Replies to This Discussion

Permalink Reply by Jim Schneider on May 9, 2011 at 2:03am

Mike, something you should consider regarding the value the bank will get when they have a broker price opinion is that they will look at square footage and the age of the comps compared to your house, and they may very well go outside your subdivision. