With the current real estate market this has been a popular question asked of me for the past half year or so. I want to issue a caveat before we go any further, these techniques will depend on the specific property and its unique situation. I recommend seeking the assistance of a full time professional Realtor before looking at any properties. Once a property has been selected the following will help determine what price to offer.
The most important aspect of making an offer is to determine the motivation of all parties involved. The assumption should be that a seller who is performing a short sale or a REO is motivated to get the property sold. The buyer should discuss with their agent their willingness to walk away from the home if the price is not right. This will have a large impact on negotiating and here is an article to explain why: Negotiating Home Sweet Home.
The next step is to determine the specific current market conditions of the area of the REO or short sale. This is another place where a good realtor will have local knowledge and can help collect the data from his/her MLS needed. The agent should create a CMA, Comparative Market Analysis, for the home and other important neighborhood data. This neighborhood data should include things like number of REO’s, Number of short sales, 12 month price trend, listing absorption rate, and any other market info that may be useful.
Once all this information is collected the real work begins, negotiating with the lender. In both the short sale and REO situation negotiations will occur with the lender because they make the final decision. The information collected should be passed on to the lender with the written offer and other necessary paperwork. This will most likely need to be done through the listing agent of the property via the buyer’s agent. The job of the agent representing the buyer is to convince the buyer of the validity of the offer price. All the parties involved need to be patient because the lenders/investors may take up to several weeks to approve the deal or make a counter offer. This is very important for buyers to know when negotiating short sales or REO’s.These type of properties are not always the best deals and at times the lender may have a unrealistic price on the home. Prospective buyers must have time and the patience to negotiate for the best deal.
If you are buying or selling in Northern Virginia including Vienna, Great Falls, McLean, Alexandria, Arlington, Prince William, Manassas, Manassas Park, Fairfax, or Loudoun counties please contact me. If you are looking elsewhere in the country I can refer you to a professional agent.
If you are an owner and are having problems making payments please read this article, and if you need advice if a short sale is right for you please contact me.