How to Get an Offer Accepted on a Short Sale
Short sales, where homeowners sell their properties for less than the amount owed on their mortgages, can be an attractive option for buyers seeking bargains. However, securing approval for a short sale offer requires careful planning and adherence to specific guidelines. This article explores proven strategies for increasing the likelihood of acceptance, drawing insights from reputable sources: FortuneBuilders, The Balance, and The Balance Money.
Subheading 1: Essential Considerations
1. Offer a Strong Earnest Money Deposit
Key Facts
- Offer a Strong Earnest Money Deposit: Submitting a significant earnest money deposit, typically between 1% and 5% of the sales price, shows the seller and the lender that you are serious about the purchase.
- Check the Comparable Sales: Research comparable sales in the area to determine a reasonable offer price. Keep in mind that some short sale listings may be priced below market value to attract buyers, but the lender may not accept such a low offer.
- Don’t Ask for Special Reports or Repairs: Short sales are typically sold in “as-is” condition, meaning the buyer is responsible for any repairs or inspections. Avoid asking the seller to pay for additional inspections or repairs, as this may lower the lender’s bottom line and decrease the chances of your offer being accepted.
- Give the Bank Some Time: Short sale approval from the lender can take several weeks or even months. Be patient and prepared to wait for the bank’s decision. It’s important to act promptly if approval arrives earlier than expected.
- Assure the Seller You’ll Wait: Short sale sellers often worry about buyers walking away from the deal. Reassure the seller that you are committed to waiting for the lender’s decision and not actively searching for other properties.
- Offer to Pay the Seller’s Fees: If there are certain closing costs that the seller typically pays in a short sale situation, offering to cover some of those fees can make your offer more appealing to the lender.
- Shorten Your Inspection Period: Consider shortening the inspection period to 10 to 14 days, which shows your commitment to a faster closing process.
- Provide a Strong Preapproval Letter: Obtain a lender preapproval letter to demonstrate your financial capability to close the transaction. This can give the seller and the lender confidence in your ability to complete the purchase.
Demonstrate your commitment by submitting an earnest money deposit of 1-5% of the sales price. This signifies your seriousness and enhances the credibility of your offer.
2. Check Comparable Sales
Research recent sales of similar properties in the area to determine a fair offer price. While short sale listings may be priced below market value, the lender may reject excessively low offers.
3. Avoid Special Requests
Short sales are typically sold “as-is,” meaning the buyer assumes responsibility for repairs and inspections. Refrain from requesting additional inspections or repairs, as these may reduce the lender’s profit and hinder your offer’s approval.
Subheading 2: Patience and Persistence
4. Give the Bank Time
Lenders may take several weeks or even months to approve short sale requests. Exercise patience and be prepared to wait for a response. Act swiftly if approval is granted sooner than anticipated.
5. Reassure the Seller
Assuage the seller’s concerns by expressing your commitment to waiting for the lender’s decision and not actively pursuing other properties. This demonstrates your reliability and increases their willingness to accept your offer.
Subheading 3: Enhancing Your Offer
6. Offer to Pay Seller’s Fees
If the seller is responsible for certain closing costs, offering to cover some of these expenses can make your offer more attractive to the lender.
7. Shorten the Inspection Period
Reduce the inspection period to 10-14 days to convey your eagerness for a quick closing. This can be advantageous in competitive situations.
8. Provide a Strong Preapproval Letter
Obtain a lender preapproval letter to substantiate your financial ability to close the transaction. This instills confidence in the seller and the lender, increasing the chances of approval.
Conclusion
Securing an accepted offer on a short sale requires a strategic approach. By adhering to these guidelines, you can increase your chances of success. Remember to offer a substantial earnest money deposit, research comparable sales, avoid special requests, exercise patience, reassure the seller, enhance your offer, and provide a strong preapproval letter. With careful planning and execution, you can navigate the complexities of short sales and secure the property you desire.
Sources
- FortuneBuilders: Making Short Sale Offers: 4 Secrets to Getting Accepted
- The Balance: How to Make a Short Sale Offer
- The Balance Money: The Complete Short Sale Process
FAQs
What is a short sale?
**Answer:** A short sale is a transaction where a homeowner sells their property for less than the amount owed on their mortgage.
How do I know if I qualify for a short sale?
**Answer:** You may qualify for a short sale if you are experiencing financial hardship and cannot afford your mortgage payments.
What are the benefits of a short sale?
**Answer:** Benefits of a short sale include avoiding foreclosure, preserving your credit score, and potentially receiving relocation assistance.
What are the risks of a short sale?
**Answer:** Risks of a short sale include damaging your credit score, being sued by your lender, and having to pay capital gains taxes.
How do I make an offer on a short sale property?
**Answer:** To make an offer on a short sale property, you should submit a purchase offer along with a short sale package that includes financial documentation and a hardship letter.
What is a short sale package?
**Answer:** A short sale package is a collection of documents that you submit to the lender when you make an offer on a short sale property. It typically includes financial documentation, a hardship letter, and a purchase offer.
How long does it take to get a short sale approved?
**Answer:** The short sale approval process can take several weeks or even months.
What are some tips for getting my short sale offer accepted?
**Answer:** Tips for getting your short sale offer accepted include offering a strong earnest money deposit, checking comparable sales, avoiding special requests, giving the bank time, reassuring the seller, offering to pay the seller’s fees, shortening the inspection period, and providing a strong preapproval letter.