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The Right Bid Is Key To Closing Short Sales

When you bid on a home, you usually open negotiations with a deliberately low offer.

Short sales are different.

Lenders must approve any deal that allows a home to be sold for less than what’s owed on the mortgage, and it can take weeks, sometimes months, for them to evaluate and approve (or reject) each offer.

How to bid on a short sale.That makes it tough to do a lot of dickering.

So your first bid needs to be a realistic offer with a good chance it will be accepted.

Start by estimating the fair market value of the home using comps (values of similar properties that have sold near the home in the past few months).

Take the condition of the home into account and reduce your estimate if the home needs repairs.

Calculate 82% of the home’s value, throw in a few thousand dollars to cover the lender’s cost of doing a short sale (ask your agent what that typically is for your area), and you have a good starting point.

Now look at the quality of your comps.

If most of the homes weren’t foreclosures and spent several months on the market, you’ve probably got a good bid.

If most of the homes were foreclosures and only spent a few weeks on the market, you’ll have to offer more — possibly up to full market value.

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  1. Mary T said:
    on March 1st at 06:46 pm

    On buying a home on short sale. We have been pre-qualified to buy the house we are renting and the lender’s agent is saying that we should make the offer even if we are not sure where the down payment will come from a gift or additional income. He says the sale will take three months. Isn’t it possible that if we make a good offer and it is accepted, it might close a lot quicker? The home isn’t on the market and the owner is doing a refi to keep the home from going to sale. Any advice?