How to Make an Offer on an REO, Short Sale or Fair Market Sale

How you first make an offer on a home can mean the difference between getting a great deal or nothing. The key to my long-term rental strategy is buying homes below market value. There are many ways to find properties below market values, but the key to securing these deals is how you make an offer on them. I will buy REOs, short sales, fair market sales and I change my offering strategy depending on the type of sale, as well as many other factors. There are many different strategies to make an offer, and I will detail the best ways to get your offer accepted on a home.

For more information on my investing strategies and rental properties, check out my complete guide to investing in long-term rentals to see what other strategies I use.

For more information on how to buy the best rentals which will make the most money, check out my book: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 374 pages long, comes in paperback or as an eBook and is an Amazon best seller.

Be ready to make an offer quickly on an REO, short sale or fair market sale

Many buyers miss out on a great deal because they are not ready to buy a home. They think they are ready and it will be easy to make an offer but things can move very quickly. In fact, how quickly you can move can make an offer can make a huge difference in whether you get a deal. Before you start looking at homes get a pre-qualification letter from a lender. Almost all sellers will require a pre-qualification letter, and some sellers will not even consider offers without one. A pre-qual letter will also give you a great idea of rates and payment figures.

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If you plan to buy a home with cash, the seller may require proof of funds. Proof of funds can be in the form of bank statements or a bank letter that state the buyer has a certain amount of money in the bank. If you need a letter from your bank, it can take a day or two so get it ahead of time. You need to make sure you have your proof of funds or qualification letter before you start making offers.

How to get your offer accepted on short sales

Short sales can be one of the best ways to get a great deal on a property. Much of the time short sales are listed below market to get a quick offer. When I see a short sale that I am interested in, the most important thing I do is act quickly. I will view the property as soon as possible and make an offer as soon as I can. Being a real estate agent gives me a huge advantage because I do not have to rely on someone else to set up the showing and write the offer for me.

I have bought a few short sales by getting my offer accepted before anyone else can submit an offer. My strategy on offer price varies on how low the listing price is on the short sale. When I make an offer I may offer full price, less than full price or over full price. If the home is a smoking deal, I will offer full price, or maybe above full price in hopes the seller will accept it quickly. If the home is priced a little higher than I want to pay, I will submit an offer below list, but I usually won’t go more than 15 percent less than list price unless the home is an aged listing.

I will use financing in my offers, but include a letter or email explaining that my portfolio lender does not require repairs. This is very important on short sales, because usually the seller has no money to make repairs for financing requirements. I explain I have purchased many properties with this lender and never had a problem with financing.

If the home is in really bad condition or there are multiple offers, I may use a cash offer to give myself a better chance.

Remember that short sale offers can be accepted by the seller, but they still have to be approved by the bank. I have had offers accepted by the sellers at a great price, that the bank did not accept.

Here is more information on short sales.

How to get your offer accepted on a REO property

I use many of the same techniques to make an offer on a REO property that I do on a short sale. REO properties are houses that have gone through foreclosure and the bank now owns. I try to get my offer in as soon as possible, but many times the banks will require the property be on the market for a certain amount of days, before they review offers. HUD are government owned foreclosures and work similar to REOs. HUD has a waiting period and many other restrictions, which I explain in this article.

If the REO has just been listed and is a great deal, I will try to get it under contract ASAP. Even if the bank requires a holding period for offers, I submit mine as soon as possible. Submitting my offer early lets the bank know I am serious, especially if it is cash and full price. I think cash is more important when trying to secure a REO property, than it is with a short sale. Many banks like to see cash offers, but there are some disadvantages. Fannie Mae will require 10 percent earnest money on all cash offers.

Here is an article with more information on buying REOs.

