Thursday, April 24, 2008

Buyer Strategy using the Short Sale Addendum

I wrote yesterday about the games Sellers play with the Short Sale Addendum. The main point being that sellers, in many cases, are not signing the purchase contract during the short sale process. This allows the seller to continue to market the property for sale in the hopes of receiving a better offer.

It sounds pretty unfair to Buyers, at least on the surface. But buyers aren't defenseless – it is still a buyer's market, right? In fact, sometimes the best defense is a good offense! Here are a few different alternatives buyers can use to counter these sellers' games:

Read the Contract – if your offer gives the seller 2 days to respond, and they don't respond, your offer will expire. The seller no longer has a valid offer to present to the bank, simple as that. Remind the listing agent about this, and let him know that you'll be looking at other properties &/or possibly submitting another offer on this home, but at a lower price.

Communicate, then Make your Choice – talk with the seller (or their listing agent) about your concerns. If they are dead set on playing the unsigned contract game, you have 2 choices. You can walk away and look for a seller who isn't playing games. Or you can play the game with them. If they receive several offers, you're likely to lose. But if they don't receive any other offers, you might even get a chance to lower your price! How much do you love this house, and how lucky do you feel?

Play the Numbers – if the sellers are looking for lots of offers, assuming that many of the buyers aren't going to stick around, you can make their prophecy self-fulfilling. Go ahead & submit offers on plenty of short sale listings in the hopes that one of them will accept your offer. (this isn't my recommended strategy, but it is something to consider.)

I represented a buyer recently where we felt like the seller/listing agent was playing this game. We didn't want to stick around while they used us as a stepping stone for the next offer, but we loved the house and didn't want to walk away. When I explained to the listing agent that our offer had expired, and that two of our other considerations had lowered their prices, so we might make another offer at a lower price on her home, she sent over a signed contract within the hour!

Your still feeling like a referee Realtor,

Chris Butterworth

[tags] short sale addendum [/tags]