get a deal and don’t want to bid against yourself, but come with an amount that you would make if they had countered. If they end up accepting your terms, then you have a deal. However, if they don’t, you can move on to the next property knowing you didn’t waste time and money on one deal.
Offer price is important, but it is not the only thing the lender will look at. You need to make sure you have everything they are asking for. This includes everything from seller financials to a fully executed contract. Omitting even one signature can cause the lender to pick another equally qualified offer. Take the time to review all of the documents before you or your realtor submits the file. The lender is reviewing multiple files a day and will not stop and email you asking for signatures or other forms. This may be your only chance to have your offer reviewed and you need to put your best foot forward.
If you are offering less than the asking price, you had better be able to justify your offer. Provide comparables that you think are closer to your offer. If there is work that is needed on the property, have a written estimate on a contractor’s letterhead breaking down each item. Just throwing in an estimate by you or your realtor will have little to no effect. The more documentation, the stronger your offer is. If the property has been on the market for multiple months, include a listing history and a timetable of any price reductions.
Short sales cannot be counted on as the bread and butter of your investing portfolio, as they once were. While deals are still available, your presentation has to be flawless. Take the time to double check all of your documents, comparables, estimates and contracts.