Buying a Short Sale Is Not Like Shopping at the 99 Cents Only Store


I love the 99¢ Only Store. Have you ever been there? I guess that they have them all over. When I was in Mexico in June, I even saw that they have their own version of the store. I love the fact that you can fill up your shopping cart with things that you may need (and you may not need) and the whole thing will never cost more than about forty dollars. When my kids were a little bit younger, I would take them there for a special treat and tell them that they could select three things–anything that they wanted (rated G, of course). Wow! Am I ever a big spender!

You can always get a deal at the 99¢ Only Store. But, can you always get a good deal when buying a short sale? The answer is, quite simply, no.

In 2007, the market took a huge dive. Banks were nowhere near prepared to deal with the sheer number of borrowers who were underwater and unable to make their payments. Loss mitigation departments had few employees. There were limited short sale submission procedures, and investor note holders did not have guidelines and procedures in place. Perhaps, at that time, you could make a low offer on a distressed property and get the banks to accept it and provide short sale approval.

Now, however, when buying a short sale, I am not seeing the banks accept lower offers with any regularity. Mortgage servicers hire individuals to provide the BPO on the distressed property and then are required by their investors to take a net amount equivalent to a certain percentage of the BPO value. And, this percentage is not 50 cents on the dollar.

I know that there are a lot of investors out there who want to buy up these properties for cents on the dollar. I know that many want to buy in bulk and then flip the properties for a profit. Most of the mortgage servicers, however, seem to now be looking for a retail buyer.

Many servicers have even improved the quality of their loss mitigation departments in order to deal with the volume. Bank of America and GMAC now use the Equator system to streamline their short sales. Wachovia has a great program available in certain cities. And, plans are under way for some additional short sale efficiency programs.

So, will the bank accept your 99 cent offer on a distressed property a few blocks away? They might… but you may be better offer filling your cart with bargains at the local 99¢ Only Store than getting an awesome deal when buying a short sale.

Photo: Flickr creative commons by dottieg07

About Author

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®. Before landing real estate, she had careers in education and publishing. Many folks say that Melissa is genetically pre-disposed to success with short sales. In fact, last year she and her staff obtained over 500 short sale approval letters! When she isn’t speaking with lien holders, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.


  1. There are, at least in Florida, plenty of short sales that won’t fit into the “retail buyer” box. Probably close to 25% of short sales on the MLS in my area are better fits for investors.

  2. You’ll never know if the bank will accept your 99 cent offer unless you submit it. However, picking up a short sale for 50 cents on the dollar is very unrealistic. I don’t need to buy them that cheap. 73% of market value or less, on average, is a money maker for me.

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