How to Structure a Short Sale Offer

If a homeowner owes more on his mortgage than the home is worth, he may try to dispose of the property through a short sale instead of waiting for the value to increase. Once a buyer makes an offer on the home, the seller and lender must both accept before escrow can begin. The lender may agree to take the loss instead of dealing with the hassle of foreclosing on the property. This also immediately frees up cash the lender can use to fund new loans.

List the date at the top of the page. Include the seller's name and address, the lender's name and address, the property address and any other relevant identifying details in the first section of your offer.

Research comparable property sales in the same neighborhood to determine your offer price. Depending on the real estate market in your area, you should try to offer between 5 and 10 percent less than the property's value. The lender will be anxious to sell the property, but may not be willing to take too much of a loss on the transaction if the real estate market is currently healthy.

State that you are willing to take the property in "as-is" condition without warranties or repairs. Since the seller is already behind on his mortgage, it is unlikely that he will be able to commit additional money to repairing the home. If you demand repairs or warranties, the bank will probably have to fund them, which may make your offer less attractive than one from a buyer who will accept the property as-is.

Include a reasonable end date for your offer. Short sale transactions take time to be approved by both the seller and lender, so leave between 30 and 90 days before the offer expires.

Obtain a preapproval letter for a mortgage in the amount of your offer price. This shows the lender that you will be able to pay if your offer is accepted.

Offer concessions to make your offer more attractive. Shortening your inspection period may encourage the lender to approve your offer instead of another buyer's because the transaction will close sooner. If you can afford it, you can also offer to increase your down payment or pay some of the seller's closing costs.