How to Write A Short Sale Offer In A Competitive Market
The local real estate market in Santa Maria and Orcutt California is currently dominated by bidding wars and multiple offer situations. So, no matter what type of listing it is (REO, short sale or traditional), the one certainty is competition. As a local short sale agent, I am amazed at the offers I see that just will not fly in this environment. Although short sale sellers generally do not receive proceeds from the sale (unless they are lender approved incentive payments), their needs and desires should be considered when writing a short sale offer, especially if you want to gain their acceptance of your offer in a low inventory market.
Here are a few tips:
● Don’t ask for the seller’s personal belongings. I’ve seen this time and time again. Hands off the seller’s personal belongings! Unless it is offered in the listing sheet (and maybe not even then), do not ask for a short sale seller’s refrigerator, washer, dryer, or couch. Short sale sellers are usually in financial distress, most don’t welcome also having to replace appliances and furniture when they move.
● Offer to put your initial deposit in escrow. This shows commitment to the deal, and that you are probably not one of those buyers who is constantly shopping around while the seller is applying for short sale approval. Losing a buyer is one of the typical reasons why short sales drag on and on and if the foreclosure time clock has begun it can also cause the seller to lose the property through foreclosure. Assure the seller that you are committed to the deal by showing them the money.
● Do your home inspection up front. Most short sale sellers are looking to sell their home “as is” because they do not have the funds to make repairs. Of course, buyers are encouraged to carefully review disclosures and perform a home inspection so they can determine what “as is” is. By offering to do your home inspection up front, the seller is assured that you are committed to the deal and that they are not going to be hit with last minute repair requests after the short sale approval has been issued.
● Write a clean offer. Clean offers are easier to get approved by the short sale lender. Offers that do not ask the seller to pay closing costs, termite repairs, or purchase home warranty policies are generally considered “cleaner” than offers that request those concessions. If the market is competitive, consider leaving out the extras that you would like to have but are not likely to get. Don’t assume that you will receive a counter offer in a competitive market.
● Offer a timeline that works for the seller. If the home is still occupied by the seller, have your real estate agent ask the listing agent about the seller’s plans. If they are still figuring it all out, they may want to wait for the regular contract period to begin. If they are mostly concerned about minimizing damage to their credit and an upcoming inability to pay, they may prefer that you begin the regular contract period now and be ready to close when the short sale approval(s) arrive. Find out what that particular short sale seller wants in terms of a timeline and offer it to them.
If you are interested in purchasing a short sale home in the competitive Santa Maria and Orcutt real estate market, it may help to work with an agent who has short sale experience. Understanding the short sale process and the dynamics at play for short sale sellers, can be essential when making short sale offers in this competitive market.
Those considering a short sale of their property should obtain legal and tax advice, and also consult with an experienced local short sale agent. If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a no cost short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.
TniLeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE), Short Sale and Foreclosure Resource(SFR), and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Any and all program benefits described are subject to change.
Copyright© 2012 Tni LeBlanc *How to Write A Short Sale Offer In A Competitive Market*
Great suggestions in this post, Tni! Many markets across the country are getting more competitive as we recover, so this is great advice for agents and buyers all over! Suggested.
And for crying out loud, give the seller a day or two to move after closing. Don't kick them out like yesterday's trash and be over there changing the locks minutes after recordation. Agents who give my sellers a few days to move in Sacramento get priority when it comes to multiple offers -- you can bet your booty. Or is that bootie?
Could be these short sales will be a lot easier to deal with when we have some structure, communication, and certainty that the seller's lender will abide by the new short sale "regs".
It would also help if the short sale listings were managed by knowledgeable listing agents.
Until the short sale timelines are in place and buyers know that they won't be waiting 6+ months for a rejection, they'll be more likely to pay for a home inspection early rather than later.
We do get earnest money deposited on ratification as with any contract.
Thanks for the suggest Mary!
Christine - I agree. Understanding the process and what short sale sellers want is key.
Elizabeth - Hey how about that... a few days to move! Gee that might be nice. Sometimes, people completely forget what the sellers might want just because it is a short sale. And, I believe it is booty, and bootie is the French spelling.
Lenn - I agree. It would be nice if there were some accountability in terms of short sale timeline. I have one now with BofA where I asked why they hadn't met the 10 day HAFA approval deadline. Their response was essentially that the 10 days didn't begin until they decided to take action. Interesting. I wonder if I could try that with them. Of course, even without that certainty of timeline, if the market is competitive (as it is now in my area), buyers have to be willing to stick their toe in the water if they want to get wet.
Tni, I can't even imagine someone asking for the seller's belongings in a short sale. That really is a bottom feeder looking for a deal. Oy!
I have FHA buyers looking to purchase a hoem in your market place. They have written no less than 20 offers and are constantly getting outbid because there are so many offers for each home that no one wants to take the lowly FHA offer.
Mike - It happens... all the time!
