Can You Win at a Short Sale? Absolutely. Read On To Find Out How To Buy a Great Home, At An Even Greater Price

Short sales allow borrowers struggling to make their payments to put their homes on the market for less than they owe on the properties. When offers come in from buyers, the bank or mortgage company has to approve the deal. Lenders will only do that when a short sale costs less than foreclosing. What’s more, every bank or finance company with a lien on the property, including those who provided a home equity loan, must accept the terms or be paid off. That extra step, and the financial industry bureaucracy it involves, is why most buyers find short sales to be a long, aggravating effort. Here are four smart moves for navigating the process.

This type of home purchase is all about presenting the lender with a deal it can’t refuse. Banks and mortgage-servicing companies are most likely to approve buyers who: have a substantial downpayment, have been pre-approved for a loan, and place no contingencies on their contract, such as having to sell their current home before proceeding with the purchase.

Many banks have companies that manage their short sales. You need a pro of your own to match that experience and help you navigate the process. You should hire a realtor. A real estate agent who has done lots of short-sale transactions will know how much of a discount is common in your area, what you’ll need to do to get your bid accepted and when to walk away from a deal that’s not going your way. Any home that has spent several months on the market can indicate an unmotivated seller or an inexperienced listing agent.

Your agent should ask the seller’s agent if the bank has actually agreed to sell the home for less than is owed or if the seller is just hoping to do so. In the latter case, you could be wasting your time. Knowing how much to offer is key, but it’s not as straightforward as figuring your bid on an owner-occupied home or even a foreclosure.

Be aware that the listed price is only an estimate of what the seller and listing agent think the bank will accept. Oftentimes, listing agents market homes at a bargain price, only to have the final bank approval come in at a higher price.

Properties that have been listed for more than 30 days present an opportunity to negotiate with the seller. How much of a discount can you get? Location and condition make a big difference. Well-maintained properties in popular neighborhoods will have less of a discount than properties in poor shape in unpopular neighborhoods. For further reading, check out this useful article about Tips for Winning a Short Sale.

When Everyone In The Room Is Carrying Poker-Faces: How to Negotiate The Deal To Your Favor

After you finally get a buyer, the hardest part after that is negotiation; its hard for both the buyer and the seller. Buyers will usually expect a back-and-forth negotiation, their initial offer will be lower than what they are actually willing to pay and lower than your list price. Once this happens, many sellers counteroffer with a price below their asking price, because they are afraid to lose the sale. 

Human instinct says that they want to show they are flexible and willing to negotiate in order to close the deal. This strategy does indeed work in terms of getting the property sold, as thousands of sellers can attest, but it’s not necessarily the best way to get the most money for your house.

Instead of lowering the price to get closer to the buyer’s offer, you really should counter at your list price. Someone who really wants to buy will remain engaged and come back to you with a higher offer. Assuming that you’ve priced your property fairly to begin with, countering at your list price says that you know what your property is worth and you intend to get the money you deserve. See: Why Sellers Make Full-Price Counter Offers.

Buyers may be surprised by this strategy, and some will be turned off by your unwillingness to negotiate and walk away. But you’ll also avoid wasting time on buyers who only make lowball offers, and who aren’t so much interested in buying your property as they are in getting a bargain.

List the home on the market and make it available to be shown. Schedule an open house for a few days later. Refuse to entertain any offers until after the open house. Potential buyers will expect to be in competition and may place higher offers as a result. You might only get one offer, but the buyer won’t know that. On the other hand, if you get multiple offers, you can go back to the top bidders and ask for their highest and best offers.

When a buyer submits an offer that you don’t want to accept, you counter their offer. You’re then involved in a legally binding negotiation with that party, and you can’t accept a better offer if it comes along. In the interest of selling your home quickly, consider putting a short expiration time on your counter offer. This strategy compels the buyer to make a decision so you can either get your home under contract or move on.

Don’t make the deadline so short that the buyers are turned off, but consider making it shorter than the default timeframe in your state’s standard real estate contract. If the default expiration is three days, you might shorten it to one or two days.

When a buyer submits an offer and asks you to pay their closing costs, counter with your willingness to pay but at an increased purchase price, even if it means going above your list price. Buyers often don’t realize that when they ask the seller to pay their closing costs, they’re effectively lowering the home’s sale price. But as the seller, you’ll see the bottom line very clearly. For further reading, see: Home Negotiation Strategies – Zillow.

