We placed a bid for house on a short sale but I want to know what the chances are that the bank will choose us to sell too. The house was listed at 350K and we bid $365K as that is what we can afford. Our credit is excellent, my husband and I have stable jobs, we are pre-approved and have 45K in the bank and are willing to put down 20%. This house has been listed since August. They did a drive by BPO (if anyone knows what this means, please let me know) and are waiting for the appraiser to come do the appraisal. What would be a sure way of securing this property? This is my dream home. I just couldn’t afford to pay anymore. It looks like the median price is about $360K in this are. Any short sale experts that want to give me some insider tips?
I am very experienced and knowledgeable in purchasing short sales and my clients get the best deals. Here’s the strategy you need to use (it might be too late on this one since you are paying too much and the bank already knows about your offer):
As a buyer, you will need to have your agent look at the lowest comparable sales and offer around 10% below that (for your area). For example, if in the last 1-6 months the low sold prices were 360, 355, 365 your offer will be for around 320k. You will also need to ask the seller to pay for all cost and 3% for your closing cost. If the home is owner occupied, then you, not your agent, can contact the owner and tell them that you will give them $1,500 if they use your purchase offer only after close of escrow/sale. The seller gets nothing from a short sale and offering them money will motivate them to use your purchase offer for the short sale. Plus it gives them money to move. Now, the only people who will get the house are people who will offer the owners the opportunity to rent it back or offer them more money (homeowners tend to catch on quick when they realize they can profit from a short sale). If the owners are out of state or nowhere to be found, be creative. 
The second part is the BPO. The bank sends an appraiser to the home. It is very important that one of the agents meet the appraiser and give them 3 low sold and 3 low active comps. They should let the appraiser know that the house is in foreclosure and any value at or below 320k would be appreciated as it will help the owner out. Ask for a business card and say that when this is over and if it becomes a success, you will like to send the appraiser a special thank you. The business card will also let you know if this an appraiser or a real estate agent. The real estate agent doing BPOs is doing so in hopes that the short sale will fail and that they get the listing. So they purposely give the bank high numbers. So by knowing who you are dealing with, you know what to expect and what your next strategy is. There’s more, but these two points should help you out.
Also, DO NOT SPEND A DIME until you have an approval letter in hand from the foreclosing lenders. A verbal confirmation means nothing as the banks might counter the terms or ask the owner to sign a promissory note. Also, make multiple offers on every short sale you like and go with the first one that materializes first with the terms you like. No need to give an earnest money deposit or start the purchase (escrow or settlement) until you have a written approval letter.
A lot of real estate agents and buyers think that making and submitting high offers will ensure a purchase of a short sale. It is actually the opposite being true. As a listing agent of a short sale you want to negotiate a low ball offer with the lender in order to find motivated buyers and to easily flip it to another buyer should the original buyer decide to flake or their loan is no longer valid. Nothing worse to be sitting with an overpriced negotiated short sale where the buyer backed out and no one else wants it because the price is too high, so it goes into foreclosure. As a buyer, you want to make sure you are getting a good deal and to protect yourself in a downward market where prices drop, especially since short sales take anywhere from 1-5 months to negotiate.
Good Luck!
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