Sometimes I think buyers look at short sale duplexes and think to themselves, “The price is the price”.
But short sales aren’t all that different from traditional sales when it comes to your ability to make an offer. What a property’s listed for may not be what it’s worth.
After all, just like every other piece of real estate, it’s only worth what willing to pay for it.
And since the buyer will have to have loads of patience waiting for the short sale to be processed, there’s usually a heavy discount involved as an incentive.
Remember, duplex owners who are selling because they’ve fallen behind in their payments are racing against a clock. In Minnesota, there is just a six month redemption period following the sheriff’s sale; which usually happens when a multi-family property owner is already six months behind in their payments.
In light of the fact that short sales can take months to negotiate, the seller is aware time is finite. This is beneficial to buyers because sellers are often willing to accept deep discounts in order to get the process moving quickly.
Short sale duplex listings typically hit the market at prices that are in keeping with the amount of time left in the redemption period. For example, if a property has not yet gone through a sheriff’s sale, the owner has a little more time in which to attempt to get a higher price.
This is important because while they will not pocket any of this extra revenue, the lender will want to see evidence there was an attempt to sell the property for more; the market simply wasn’t willing to pay it.
This brings to mind an important reminder; if you submit an offer on a short sale, both you and the seller are negotiating with the bank. The seller is charged with demonstrating to the lender they can no longer afford the property. And essentially the buyer is arguing this is the price the market will bear.
As we head into winter, this should become easier to prove.