What Is Rent-to-own, And Should You Get Involved In It? Here’s The Catch In The New Way to Buy

What are rent-to-own homes? Well, these homes are a way for people who don’t qualify for a mortgage, but want to still buy a house. This option is something that allows a person to lease the house with the option to buy it when the term is over.

The isn’t necessarily the most common way to buy a house, and the availability of homes being sold this way are rare. However, it can be a good idea, and some people do make it work. Here are some things that make it something you should consider.

Perhaps you are really close to being able to get approved for a mortgage, but you’re not fully there yet. You may have a low credit score. See: A Deeper Look into How Rent-to-Own Works. Or, you may have great credit, but low credit history. You might have just gotten an amazing job, but haven’t been there long enough for the bank to consider is a stable thing. You also might be self employed; even if you make great money, the bank still finds that risky.

These are all situations in which the homeowner can buy a house, but the bank hasn’t quite seen their potential yet. So, if you rent to own, you’re giving yourself a good two years to get your credit in check, while getting closer to owning the home. It gives you time to improve your credit score, or get a better job, or fix any blemishes on your credit report. Read: How Rent-to-Own Homes Work.

When you choose this option, you are going to be paying a lease option fee; you can consider this your deposit, which by the way, you won’t get back. So don’t put down a deposit unless you’re sure you want to buy the house; or, if you’re not okay with losing that money.

The downside of rent to own is that you’ll have wasted money on rent if you don’t buy it. You pay the owner extra rent each month; the regular rent, and then a smaller portion that is set aside for the downpayment on the house. So, if you don’t buy it, you lose that money as well.

Another downside to these situations, is that there isn’t a standard contract for this type of buying situation, like there are in the closings for the traditional method of buying. This means, that the owner can write whatever they want in the contract. You should consider consulting with an attorney if you are looking at a lease to own situation. For further reading, see: Rent-to-Own Agreements Can Benefit the Buyer and Seller.

 

Are You a Seller, Wanting To Be Present at Every Viewing? Here’s Why You Should Schedule a Lunch Date (Or Be Anywhere Else) During Your Open House

When a buyer is viewing a home, they should feel incredibly comfortable. They don’t want to feel like ean intruder. This is just one of the many reasons the seller shouldn’t be there when their home is being viewed. They should be able to open and look at your closet, without feeling like a thief, or something else uncomfortable. They will need to look under your sofa, look in your medicine cabinets and drawers, and many other things. See: The Worst Things to Say to a Sellers Agent

Honestly, you should be worried if you have a buyer that doesn’t want to do these things, because that means they aren’t serious about the house. For example, when you’re shopping, if you take the item off the rack to glance at it and put it back, you aren’t serious. It’s when you take it off the hanger, study the fabric, and try it on that you mean business.

If the seller is present, the buyer won’t be able to do these things because they’ll feel uncomfortable with you watching them do it. When the seller is present in front of a buyer in their home, they both are losing. The seller is probably losing a buyer, and the buyer is losing a house that they may have really liked. The buyer never stood a good chance, if you were there. Check out: 14 Steps to a Flawless Open House.

Another reason the seller shouldn’t be there is that they end up talking too much, by accident. It’s in a persons nature to fill uncomfortable silences with noise. And unfortunately, the seller may end up revealing things about the house that the buyer shouldn’t have known about. For example, you might talk about how great the neighbors are. Then, if the room becomes too quiet, you might accidentally throw in a comment about how rude one of them is. 

It’s also possible for a seller to damage the buyer’s ego. For example, when a buyer asks questions, the seller could respond in a way that will hurt the sellers feelings. For example, if the seller says “yes, the living room was orange when we moved in, which was god-awful, so we painted over it, thank goodness!” The buyer might have wanted to actually paint the room orange. You never know what you’ll say that might turn them off.

There are not many situations in which it is beneficial for a seller to be present at an open house, or viewing. There is no excuse for a seller to be there. Even if you take the dog for a walk, or go to lunch, it really doesn’t matter where you go. Just don’t be there! For further reading, see: The Dirty Secret About Open Houses – They’re Not For Selling Houses.