When buying or representing a property in a short sale, one of the most important steps is making a solid, realistic offer. But what exactly counts as “reasonable”? Short sales are unique transactions because the seller’s lender, not the seller, must approve the deal. That means the offer you submit needs to appeal to both the market—and the lender’s loss mitigation department.
Here’s what you need to know about crafting a reasonable offer on a short sale.
How Lenders Evaluate Short Sale Offers
Banks don’t guess when deciding whether to approve a short sale. They typically order a BPO (Broker Price Opinion) or full appraisal to determine the property’s fair market value. Your offer will be compared to that value, not necessarily what the seller owes.
Most lenders are willing to accept around 90% to 95% of the current market value, assuming the home is priced competitively. But that doesn’t mean lowballing works. Offering well below the market value—even if the home is distressed—usually results in delays or rejections.
Key considerations lenders use:
> Broker Price Opinion or appraisal results
> Condition of the property
> Current real estate market trends
> Net proceeds vs. cost of foreclosure
What Buyers Should Offer (and Avoid)
If you’re purchasing a short sale, your goal should be to make an offer that reflects the realistic value of the property while also considering any necessary repairs. A fair offer that aligns with market value—supported by a strong preapproval letter—goes a long way.
What to include:
> Offer close to market value, supported by comps
> Proof of funds or financing preapproval
> Reasonable closing timeline (banks dislike long delays)
> A clean contract with minimal contingencies
What to avoid:
> Lowball offers based on the mortgage balance, not the market
> Demands for excessive repairs or credits
> Unrealistic closing timelines
When Should You Go Above Asking?
In competitive markets, offering above the list price may be necessary—especially if the property is underpriced to attract offers. The lender will still evaluate whether it’s within a reasonable range, so don’t go overboard. You want your offer to be competitive but justifiable based on local sales.
Advice for Real Estate Agents
Agents guiding buyers or sellers through a short sale should educate clients on how lender review works. An accepted offer still requires lender approval, which can take time. Managing expectations and submitting a well-documented offer package speeds up the process.
Learn more about the short sale process for agents here.
Final Tips for Making a Strong Short Sale Offer
> Check comparable sales within the past 3-6 months.
> Work with an agent experienced in short sales.
> Be responsive to requests from the lender’s negotiator.
> Understand that patience is part of the process.
For a deeper understanding of how short sales work and why pricing matters, visit our What is a Short Sale? page.
For more on how the IRS may treat canceled debt in short sales, visit: https://www.irs.gov/taxtopics/tc431
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