Chris - It's tough out there. Even tougher for VA buyers.
Tni - I have little experience with short sales, but just today our office lender told us something that made sense when writing an offer on a short sale. He said to make the mortgage contingency (if there is one) 20 days after the bank's approval, and the close 30 days after the approval.
Great points. A short sale has to go through a lot of hoops...therefore the buyers need to keep things simple and genuine.
It's too bad about FHA being considered lesser than by the listing agents because when I've talked to several of the banks that I've done short sales with, they don't care about the financing, they care about the money at the end. Now, if you're an FHA buyer asking for closing costs, that may be different, but we've had some who offer over asking and then want closing costs back - but we have to warn them that the lender may not approve it and just want the price they're offering instead.
Sounds like things in your market are very simular to wht we are seeing here in Temecula CA.
All good points. Buyers need to take your advise as Santa Maria Short sale specialist.
Tni -- All great points that will certainly help to reducing the timeline and/or ensuring the success of the sale. Having a listing AND buyer's agent who are educated in and have experience with short sales is by far the most important part of the process.
Excellent Tni, all you say on a short sale is so important and for us who do many short sales we know how important these points are...as a Santa Maria short sale agents you are the right agent for short sale sellers!
Tni, you've made some excellent points here. Anyone interested in purchasing a short sale in this area should definitely contact Tni as she is the BEST Santa Maria short sale agent and will definitely get you good results!
Hi Margaret - That same type of arrangment is in the standard short sale addendum for the CAR forms.
Athina - Very true. A genuine buyer is very valuable.
Reba - I've had some push back on paying closing costs on conventional offers. But, I've seen them pay them also. Depends on the investor, type of financing and days on market I think.
Hi Sid - Yes, we don't have enough houses. Yet, so many agents are having trouble with writing a competitive short sale offer!
Barbara - Agreed. Both matter.
Ginny - Thank you! Yes, listing short sales gives you a certain vantage point.
Thanks Stephanie! Glad you thought it was worthwhile.
Great tips. I can't seem to encourage buyer's agent to conduct an inspection prior to seller's bank approval. I would have closed several more if they had.
Tni: Great blog. As a short sale listing broker, I found it really helps to go into escrow and have them issue a preliminary HUD-1 to include with the package that has all disclosures signed by everyone in it. I get my approvals fast and, in fact, the lender pressures for an early closing.
Lenn took the words right out of my mouth. I hope that things will start to improve so that more short sales are "short".
Tni:
The market is changing and buyers need to change their tactics with the changing market. Having an experienced short sale agent is key to closing the sale successfully.
Tni - It's obvious you have been to the short sale rodeo a time or fifty.
Tri...love it! You hit all my pet peeves! I always ask for, or offer, deposit in escrow right away, and hands-off personal belongings, unless offered. As a side note, including personal belonging in the contract may also have to be eliminated by addendum if the buyer's lender has a problem with it.
OK. My bad typo on your name! Sorry Tni ;)
Thank you Tni, Great advice and well written, you did a good job of considering the sellers needs and situation in this valuable advice.
Good morning Tni,
Very good post on short sales though sometimes the appliances were part of the original purchase and should stay with the property. Best of success to you this year!
I will bookmark this post and use the tips . Thanks for sharing.
Depositing the earnest money up front is such an easy way to let the sellers know you aren't jacking them around and looking at other homes to buy.
Yes, yes, yes. Although I prefer on the list side not to get the earnest money until the deal is ready.
Keeping it simple is good! It amazes me when a buyer wants the seller or third party creditor to pay for repairs even after they have been counseled that the home is "as is where is" and the inspection is just for information to help them decide if they want to do the repairs.
I find having the buyers talk to the sellers directly gets their short sale offer accepted in a competitve market.
Hi Tni,I can't help but to adore this blog.Really good choice of blog and excellent tips.What can I say you're definitely an Amazing Santa Maria Short Sale Agent.Hope to read some more blogs.God Bless!
What a Great tips here Tni,You're definitely one Brilliant Santa Maria Short Sale Agent.You really know how to share your knowledge to other people.Keep it up!
Great post. Price matters less than all these other issues. Of course the better the price the more likely the bank is to accept the offer.
We have our own Short Sale addendum....legally approved of course...inspection and earnest money are due from the Sellers' approval not the Lender's.....if property condition is an issue...best to know right up front...and very very few buyers walk with "skin in the game."
Hello Tni,this is a brilliant suggestion.Alot of markets are getting more competitive.Great job in giving advice to everyone.Continue being the best Santa Maria Short Sale Agent.
Tni,what an excellent topic here.I agree with all their comments.This is one helpful tips to help everyone.Great job.Continue being a great example to everyone and stay the best Santa Maria Short Sale Agent.
Hi Tni,I will definitely recommend this blog to my other friends I'm sure they would love this.Thanks for this amazing post! Best wishes to you and Keep it up being top notch Santa Maria Short Sale Agent.