Cape Coral Real Estate : Short Sales Should Not be GAMES

Almost sounds like a BAIT & SWITCH doesn't it? It's a shame that this realtor feels he has to try and fool people to get business. Turns out the only fool is him.

I've completed a few short sales in my time and all were successful so far...it is difficult to know exactly where to price them as the banks will not tell you what they want...any agent who tells you a number without a contract is not telling the truth. You have to price it where it will generate interest and that is usually below market....buyers wont wast time wondering if a short sale will be accepted by the bank. If they know they are getting a good deal value wise they might wait it out...if it's at market then they might as well go to the property they know they can buy in a certain period of time. Remember...although both parties execute a contract that is agreeable,.the bank has the final approval of the price and terms....so they better know in the listing that it's contingent on the banks approval and it can be an unknown. If they are in a rush to close they better move on to the next. The buyers agent also better have knowledge enough to explain to their clients how a short sale really works and the steps.

Danial, Yep & that is making the buyers & buyer agents leary of working ANY short sale.

Neal, I've closed many short sales as well. The banks don't have to tell you what they want. They want as close to market value as they can get. If the property was just placed on the market well below any comparables and you get an offer, how likely is the bank to accept that? They'll think it was priced too low & didn't have the needed market time. Some banks want to see 30-60 days of market time before they'll even look at offers. Also, they all order an appraisal or BPO (broker price opinion) after an offer comes in. They'll definitely take less but how less varies from bank to bank. Some lenders are more aggressive in what they'll do but being able to show SOME market time with reductions has been much more successful than pricing too low to begin with.

Susan,

Who knows what is really right...all banks are different and a perfect example... I just closed one at 119,900...appraised by the bank for 137 and in 47 days...the home was initially on the market for 8 months and then the seller wanted to walk because she could no longer pay...it didn't start out as a short...no onw would make an offer at market after we dropped the price dramatically...so go figure...it also has to do with the amount of inventory...they should know that there are over 400 sitting empty and they don't want to carry too many themselves ...it ends up costing them 50K to foreclose...they would rather help the sellers out instead of it ending up costing them more in legal fees...its a hard figure. Also once the seller is at least 2-3 payments behnd...they start to run out of time..and you and I both know that time is a problem now with homes siting longer so the banks might not wait too long before they start foreclosure proceedings.

I hate that when that happens.... I showed a one a couple of weeks ago that was listed for $200K.  My buyer liked the home and their was a leak I wanted to report. Turns out their were 4 offers and the bank countered them all at $240K.  One buyer accepted but the price was the same in the mls and still active,,,,  My buyer hasn't wanted to see any more houses with me.....  Thanks listing agent for ruining my relationship with my client (this was the first house and only house I showed him).  I do list, negotiate and show short sales. Now I always call the listing agent to find out the deal before I show it.

Hello Susan,

Time is everything. Time is money for both the seller and the bank. I think your opinion of that agent based on your conversation is correct but be careful to not paint every low priced short sale with a broad brush. We don't always have the big picture.

This is so frustrating!  The banks will only take fair market value anyways.  They are also weighing heavily on OTHER listings rather than closed SO LONG AS the other listings ARE NOT short sales but REO or non-short sale.  I have clients sending me ML numbers from Realtor.com all the time thinking I may have "missed" something.  This after I counsel my buyers on the short sale process and ask if they would like to receive short sale listings.

BAH.

Neal, It appears that we are in agreeance. That home had some long market time already. Congrats on the close.

Debbie, that is unfortunate that the buyer took out their frustrations through you. Now in our buyer consultation we go over short sales in great detail.

Ken, there are many great short sale deals out there but there are many out there that are a waste of time. I didn't even mention in the post about another agent who when I called to show his listing in that community said "don't even bother". Why? Because there was an uncooperative tenant & non-responsive seller. So, why was it still listed? I guess for buyer leads for him?

Renee, isn't that funny how the bank wants to compare their short sale listing to regular sales? We've closed many that were good deals but if the agent is trying to play games they are not helping anyone - not even themselves.

Susan, Deliberately and excessively underpricing a home is against the Code of Ethics, is it not?  I've seen this in my market place, too.  The agent tries to create an "auction".  It makes our profession look bad, as well. Proper marketing, and lowering the price when the market does not "choose" the property is the best course of action. Wendy

Thanks for stopping by Wendy, my point exactly :)  - - I can't even see how this could benefit anyone - not the seller, not even the listing agent.

Susan,

how does it NOT benefit the seller? They are out from under a bad mortgage and can get on with their life. Especial now that the seller is off the hook for the mortgage balance. If the owner was still being taxed on the forgiven balance, then I'm sure more owners would care.

Susan, there are so many factors to deal with when pricing a short sale.  To price a short sale way below fair market value when the home is just being listed and there is a lot of time before the scheduled auction date, then that may not be such a wise idea perhaps. But then again, we must consider the particular lender, as not all lenders view offers in the same way.  What may be an acceptable loss to one lender may be well out of line for another lender.  If a home is fast approaching the auction date and there are have been no showings and no bites, pricing is what will make things change. If that means pricing it below FMV and below the competition, than that should be considered. One lender may be only accepting offers at 95% of FMV when another will accept at 82% of FMV. Getting an offer and submitting the offer is the only way to determine what the lender will accept.

Todd, if a house is not priced correctly it will not sell. I think you misread my blog. Yes, when short sales sell they are absolutely a HUGE benefit to the seller.

Lynn, we definitely aggressively price these homes & reduce as needed but just listing them for half of any sold comparables right out the gate does not make any sense - unless of course the bank has agreed to it for some reason - they do become more motivated the closer they are to a foreclosure sale.

Offering a home at a price that there is not a chance of a bank taking is wrong! I think if an agent is offering that low price, just to get calls then they should be held responsible when the bank doesn't accept and offer at the full list price!

Bait and switch running rampant on short sales here in Florida...REALTOR beware..CYA.  it is going to be interesting to see if there is a significant increase in FREC complaints in the next few years.  Trying to make a quick buck now may cost you the license that allows for you living in the future...eh hem...think about it.

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