You’ve found a short sale property that suits you and meets your investment criteria. Now it’s time to make an offer. And today that means a good amount of bidding competition – and quite a bit of it some pretty well-heeled bidders.
So you’ll need to know how to make an offer on a short sale in Long Island.
One thing to keep in mind through it all is that banks are in the business of lending money and don’t want to become property managers. And that property just sitting there with a lot of money owed on it is costing the bank money daily. So banks are often more interested in speed than in the bottom line. Because short sales usually involve a lengthy process, anything you can do to help expedite the process will help you become the winning bidder.
1. Have Healthy Earnest Money
The first of these 3 tips on making an offer on a short sale in Long Island aims to help you be perceived as a serious buyer. To show that you’re in earnest, you need a strong earnest-money deposit.
You will need to put down much more than the minimum deposit. Experts recommend a deposit that is at least 1% to 3% of the sale price. It’s further recommended that, once the sale has been approved, you put the earnest-money deposit in a trust account. All of this will show that you’re a serious buyer, not just a tire kicker.
To add additional weight to your offer, it’s a good idea to have a pre-approval letter ready to hand. Sellers want to see that potential buyers actually have the wherewithal to close the transaction.
2. Go into it Informed
There’s a lot that can go wrong in the lengthy process of a short sale. But being informed and practicing some due diligence will help you navigate around many of these pitfalls. Besides, showing up informed and knowledgeable will always help you in making an offer.
You should start by checking comparable sales, maybe even checking with listing agents. Many times, short sale listings come in under the market value, sometimes as much as 5% to 10% under market value, depending on the property and area. But keep in mind that the low price may be just an enticement for potential buyers. The trick is to determine whether the seller’s lender is likely to approve your offer so that you can make it with confidence.
3. Show You’re Willing to Wait
Although some short sale offers are approved within a few weeks, it generally takes months and months. If you’re serious about your offer, you need to be prepared to wait it out. Just keep in mind that the bank really does want everything to go as quickly as possible to get that non-producing or money-losing loan off their books.
Some short sale buyers write offers on multiple short sales hoping to take the first one that works out. They simply leave the other sellers and their agents just standing there holding the bag. So if you can demonstrate that you’re willing to wait for the short-sale process to run its course, you and your offer will be taken much more seriously. You just need to show that you’re willing to give the seller and lender the time it takes for approval.
Buying a short-sale property can definitely be a wise investment move. But because the competition is keen and because a lot of buyers have a lot of cash in hand, you’ll need at least these tips on making an offer on a short sale in Long Island.