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I have found an investment property that doesn't totally fit my defined investment profile but I am considering making an offer anyway because I am very familiar with this neighborhood; owned a property there in the 90's. I have never bought a short sale listing. It is being offered at an attractive listing price and needs only minor work so I could put it into service in a week following closing. The only way it doesn't fit my investment profile is that it is about 30 miles from my house and all my properties are w/i 10 miles. Otherwise it is same size, amenities, will rent in same range, etc. All my properties have the following: covered, attached parking, fenced outdoor patio area, 1100-1500 square feet, washer & dryer area, open floor plan, 1.5 or 2 bathrooms, 2 bedrooms, good access to major freeways, w/i 10 miles of my home.
So what is the common practice for bidding on a SS? I usually offer about 8% below asking when I am convinced the property is a good deal. This property has a listing price well below market and comps. Since I actually do not care to acquire it unless it is a steal, any suggestions on offer? It would be a cash purchase.
...This property has a listing price well below market and comps. Since I actually do not care to acquire it unless it is a steal, any suggestions on offer? It would be a cash purchase.
Some agents will deliberately price below market value to get offers. They need an offer to get the seller's bank involved. Sounds like this may be the case here. However, the bank will check market value (BPO or appraisal) and will likely come back with a higher counter offer.
Common practice? Check the recent sold comps and base your offer on that, as that is what the bank will do. Of course, that assumes the bank will approve a short sale for this seller in the first place.
In your case as an investor, you might take a chance and go with the below market asking price to see how the bank responds. Keep in mind you could be waiting months for an answer. If the price is really below market, you may also end up competing with other offers.
Some agents will deliberately price below market value to get offers. They need an offer to get the seller's bank involved. Sounds like this may be the case here. However, the bank will check market value (BPO or appraisal) and will likely come back with a higher counter offer.
Common practice? Check the recent sold comps and base your offer on that, as that is what the bank will do. Of course, that assumes the bank will approve a short sale for this seller in the first place.
In your case as an investor, you might take a chance and go with the below market asking price to see how the bank responds. Keep in mind you could be waiting months for an answer. If the price is really below market, you may also end up competing with other offers.
Thanks RJ, as an investor it only makes sense to step out of my portfolio profile when its a steal. The short sale process of months and months doesn't bother me ...... gives me time to earn more cash from my other endeavors. I am mulling over this one...
The trouble you'll run into is the bank... it all depends on whether they'll go low or not. Ours did. Really in your position it doesn't hurt to try, especially since you won't be using it as a place to live.
The process we used was, I decided to put in an offer but since no repairs will be made I got an inspection beforehand. When I wrote the offer I included a page with details on recent sales, and deducted pretty steeply for a few things that are a bit more important, but in the big picture not that big a deal (for example, grounded outlets on a few ungrounded circuits in a kitchen that I plan on redoing anyway). That was submitted to lender #1 along with financial records from the sellers. Lender #1 processed it and sent it all to lender #2 along with information about how much their bank would get from the deal. They took much longer to process all of it than the first, but when they did both banks supplied letters with terms for the sellers (repayment / settlement of their outstanding debt), and a deadline that closing must happen by (3 weeks).
As long as they've at least been thinking about moving out and planning for it they'll be ready to go pretty quickly. Or they could be completely unprepared like ours and for some reason try to schedule closing after the deadline set by their lenders. We were close to it, but not cash buyers so closing was set more by their ability to leave than anything else.
Squirl, you are in a really good position to negotiate on this property because as an investor "to buy or not to buy?" is black and white. I would advise you to put in an offer at the price that acquiring the property makes sense for you. Period.
Treat it as if you were buying something at auction. If a painting is worth $2500.00 to you and not a penny more, the smart buyer stops bidding at $2500.00 - and doesn't fret because another guy got it at $2550.00.
Even if there are multiple offers on the property, you might wind up being offered the home down the line anyway. A very high percentage of short sales don't go through and those who have made offers previously are the first ones called to be offered the home when that happens.
Update: I found out pretty much what the present high bid is on this property and I am certain I can get it at a reasonable price....but still about $4K higher than my target price. However, because it is father away from my house and none of my present contractors would be willing to do work there (distance) so I would have to use contractors I am unfamiliar with. So, decided not to make an offer. I will be watching to see how much time elapses before it closes.
Good for you, Squirl. You made a wise choice based on your own personal parameters.
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