Determining Short Sale Offer Price

[Jason Shan]

Hi everyone!

First time buyer here looking to capitalize on a short sale.  They say I can't go look at the house but that my offer is subject to inspection (so I can back out if I see something I don't like I guess?)  

I have an opportunity to get a house for well below market value, but not sure the strategy on how to put in an offer; don't want to go too high but don't want to go too low and lose the bid either.  

Also wanted to see if there were any contingencies or things I should include in my offer such as when tenants need to move out, relocation fee, what happens if I find liens on the property, etc?  Any input would be greatly appreciated. 

Any other questions or preparations I should have that the community thinks is essential? 

Thanks so much!

[Evan Wiesner]

Jason,

There's a whole can of worms to discuss there. First, offer what you believe is a valuable offer for the condition of the home and circumstances surrounding it.The lender reviewing the offer will have their own appraisal or BPO done and likely won't accept less than 82-86% of that number. It's anyones guess what that number is going to come in at, so if you're fair, you stand a better chance of a strong negotiating position.

Always have an inspection contingency, and it's not a bad idea to specifically indicate that it goes until X number of days after bank approval. Granted, that should be a given in any state but I still make sure to write it in. 

The tenants, if there are any, should be out prior to close of escrow unless you want to develop a relationship with them or come to some other arrangement. Writing into the contract that it's contingent upon a written agreement between you and the tenant on an acceptable move out after closing is fine, I would suggest finding a good local attorney to draft a stipulated judgement in that case and you may need to be ok with cutting them a check for a small cash for keys at move out.

Other than that, cover yourself for any unforeseen circumstances. If you think of something due to the owner or tenant that may cause a problem, make sure you have an out for it. The inspection period is the best and and agreement for the tenant is great, but each SS is unique and it's always good to be prepared.

Good luck!