Is It Better To Buy a Dallas Short Sale or Wait for the Foreclosure?

If you put in an offer to buy a Dallas short sale waiting for an answer from the bank can be long and frustrating. A short sale situation happens when a seller's lender agrees to accept less than what is owed on the mortgage to allow the sale between the seller and buyer to move forward, and banks take a long time to decide. Sometimes short sale buyers wait up to six months or more for a response from the bank. Many times the banks answer is no, and that buyer will have wasted much time.

Short Sale Listing Prices

Buyers often get excited about buying a short sale for two reasons. The list price is very attractive and they believe the seller is desperate and they can get a lowball offer accepted. However, neither of those is necessarily true.  Not every short sale home is a Dallas foreclosure and not every seller is desperate.  Many sellers and/or their Dallas Realtors often set the listed price unrealistically low hoping to get a offer on their home quickly.

Is There Such a Thing as Preapproved Short Sales?

Realtors find out how low the bank will go is if an offer has already been accepted and the buyer walks away. Only then is the agent free to market the listing as an accepted short sale because banks almost never disclose their bottom price in advance.  With a preapproved short sale, the new buyers' wait is shortened. Generally, about the time the first buyers walk away the sellers' documents have already been submitted to the bank, and the bank may have been close to, or had already,  issued a short sale approval letter.

Short Sale Negotiations

The sellers can agree to any purchase offer but it's not binding unless the sellers' bank approves it. It doesn't matter what terms and conditions are in the offer if the bank won't accept them. Your negotiation does not really lie with the seller; it lies with the bank's negotiator. Banks often rely on desktop appraisals or BPOs (broker price opinions) to determine the property’s value. Although banks don't want to follow through on a foreclosure, they also want to get fair market value for the property to lessen their losses. It is up to the listing agent to provide comparable sales and to substantiate the price submitted by the buyer.

Will the Price be Lower After a Foreclosure?

Whether a home buyer should wait for the property to go through foreclosure depends on whether the home has one or more a offers on it. If more than one buyer has submitted an offer, the highest and most qualified offer will most likely get the home. If the buyer is the only buyer to put in an offer and the bank is responding negatively it might be in the buyer's best interest to wait until the home is foreclosed on. There is also no guarantee that a bank won't reject all the offers, particularly if none of them are high enough.
Many times banks aren't reasonable and end up shooting themselves in the foot, so to speak. I've have seen several listings where banks refused to accept short sale offers only to end up with the property through the foreclosure process, which then ultimately sell for tens of thousands less than what they were offered with a short sale offer . Don't get discouraged if the bank rejects or counters your short sale offer. Be calm and be well informed.  Eventually the bank will put the home on the open market for sale as an REO (real estate owned). Watch for the property to reappear on the market as a bank owned foreclosure home. If the price is reasonable at this point, buy it from the bank, at the same price you offered with your short sale offer. At least buyers of bank-owned homes are relatively assured their transactions will close within 30-45 days, and most likely at a lower price.