Buyer Myth #4; The Listing Price is What the Bank Will Most Likely Accept When You Make Your Offer

Before a short sale is ever put on the market, the listing agent and bank will determine an undisclosed price range for the property. The high-end will be what the bank would ideally like to get back. The low-end is the minimum they would be willing to accept at the time of the approval. The listing will generally go on the market at a price that is closer to the high-end of the range.

A lot of buyers will make the mistake of making a real ‘low-ball’ offer. If it is below the low-end of the accepted price range, they will likely dismiss such an offer immediately. Remember, banks are not as desperate to sell as most people think, and they’ll do whatever they can to have the property sell at the highest possible price. So, if you are serious about the property, make a reasonable offer. An experienced and market-savvy real estate agent will be able to help you determine what a ‘winning’ offer is on any specific property, short sale or otherwise.

Even if the seller accepts your offer and the bank accepts the offer initially, they will still go through the full short sale approval process before anything is finalized. They will appraise the property once more and review all aspects of the contract to make sure it is to their liking. If they determine that the property is worth more than you are offering, they can – and usually do –make a counteroffer asking for something more. This can include a higher selling price, a larger down payment from you, reduced agent commissions or in some rare cases, a stipulation that you must secure your home loan through them.

When you submit your officer and pre-qualification letter, make sure the amount in the letter is the same as the offer price. Even though you may be qualified for more, have your lender put in the exact price you are submitting. If they see you are qualified for more there is an increased chance that they will ask for more. Even though they will eventually review your full financial situation, you don’t want to advertise upfront that you can afford more than you are offering. This is a good strategy when making any real estate offer, but especially important to remember when purchasing a short sale property.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: