Worried about my short sale, supposed to sign listing agreement tomorrow

I owe: $265,000

Current tax assessment: $251,000

Recent sales (only 3 in the past 6 months): 11/9/2010 @ 245,950 - 11/16/2010 @ 215,000 - 2/17/2011 @ 198,000

Servicer: Navy Federal Credit Union

Investor: Fannie Mae

 

My short sale specialist wants to list the home for $175,000. The plan is to sign the listing agreement tomorrow and to hold an open house on the 14th. I was told that I would meet the realtors the following Tuesday to discuss the offers and submit the best to the bank. They explained that the offers may be too low for the bank, but even if the bank rejected it, we would then know how much they need to get a deal done. They also said that they will try to negotiate with all potential buyers to get the highest possible offer. 

 

According to Fannie Mae, we have to stop paying our mortgage to be considered for a short sale. Each month that we wait is significant. I'd like to avoid being 90 days late, if possible. My concern is that our house will just be sitting out there while the bank goes through the process of rejecting an offer that we expect them to reject in the first place. 

 

My other concern is that this is only priced to attract short sale investors. A cash offer is nice and all, but investors have nothing to lose by making a crazy low offer. My fear is that this open house will only be investors that are trying to snag a great deal. If that's true, then the realtors have nothing to lose by submitting an offer the bank won't accept. Either it goes through and closes or they reject it and we start over with a higher price in mind.

 

This brokerage specializes in distressed property and allegedly has closed hundreds of short sales over the past few years and have numerous deals in the works.

 

Thanks for your feedback.

Views: 589

▶ Reply to This

Replies to This Discussion

Permalink Reply by Kimberley Kelly on May 6, 2011 at 12:41pm

I do not agree with pricing a home too low when you first list it.  The Investors want to see a FMV (fair market value) on the table..normally my Shorts get offers at about 10% below the competing Foreclosure prices.  If the neighborhood has no forecloses to comp, I usually start the Listing a bit higher, run ads, see the response, and start reducing accordingly.  You are correct.  Trying to lowball just lengthens the timeline.  Especially at the start of the Listing time frame, you need to price it properly.  Alot of these specialists just take huge amounts of listings, and can thereby say "THey've closed hundreds"  Well, if you list 1500 a year, I would expect you to close hundreds!  I believe your List Agent is your key to succcess in your Short Sale.  Follow your gut on this one..you sound correct.

 

Trying to avoid being 90 days late is a great goal but very likely will not happen in the Short Sale world.  Even primary Residences with only one PML (purchase money loan) can take much longer than that depending on the Lender, the negotiator you end up with, the aggressiveness of your List Agent and plain old Luck.  A 90 day turnaround would be the BEST case scenario and not your standard case.  I just got one approved in 105 days with 2 loans from different lenders, and I considered it extremely fast.  You just never know..

Permalink Reply by Samson_is_Furry on May 6, 2011 at 2:01pm

Thank you for your reply Kimberley. I met with another realtor who suggested starting the short sale price at the assessed value of $251,000. Then dropping by $10,000 or so every two weeks until an offer comes in. At first, I thought that would take too long. It is now beginning to look like the better idea.

I certainly have lots to think about before my meeting tomorrow.

Permalink Reply by Bryant Tutas on May 6, 2011 at 2:16pm
Mike. Pricing strategy really depends on your market. In my market I usually start a tad high then work the price down. But there is nothing wrong with pricing low as long as the property stays on the market long enough to create a bidding war. The bidding war will bring the price up. If the agent has experience and is successful with short sales then just express your concerns. I'm sure they'll listen.
Permalink Reply by Jeff Payne on May 7, 2011 at 2:48am
I prefer to list at fmv and systmatically reduce the price every 2 weeks until an offer comes in that is acceptable
Permalink Reply by Samson_is_Furry on May 7, 2011 at 6:25am
Makes sense to me. I don't see the point in spending two+ months fishing for a bank approved price with an offer everyone knows is too low. Sure, BPO could come in lower than FMV, but even I have a decent idea of what our home may sell for. Why should we play games with the bank just to have them confirm that?

Jeff Payne said:
I prefer to list at fmv and systmatically reduce the price every 2 weeks until an offer comes in that is acceptable
Permalink Reply by Karen Key Smith on May 8, 2011 at 1:14am

I totally agree with Jeff as it has been my experience that MOST of the time if I have Fair Market Value price or a touch below the bank will go for it if the seller qualifies for a short.  It is incredibly misleading to put a bait price out there that you know would not fly. It also hurts our general market and slows recovery when people use a lower than value price. 

I also agree that if you make your best attempt to sell the property for the bank and the owner you can justify your price.  Good luck in selling your home!!!!  Today it turns out that price is about everything and it does not hurt to have an inviting house to come to. 

