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Buyers often contact me for advice on short sales. They are frustrated with the short sale process and want to know why their offer hasn't been accepted. They've made an offer on a short sale property six months ago and can't understand how come they haven't received an answer yet. Most people don't know that it is fairly simple to determine if a short sale offer will be approved.

You just need to know what the lender's guidelines are for approval. Most lenders will first order an appraisal to determine the value of the home. They don't want to sell the home for less than the appraised value. The appraiser will look at recently sold properties and how they compare to the subject property.

They will use that info to determine the Fair Market Value. They turn in their report to the lender. The lender uses the reported value to accept or deny an offer. If the offer is substantially lower than the appraisal, then they will reject the offer. However, they will usually accept offers within 5% of the appraised value. Obviously this varies according to the lender and the circumstances. So you want to know if your offer will be accepted by the short sale lender?

Ask your Realtor to put together a CMA, also call a Comparable Market Analysis. This is your agent's opinion of the value of the property. If your offer is within 5% of the agent's opinion of value, then you have a good chance at the lender accepting it. If your offer is below that 5% mark, there is still a chance the lender will accept it. However, the odds decrease substantially. If you want a second opinion on the value, order an appraisal. You can send your appraisal to the short sale lender.

It will be hard for the short sale lender to argue with an appraiser's opinion of value for a property.




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