By now most home Buyers have a general understanding of what a Short Sale property is. What most do not realize is that the price that is advertised for sale is not always a guaranteed sale price. Yes, there are exceptions to this in where the listing agent has been able to negotiate the proper sale price of the property but in most cases this is not true.
To better understand this you should know that the process of a home that is a Short Sale can be rather long for the Seller who is trying to get out of their home. A typical scenario is the Seller finds that they can no longer afford their home. They own more to the Bank than it is worth so the only way to get out of their home is to negotiate with the Bank to sell it at a lower price for them to get out of the loan. The Seller typically uses a Realtor to help with the Bank negotiations. The Realtor will list the property based on comparable homes (other short sales) in the area that are for sale and that have sold. Meanwhile, the Seller is providing the bank with general information to show that they do not have the assets to continue paying for the property. The Bank will instruct the Realtor to submit offers before they move forward with the case file. It is at that point that the Bank does an appraisal (BPO) to assess value on the property. Once the Bank has all the information from the Seller and value of the property, then they will decide what they are willing to accept for the sale of the house.
Banks tend to have a higher price in comparison to what the listing price shows. This is where the problems for Buyers start. Most Buyers do not understand why there is one price from the Realtor which they feel is the asking price for the house and then another price from the Bank which is typically higher. Most Buyers get frustrated and in some cases walk away from the property that they are bidding on. If you are an informed Buyer you can avoid some of the roadblocks of a Short Sale and know which homes are better to work with.
If you are planning to write an offer for a Short Sale property, make sure you are informed about the challenges in advance. Below are a few questions you should ask about any Short Sale property. They just might make it easer for you to negotiate your next Short Sale deal.
1. Ask if the Bank has negotiated that sale price that is listed.
2. Find out if the Seller has been qualified to sell the house as a true Short Sale.
3. Ask how long it will take the bank to review your offer.
4. Find out what the bank will agree to pay as far as standard Real Estate closing fees.