Things to consider when making offers on attractive short sales

The market has really changed rapidly when it comes to aggressively priced properties. Currently, my team has 6 short sale listings under contract and many of these listings sold within the first few days on the market and most had multiple offers. Several bidders/buyers have been calling our team directly to inquire as to why their offers were not accepted. While there are many reasons certain offers are turned down, it is not what most people might think. We rank all offers that come in by different factors and much to everyone’s surprise, price is not the top deciding factor. The teeth an offer has actually is more appealing to my sellers since we are looking to remove as many obstacles as possible between the offer and a closing. Buyer’s agents somehow think they are doing their clients a favor by drafting an offer that makes no commitment on their part. In today’s competitive short sale market, these offers get placed on the bottom of the pile while the the cream that rises to the top are the offers that are willing to put up earnest money and perform inspections, which all drastically increases the chance of success.

I just came across this post by another Realtor and it also highlights this exact point very well:

Be the Winning Bidder in a Multi-Offer Short Sale
via REALTOR.com® Blogs by Lisa Lyons on 3/2/11

Short sale homes can be great bargains for home buyers – but what happens if the home you love has multiple offers? How can you make sure your offer is the one accepted? Connecticut Realtor® Minna Reid, a short sale specialist, advises how you can come out the winner in a bidding war.
“Short sellers often have different needs than sellers in a regular sale. Some buyers mistakenly believe that all that matters is how much they offer. While the amount of your offer is important, it is not the single most important determining factor, nor do the sellers have any obligation to accept any offer simply based on its dollar amount. Here are a few tips to make your offer the strongest if you end up against competing buyers for the same short sale home:
• Have patience. Short sales take time. The more flexible you are willing to be, the better your offer looks to the seller. It will usually take a minimum of 30 days to get a short sale approved, sometimes longer. As a short sale listing agent, I frequently recommend the most patient buyer over the highest paying buyer.
• Be ready to move quickly. This may sound like a contradiction to the previous point, but after all the waiting is done and the approval arrives, everyone will need to hustle. Short selling lenders don’t give long for the parties to close. 30 days from approval is expected. Being able to close quickly gives you an advantage.
• Have the most desirable method of financing. Cash is always king, but certain financing is preferable to others. Given two identical offers on a short sale – one with conventional financing and one with FHA, the conventional will trump almost every time especially when the condition of the property is questionable and the sellers lack the funds to make repairs. Level of pre-approval also weighs heavily here. The further you’ve gotten with your financing, the better your offer looks.
• Have the right buyer’s agent. When my short sellers receive multiple offers on their properties, I always measure the level of the buyer agents short sale expertise when making my recommendation. Its easy for me to tell with a few choice question whether your buyers agent is experienced in short sales. I will frequently also pull the MLS statistics of your agent to see how many short sales they have been involved in. Why? Because I know this person will be advising you through the process. If they don’t know what they’re doing, I know the sale will likely fall apart at some point and I don’t want my sellers to end up having to start all over. Choose your agent carefully if you plan to pursue buying short sales.”