How To Best Structure a Short Sale or REO Offer
One of the growing frustrations among new clients that I meet is that they want to purchase a San Diegoshort sale or REO but the banks seem to favor other people's offers. Unfortunately, nine times out of ten I find that these short sale buyers are receiving misguided, or sometimes unguided, advice from their real estate agent. In this post I will share the advice I give my San Diego short sale and REO buyers on how to structure a their offer.
If financially possible for you, make the opening deposit equal to 3% of the purchase price. The banks will take your offer much more seriously this way because 3% has become a de facto industry standard.
The reason behind this number is that it matches the maximum liability allowed to a buyer under the liquidated damages clause on page 5 of the C.A.R California Purchase Agreement. Anything less than 3% will make you seem less committed to the property.
Escrow and Title
Make escrow and title services the seller's choice in your San Diego Short Sale offer. Not only will this make your offer seem cleaner to the bank, but you may as well do it this way because the bank will end up dictating services anyway.
It also gives the impression to the bank that you will be easy to deal with during escrow, which gives them confidence to go with your offer over somebody else that is perceived as being difficult.
Notice To Perform
Many agents, including myself, use the practice of extending the notice to perform period for their buyers. While an excellent practice for traditional transactions, this is a terrible practice for a short sale or REO offer. It too has the effect of making you look difficult as a buyer and not fully committed to the purchase. Throw in the fact that this is bound to get countered out by the bank and there is really no reason to soil your offer by doing this.
Length of Escrow
Anything over a 30 day escrow period will be viewed unfavorably by the banks. By now you should be getting the idea that anything over what is absolutely standard will be viewed unfavorably by the banks. The same goes for escrow length. Make sure to stick with the popular and widely accepted 30 day offer.
By having these elements in your next short sale or REO offer you will give yourself a much greater chance than before. Of course price is still the biggest driver and will have a huge impact, but by following this advice you will be sure that have as clean an offer as possible, and therefore a leg upon the competition.