Should you submit a low ball offer on a short sale? Every market is different, so I am giving examples of what we are experiencing here in the Tampa Real Estate Market, where about 40% of our homes for sale are either a short sale or foreclosure. Before you decide to buy a short sale, keep in mind the following:
How Banks Determine the Value of a Home:
After a buyer submits an offer on a short sale, the banks will perform a BPO (Broker Price Opinion). It’s not a perfect scenario, because Realtors, not appraisers are determining the market value. I’ll leave that debate alone for now. A BPO price is usually determined on what has recently sold in a 1 mile radius within the past 6 months for a similar property. Just like an appraisal, a BPO will use comparable sales to include foreclosures, short sales and regular sales.
Will they accept my offer?
Ask your Realtor for comparables. If the asking price is aggressive, the bank will most likely want close to their BPO price.
If we are forming a price opinion based on one half of our sales being either a short sale or foreclosure, then isn’t essentially everyone getting a good deal?
What does is mean when it says “bank approved price”?
The bank may have had an offer that fell through, which happens quite often. At least at that point we have an idea of what the bank is willing to accept. Which is why you see “bank approved” in the description. In my experience, I don’t believe any bank approved price unless the Realtor can give it to me in writing. Why am I so skeptical? Because I’ve had “bank approved” short sales take over 4 months before we received a response.
Is the listing price for real?
Some short sales you see listed may be an unrealistic price.
It’s the case of pricing a property too low, giving a false sense of the market, which is very confusing to many buyers. This approach may be used to submit an offer to the bank quickly and get the short sale process moving. This is a failure waiting to happen. The buyers could wait 4 months or more for the bank to come back and reject their offer.
Go ahead, make a low offer. Chances are it probably won’t be accepted at a 20% discount if it’s already priced appropriately. If your Realtor tells you it is priced too high, then you probably have a good chance of getting a low ball offer accepted.
Have a short sale question? Please submit your question using the comment box below.
Rae Catanese, Realtor-Prudential Tropical Realty
You may also want to check out my article on the Top 10 Short Sale Real Estate nightmares on HGTV’S frontdoor.com