Saturday, October 23, 2010

Do You Think Short Sales Can Be Gotten Under Market?

We've got 4 different types of listings in the current market. Traditional sellers...the ones with some equity. REO's.....bank-owned. Investor, or flipped ones, that have been bought and are being re-sold for profit. And, the Short-Sales (SS)...we should all know what they are by this time. Seller owes more than the home is worth and is asking the bank that holds the mortgage to be shorted on their balance due. Therein the Short Sale (SS).



I wrote an offer on a Traditional sale this week. Cute home, nice neighborhood. Decent floor plan. Required some work. Lots of deferred maintenance that needed to be caught up on.

Listed @ 318. Recent comp closed in early July for 320, the most recent sale in that track.

We definitely wrote a low offer. My buyer needed to keep plenty of cash in her pocket to do the needed repairs. And, those were the ones we could see with our eyes. Not to mention what the home inspector might find!

I explained to my buyer that I doubted the seller would go for it. Don't get your hopes up. Maybe insult the seller, maybe a counter offer close to list price.

But, that's not the point of this post.

The point of this today is that the listing agent, someone I respect very much, had a completely different opinion on Short-Sale values/comps than mine. And, I was really surprised.

That agent for the recent sale did what a lot of agents do, list SS's low to get an offer in. She listed it at 299, and it sold for 320. Took four months to get it closed.

In that time period the SS bank does a BPO, Broker Price Opinion. And, that BPO is done so that the SS bank knows the values of the homes in the area.....to see if the offer submitted is a valid offer. The BPO is done by someone not involved in the transaction so as not to lean in one way of another.....that would be fraud.

Aha! Here comes the fraud factor. And, one I never want to get involved in. The only way that SS could be considered as undervalued is if there was some fraud. These banks want to get their money, take as little loss as possible. But, yes, sometimes there is some fraud.

Now, come back to the current listing and offer situation. When we discussed the recent comp. She said there was one for 350. I said the most recent was in July for 320. She said "But that was a Short Sale". Like that was invalidating the comparable sale. Huh, really? No.

Appraisers look at sales in the area and make their adjustments based on conditions, amenities and location. If the SS was in spectacular condition, that one actually was, and the Traditional needs work, this one definitely did......those value corrections will be made by the appraiser.

Under market SS? Don't count on it. If it is listed under market, there will be a multiple offer situation to drive it right back up to market value anyways.

Just like that recent sale in July.....

No comments: