Who Calls the Shots
On both a Short Sale and a Foreclosure property, the Bank holding the mortgage is the one who calls the shots. In a Short Sale scenario the homeowner may still be involved but the Bank either accepts or rejects the offer. On Short Sales, many Banks have begun establishing the price they are willing to accept even before the home is put on the market. This establishes a common term being found on real estate listings: The Bank Approved Price. Foreclosures have a price established by the Bank before they are listed as well.
Times, They are Changing
Not so long ago, it was common knowledge that a Bank would offer around 3% back to the Buyer on either the asking price or in closing cost contributions. But, the Banks are in the same real estate market as the rest of us and they are seeing multiple offer scenarios on short sale and foreclosure properties as well. This puts the ball in the Bank’s court and eliminates their need to offer concessions to the Buyer.
With inventory at an all time low, Buyers are being forced to consider foreclosure and short sale properties even though in all cases, these homes are sold in As-Is condition. Short sales and foreclosure homes are typically listed at a price just below market value to reflect the condition of the home, but many Buyers would prefer a Move-In-Ready home. The challenge Buyers face is the stigma that they can offer much less than the home is listed for and still have a chance at getting the home. This is most certainly not the case in the current market. The reality is, a Buyer will likely find themselves in a multiple offer scenario and will be forced to present a competitive offer.
The Truth of the Matter
Because the home is likely priced just below market value, a Buyer must first be willing to offer MORE, yes I said more, than the home is listed for. In addition to this, a Buyer must be prepared to ask for less in contributions from the seller. The key to a successful offer in a multiple offer scenario is to write a clean contract. Give them want for the home and pay your own ‘bills’ and you will likely be the one who wins in a multiple offer scenario.
Keep this in mind; Because a Buyer is buying into the market at the lowest interest rates in history and because they are buying a home at the current market value in a market that is seeing annual growth in equity – They Win!