Cleveland Real Estate News

Today was one of those gratifying days in real estate. I was able to hand over the keys to my clients because they are the proud owners of a new home. There would be more days like this except for one pesky little thing in real estate: short sales and bank owned homes.

 

To recap from earlier posts: A short sale is a home listed for sale at a price that is less than what the mortgage holder (owner) owes on the house. We call these owners upside down in their mortgage. We’ve all heard a lot about upside down owners in the last year as it relates to foreclosures. People who enter into a short sale of their homes are trying to avoid foreclosure.

 

In our area, when a home is listed at a price that puts the home owners upside down, there are remarks listed for the brokers (on our computer MLS listing service) that alerts us so we can inform our buyers when we show it. It will say something like ‘this home is subject to a short sale.’  To the point and helpful.

 

A bank owned home means someone waited too long to be able to negotiate a short sale (or didn’t try to do it) and now the bank owns it. It could have also already gone through a sheriff sale and been bought back by original mortgage lender or a different bank.

 

Yes I sell bank owned and short sale homes and yes they can be negotiated. But there are certain things buyers have much less control over on these homes, compared to sales negotiated with private sellers, regular home owners like you and me. The main thing is the price. There are so many variables, that when you make an offer that is less than the listed price you have to be prepared to lose the house to someone else. That is just a fact of life.

 

So I tell my clients, when they really want a home, to make their best and highest offer. This means a price that, if you lose the house to someone else anyway, you know you did the best you could or the best you felt comfortable offering.  Best and highest doesn’t have to mean full price. Plus, if a home is drastically lower in listing price than non-bank owned or short sale homes in the neighborhood, someone could actually still outbid you by offering more. If you want to make an offer on one of these under market value homes, it’s good to think about it differently. Meaning, not thinking how low can I go and still get this home. Instead, what is the best and highest offer I feel comfortable making, knowing what I know about my finances and my belief, after seeing the home, what might need to be done to the house to get it up to my comfort level when I move in. In my experience, people feel this way about a home because it already meets certain criteria that could include floor plans (that first floor bedroom they need), number of bathrooms, it only needs cosmetic work like painting, it has enough bedrooms for everyone in the family; things like that. I don’t think it’s necessary to make a best and highest offer on a home unless you really want it.

 

Nothing is etched in stone, believe me.  It’s possible you could be successful in owning a home after offering much less than the listed price. And sometimes people are making offers on homes they can take or leave. By that I mean, it meets their needs, but they won’t be upset if they lose it. They might not have a time crunch, or care if they are in a new home before the end of the year. I think you get my drift here.

 

But if you really want a particular house, and it happens to be a bank owned home or a short sale, there are enough variables to make it a crap shoot. In reality, making your best and highest offer can take away some of the stress or disappointment you might feel afterwards if someone else has their purchase offer accepted and you don’t.  Peace out - 3C