One of the keys to having a successful Short Sale is pricing. Now there are folks that say pricing doesn't matter because the seller is receiving no funds anyway. Well....they're worng. Tell that to the seller who has to pay taxes on the "short".
It is imperative that the Short Sale property is priced right. When I say "priced right" I mean as close to market value as possible at a price that will get the property under contract quickly.
One of the problems I see in my market is that many Short Sales are priced way to low. Pricing low may generate a lot of activity but these deals, more than likely, will not close. You have to be able to justify the purchase price to the lender.
Pricing a short sale should be just like pricing any other property. You are looking for a price that will sell the property in a reasonable amount of time and at a reasonable price. The fact that the property is a short sale, requiring 3rd party approval, is nothing more than a negative market condition.
If the true market value of the property, if not a distressed sale, is $200,000, then what you should be doing is taking this figure and making an "adjustment" for the "negative market condition (short sale)". Depending on your market it could be a 10% to 20% downward adjustment. Let's say that your market is showing you that short sales are selling for 20% below a normal sale of similar properties. That means that this property should sell for $160,000. So maybe you price at $165,000 or $169,000 depending on your area's sales price to list price ratio. Reduce as necessary.
Now you have a property that is priced right AND you have a very good chance of getting the Lender to agree to the short sale. The higher the price the easier it is for the Lender to make a decision. What say you?
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
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Copyright © 2010 http://www.brokerbryant.com/ | All Rights Reserved
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
Want to find out more? www.CentralFloridaShortSales.com
***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.
Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales, Orlando Florida Short Sales, Celebration Florida Short Sales, Winderemere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.
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Reserved for TLW
Byant - I say, "Banks are stupid, but they ain't idiots". I try to explain this all the time, and then find buyers frustrated with the "process" when the appraisal comes in higher and the lender wants to see more green at closing. Short Sale listings priced too low will always provide some sort of grief before a transaction is completed.
Bryant, I couldn't agree with you more. I have seen many short sales priced too low for the banks to accept offers in that range and have wondered what are these agents thinking? These agents probablyhave lots of activity, but I can't see that it would be worth to price a short sale too low.
Truly a very important step. Just becasue it is a short sale, the buyers are still wanting to get a good value and they are going to need enough incentive, usually via price, to stick around for the entire process. Great Posting.
Robert Earl
This really is so important. It is frustrating when a property is priced to generate offers, but in reality the price is set way below market comparables. As Paul so eloquently put it, "The banks may be stupid, but they ain't idiots!" I am not sure what they are thinking.....and it is really unfair to all of the parties involved. Unfair to the seller who needs out. Unfair to the bank to play games and unfair to the buyer who "thinks" they have a chance.
Excellent advice Bryant, we list our short sales like any other property . . . The actual value for the neighborhood in today's prices.
BB, this is key to our entire viability as associates. Pricing has to be an area we become experts in. 95% of the time you can walk through a home and know it's market value immediately without further research. Why would there be any differentiation with "shorclosures" added to the fray? They are part of the equation within our market realm too. Reasonable vs. Realistic, what say you?
HA HA...TLW IS ON THE BOOK OR THE FACE AS SHE CALLS IT.
I agree price it right, the BPO will confirm it and you are good.
A+++++++++ explanation of how to price a short sale. I could not have said it better! This may be my first BB reblog!
Lol Missy...
I wasn't though. Whilst I bust my ass setting up our new home, Blog Boy, Blogs :)
Ka Ka Head :)
TLW...ROAR!
Well said Bryant and oh so true. We need a price acceptable to both the buyer, the seller and the lender. Different circumstances will dictate different prices.
What you are saying is so true. There should be a discount as to the short sale pricing, some but not off the cliff. We now send pricing history in with the contract which gives the banks the understanding that the property was marketed and reduced until offers come in. Good Post.
This is just common sense. Price a short sale way under the market you end up wasting your time with an offer that is near "list!"
BB,
For the very reasons you cite, I price my short sales on the higher side and reduce every 2-3 weeks if we don't have an offer. Found this makes clear to both the bank and BPO agents that the home did NOT go at a higher price. Perhaps this is one reason we get the shorts closed and other agents don't...
Locale has a lot to do with it. Comps are very compelling. I see it in my market all the time.. overpriced and stagnate or underpriced and with multiple offers.
Hi Bryant, It's always more successful to have the property "priced right" so it's off the market quickly and the potential buyers don't ask the question "Why has that property been on the market for so long?"... ;>))
Bryant -
Seems like some of the bigger lenders have made it clear that market price is what they are after. That suggests that the days when short sales were often an outrageous steal are indeed over.
Agree with you about pricing right as a priority and the pricing methodology you use as well.
Also agree that short sales are seen as a negative factor and build-in a small 5-10% discount accordingly. Disagree with the poster who says bigger lenders want full market price. Happens on occcasion but definitely still an exception from the norm!
Excellent job with your pricing explanation BB. This is exactly what I tell the sellers during the interview process.