Navigating this market can be very complex at times. In your search for a home, you mostly come across three different types of sellers. Each one will have different escrow timeframes, negotiation styles, pricing strategies and timeframes for accepting your offer. Without knowing the different characteristics of the different types of sellers, it can be very frustrating as a buyer.
These are sellers who have equity in their homes and are usually looking to close escrow in 30–45 days. When writing an offer on a traditional sale, you will usually negotiate directly with the seller through their agent.
These sellers owe more than what they can sell their home for and therefore, have to negotiate with their bank to receive a lesser amount. Typically the negotiation process with the bank can take 4-6 months to get an offer approved, and the price is subject to change during this time. There is also a chance that the bank will reject the seller’s request for a short sale and instead foreclose on it.
These are the homes that have been foreclosed on and taken back by the bank, and they are also known as REO’s (Real Estate Owned) or “bank owned.” Similar to the traditional sale, the bank will want to close escrow within 45 days upon accepting your offer. The banks are motivated to sell these homes quickly and will typically price them slightly below market value to receive multiple offers and create a bidding war to drive the price up. Even though you may pay over the asking prices, these homes can still be great values.