How to Make an Offer on a Short Sale

By on July 9, 2015

A short sale can be the best option for some home sellers: If they can sell their property, they’ll avoid foreclosure. If you’re the buyer, your prospective may be different. Making an offer on a short sale is different from making a standard offer and there are a few pitfalls you’ll have to navigate.

While you can get a great deal, you’ll increase your odds of getting an approval if you know what to expect.

How Short Sales Differ

Short sale properties are different from traditional home sales and foreclosure sales. With a traditional home, you only need to work with the buyer and the buyer’s real estate agent. With a foreclosure, the lender has already bought the property and you’re making an offer directly to the lender, without the buyer involved. With a short sale, the buyer is selling the property but the lender also has final approval on any offers made.

Get Financing for Your Short Sale

Paying in cash will greatly increase your chances of the seller and lender approving your offer. However, many people can’t afford to buy a home in cash. If you’re using financing, make sure you have your pre-approval lined up before you make an offer on a short sale and plan to put as much down as possible. If you offer a pre-approval letter and a large down payment, the lender will take you more seriously.

Be Ready to Wait for Approval

Short sales take longer to approve than typical home sales. With a short sale, the seller first has to approve your offer. Once the seller approves, the lender also has to agree to accept your offer. This process could take weeks, if not months in some cases.

Don’t Expect Contingencies

In a typical home sale, you can negotiate with the seller to reduce closing costs, cover fees or make repairs before you finalize the deal. Since you’re working with both a seller and a lender, asking for contingencies with your offer could result in a rejection. The lender is likely already taking a loss on the property and won’t want to lower their profits any further.

Make a Strategic Offer

The first offer you make may be the only chance you have to woo the lender. If your offer is way below the market value of the home, the lender may reject it and move on to another buyer. Meanwhile, you may have waited weeks or even months to get a response, only to be shut out of buying the property.


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