Making an offer on a Short Sale, Cash Buyer , HELP!! Updated

Hi all,
I am going to make an offer on a house that is a short sale. FWIW, This house will be my primary residence. The septic system for the house doesn’t pass Title 5 inspection in MA and therefore can’t be financed. The sellers agent has a quote for the repair at 6K. However, this quote is 8 months old and states that additional work might be necessary that is unforseen without going digging up the system. I know this 6k number might end up being 20k+ and am very concerned. Also, I am told that this house has been under contract 3 times and hasn’t closed. The listed short sale price is $300K. The sellers agent told my agent that $285K would get approved easily. My agent is not a strong buyers advocate but I am stuck using her. I think she is downplaying my leverage as a cash buyer. I really need advice on what my best course of action is to get this discounted even more. Help is appreciated.


Cash is King!

Make the offer at a 20% discount and give a deposit and send a copy of your bank statement to get their attention. I believe the realtor is required to present it. My son in law just bought a foreclosure in Georgia and he offered 10% below asking and it was accepted quickly. I am not sure of what would have happened if he offered less? I would doubt that the three failed offers were cash offers?

Six K for a drain field is about right for ND. I had one house out of 20 that I had to replace the drain field and I checked with the health department and found out I could do it my self as long as it was inspected by the health dept. I had a friend come over with a back hoe and two days latter and after the inspection it was done for a total cost of $2,500. I don’t know what type of systems you do in MA though??


Randy is right, cash is king when your an investor; however your problem is you are buying this because you love this home and you see yourself living in it, you do not have the luxury as I do as an investor to make 50, 75 or 100 low ball offers to maybe buy one home at 25 or 30 percent below fair market value!

It is very difficult to make a 20 percent below asking price offer knowing you want to live in this home. Being rejected just doesn’t work when you have a wife / husband and family and you really need to find a new home to move up or move down and it’s just not completely your choice.

Now your septic system can be cheap as Randy suggested or can cost you upwards of twenty grand depending on your situation, a lot of unforeseen problems include your existing waste and drain line, if it’s an old cast iron or clay pipe line then it may need to be replaced with the system.

If this home is so old there was never a Perk test done and now replacing the system you find it does not perk where currently situated but will perk 300 feet from the house you suddenly come up with the added cost to lay a main line 300 feet to your new septic tank and leach field.

However if you have a really small yard and the outside area big enough for a septic system and leach field will not Perk (Fails Perk Test) then your stuck installing an “Alternative” septic system, and this alternative system can run upwards of $20k.

I think if your going to live in this home, your wife’s in love with it and you don’t want to sleep on the couch then you had better think about making a more realistic offer, however I think I would go in at $270k for first offer and reference the potential cost of a worst case scenario of needing to install an alternative septic system and associated cost’s.

Good luck,


Assume the new septic system will cost $20K+. Bid accordingly. Don’t worry for 1 second what your agent thinks or will tell you. Be willing to walk away if you can’t get the terms you need to make the purchase worth your time and efforts, even if you plan to live there.

Thanks everyone for the quick replies! What also concerns me is that the house and septic system is only 6 years old. The agent blames the septic problem on the use of bleach for cleaning and laundry by the current owner. I am concerned that there might be a more cronic problem even after the repair.


As a cash buyer you have a higher chance of buying the house and your agent should do their best, to get you the best bargain.More so because this is your primary residence and you are not an investor hoping to profit from the purchase immediately.

I just spoke with the septic inspector. He said the 6K estimate for repairs is fiction. He estimates the repairs to be $25K-$30K. The inspector was very helpful. He inspected the property 7 months ago and when he pulled the file, he remembered all of the details. The house is six years old and the septic system failed in year five. He suspects a bad design or a poor install.
My agent wants me to make an offer at the $285K with a stipulation that I pay no more than $6K for the repairs that the sellers agent claims. $6K was their number not mine. How can this work? Nobody knows what the actual costs will be until the system is dug up. And, I don’t anticipate that the bank is going to go lower the price if the repairs are $25K-$30K.
She is insisting that this is my best chance at getting the house. I am seriously considering making two offers. One offer would be a lower cash offer in which I would take the house “as is”. The other offer would be with the conditions my agent recommends. Is it wise to make two offers?


Bank owned homes and bank approved short sale offers need to be “As Is.” Banks hate contingencies and indeterminate expenses. An open ended offer subject to the cost of repairs is not going to be accepted.

My recommendation is to make a low “As Is” offer. Support your offer with a BPO and at least one formal estimate as to repair costs for the septic. Include these with a cover letter with your offer as justification for the low price.

You may get it accepted - but do not hold your breath.


Good comments!

It sounds like my original advice is about right 20% off, cash sale and a copy of the new estimate. You could have had an offer rejected and come to a fair agreement by now. Make the low offer!