Permalink Reply by Donna Clayton, Broker, MBA on May 8, 2011 at 3:15am

Hi Mike,

It sounds like the market value of your house may be around $200K or maybe a little more.  Your broker is obviously listing it well below the market value in hopes of generating a bidding war.  The potential problem is that you may not get an offer above your list price.  Buyers tend to hover around that list price, even when they make an offer above list it may only go slightly higher.  Meanwhile, Fannie Mae is going to focus on the true market value of your house and that is what they will be hoping to reach.  You may find your self going back and forth with the lender and wasting time in the process.  Just tell your broker that you really want to list the house closer to it's true market value.  If you go too low, the bidding war does not always happen, or it does not always yield the desired result.  Then you will be caught in a loop with month after month of lates on your mortgage.  I hope this helps.  Good luck with your endeavors.

-Donna

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on May 8, 2011 at 3:37am

Mike - You've received some great perspective here from several respected agents/brokers.  I will add my .02 as well. 

It sounds like the agent you are thinking about listing with wants to list the property too low.  Banks are now wise to this tactic and quite frankly don't like it and don't want to cooperate with someone who is causing a bigger loss "right out of the gate".  As both Harry, Jeff, & Bryant have said, start at Market Value based on current list and sold comps and automatically move the price down by $"Y" every "X" days.  Once you start gettting activity, stop reducing the price and see if an offer comes, if not, move the price down again.  Once you have a strong offer, negotiate it and send it to the bank for consideration. Have the agent you selected write a letter to the lender explainign how they marketed the property; "Started at $X and after N days reduced to $Y, then after N days  reduced again to $Z and got this offer, etc....."

Be careful a listing agent doesn't pressure you to price too low, they may already have a buyer they are goign to represent and will not be working for you!  Tell the Listing Agent you select they cannot represent a buyer - see if they stick around - a great agent will...

 

Best of luck,


Thom Colby

Broker

Newport Beach CA

Permalink Reply by Jonathan D Rexford on May 8, 2011 at 5:49am

"My short sale specialist wants to list the home for $175,000. The plan is to sign the listing agreement tomorrow and to hold an open house on the 14th. I was told that I would meet the realtors the following Tuesday to discuss the offers and submit the best to the bank."

 

I may be missing something. But, is it that the real estate agent telling you to list for 175K or some so called Short Sale Specialist?  The other advise you have gotten is excellent.

 

Permalink Reply by Steve Norris on May 8, 2011 at 6:37am

For what it's worth, I spent several months testing the notion of pricing low in order to generate traffic, offers and a bidding war. I used what sounds like a similar strategy that your agent is using: heavy marketing to run up to a weekend open house event at which we tried to have enough traffic to generate multiple offers and the subsequent negotiations to get as high a price as possible.  Problem was that in my market (maybe not yours), there simply were not enough buyers available to generate a price that was within shouting distance of market.  In all except one instance, we got multiple lowballs, but nothing close enough to market value that we could realistically take to the bank.

 

I went back to a strategy very similar to what Thom describes above and while it sometimes takes as long as 30-45 days to get that good offer, it is an offer we can document as the best that can be had.  This has made negotiations with the banks much more straightforward and, I believe, quicker as well.

 

That said, if your agent is getting the job done successfully (by percentage of listings closed rather than simply numbers), in your market, (s)he may have worked out the kinks that I found in that strategy.  Results (house sold, deficiencies forgiven or happily negotiated) are all that matters.

Permalink Reply by Marivel Costanza on May 8, 2011 at 9:52am

 

 

Dear Mike:

      It appears to me that based on the information you provided in your message your home is located in a declining market like most short sale homes at this time.  If your most recent comparable is under $200,000 then a $175,000 listing price is within an acceptable range (20%) of the current market value in your area.  It sounds to me like you found an agressive agent and that may just be what you need to get your short sale approved with your Credit Union.  There are so many aspects to a short sale and pricing is just one of them and not always be the most important factor to your approval.  Is the broker you selected someone that you can trust and/or can you get referrences from recent short sale clients?

      Remember, the Credit Union will have an appraisal done before an offer is submitted to your investor.  Selecting the right buyer is as important as the sales price.  Will your buyer stick around for the approval and do they have room on their approval to go higher on the price if the Credit Union gives them a counter offer for a higher sales price.

 

      I recently had a short sale with a Credit Union and it was a learning experience, please make sure you have a strong negotiator on your side and someone that cares about you and your future...you will know! 

 

       You are doing the right thing and may your future bring you much happiness and success.

 

Marivel

      

Permalink Reply by Samson_is_Furry on May 8, 2011 at 1:42pm

My sincere thanks to each of you. I've proceeded with this brokerage, but made sure that I was able to terminate the listing at anytime without reason. I can afford about four weeks to determine whether or not this is going anywhere.

The strategy seems a bit off to me. To be honest, I'd likely go in a different direction If it wasn't for the fact that this realtor helped a friend in a nearly identical situation. 

I'll definitely keep you all posted. 

Thanks again and Happy Mother's Day!

Mike

RSS

Members

© 2024   Created by Short Sale Superstars LLC.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************