How to get your offer accepted on fair market listings

I have bought great deals that were fair market listings as well. Fair market means the owner is an individual, not a bank and they don’t have to complete a short sale. You may think it is hard to find great deals on fair market homes, but there are deals out there. One of my recent purchases was a home the owners had bought two years ago as a HUD home, and never repaired. The market has increased enough that when they decided to sell, they could get more than enough to pay off their loan and make a little money. The other home I bought was an estate sale, which I made a low offer on that was accepted. Getting an offer in quickly is extremely important on these properties. There is a great chance of getting your offer accepted before any other offers come in, if you are fast enough. Fair market sellers will also be willing to accept financing if the price is right.

How to get an offer accepted on aged listings

I don’t like to make low-ball offers, but I will in some cases. Aged listings are homes have been on the market for at least 60 days and hopefully longer. They may need a lot of work or were priced too high to begin with, and have sat on the market. Whether the home is an REO, short sale, fair market sale or HUD home, there is a better chance of having a low offer accepted, when the listing is aged. I consider a low offer 20 to 25 percent below list price. I was able to purchase the estate sale at 20 percent less than asking price because it was an aged asset.

You would think that most sellers would lower their price when a home does not sell. But some sellers are a little stubborn and stick to their original price, even when they are willing to come down. Not all aged listings will negotiate, but many will. HUD may negotiate more than 20 percent off the listing price on homes that have been listed over 60 days.

Here is an article on how to get a great deal from the MLS.

How to handle a multiple offer situation

If you find a great deal, there is a good chance you will find yourself in a multiple offer situation. Don’t be intimidated by the seller asking for highest and best. Highest and best means the seller wants all offers to come in with their best offer, and the seller will choose or counter the offer they like the best. I see many buyers withdraw their offer when asked for highest and best, which doesn’t make any sense to me. Leave your offer the same if you don’t want to raise your price, but don’t withdraw it!

Many banks have regulations that require them to ask for highest and best as soon as they receive multiple offers, so don’t take it personally. The seller wants the best offer possible, and wants to make sure all offers have a chance to submit their best offer.

When I am in a highest and best situation, I figure out what the the top dollar I can pay for the property is. The only time I won’t offer my top dollar is if the list price is really low, and I feel no other buyers will offer as high as my top dollar. I would rather pay my top dollar and get a great deal, then try to save a few bucks and miss out on a deal.

Some great ways to make your offer more attractive in a highest and best situation is to offer cash. Cash brings with it a sense of commitment and surety to the seller. I also may remove my inspection contingency, which really lets sellers know I am serious. Here is a much more detailed article dedicated to multiple offers.

A good reputation will help you get more offers accepted

I know I get deals over other buyers because I have a great reputation in my area. When I get a house under contract, I almost always close it. Many buyers will use the inspection to try to negotiate a lower price on homes. I do not do this, because it gives me a bad name. Our community is tight-knit, and if I negotiate every deal with the inspection, other agents will notice. Because I close quickly with no hassles and don’t ask for reductions, other agents know I am a good bet to close and make their sellers happy.

Reputation is a huge thing in a small or moderately sized market. Agents know other agents and remember when things go bad. If you continually ask for price reductions after inspection, agents will remember and tell their sellers to be ready if they accept your offer.

Why a good reputation will help you get more deals. 


How you make an offer on a house can make the difference between getting a deal and not getting a deal. I know there are buyers out there who make hundreds of offers at 50 percent or less of list price, and I would estimate they get 1 out of 500 offers accepted if that. Making that many low ball offers detracts from your reputation as a real buyer and may costs you deals. Reputation is huge when buyers are choosing between two very similar offers in a highest and best situation. Keep your reputation strong and remember saving a couple thousand dollars on one deal may cost you the next deal that could be worth ten times that.

Many offers I make do not get accepted, especially in our appreciating market. Do not expect to get all of your offers accepted either, it can take time to get the great deal. You can make a lot of money in real estate, but if it were quick and easy everyone would do it.

This post may contain affiliate links and I may be compensated if you make a purchase after clicking on my links.


  1. Tammy October 3, 2017
    • Mark Ferguson October 4, 2017
  2. Clint Weir October 9, 2014
    • Mark Ferguson October 9, 2014
  3. Caleb October 11, 2013

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