Short sale question?
We are looking at home that is a short sale. It is assessed a little below $400,000 but has water damage because a pipe burst so the listing price fo the short sale is $200,000. We went to make an offer yesterday and were told “bids” are being accepted. Is this allowed? We thought bidding was only once it was in foreclosure. The agent said it ends tonight at midnight and in the morning she will take all bids to the bank. We are also afraid an investor may buy it up but since the market is so slow we aren’t too sure. We don’t want to pay anymore than $225,000 for the house because we will also have to put money in it to fix it. What is our chance of getting it with the agent doing it this way?? I was also told that anyone making an offer has to pay in cash because the banks will not loan money for the home until damages are fixed, does this help our chances??
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May 12th, 2010 at 2:57 am
In a Short Sale scenario, it basically comes down to the “biggest & best” offer to the Seller and their respective lienholder(s). The lienholder(s) know that the home is being sold short, so they are looking to obtain offers (aka bids) in to review and help their situation.
With that, being the first one to go under contract with the Seller is a good position to be in, as you will then have your place marker in at the primary seat. If you miss that spot, you will become a secondary offer, and it isn’t until negotiations between the primary & the seller/lender fall apart that you then be considered.
They are opening things up “for bid” because they’d probably prefer not entering into a contract with potentially a less than desireable offer if there is one coming in that may be better.
Good luck to you!
May 12th, 2010 at 10:39 pm
All cash is a great position to be in. The water damage makes it less desirable to other investors because they can’t rent it out “as is”. Take a shot at it. If you plan to fix it and live in it then you will avoid paying taxes when you sell if you stay two years or more.
May 13th, 2010 at 11:06 am
I see corporate owned properties all the time that accept bids within a certain window and they’ll declare a date when all offers will be reviewed. What they’re doing is not really any different than a normal sale except that this organization is being upfront that they won’t pay any attention to your response deadline on your offer.
You should offer only what you’re comfortable, and if someone else is willing to pay more, move on to another house.
May 15th, 2010 at 12:14 am
To entice the deal to close, you could agree to assign the Insurance Claim to the new buyer…
all these nice people gave you fair advice, good or bad it was “for free” and we all get thumbs down? LAME!!!
May 15th, 2010 at 9:09 am
How many others are really going to be able to pony up all cash for a property like this? The water damage is a huge wildcard. Did you get it inspected? Water damage and neglect are a recipe for mold…
I would offer what you are comfortable to offer (something below the $200,000 asking price) and let the chips land where they land. You would probably be better off not dealing with this property, so make sure you get a phenomenal deal on it.
good luck!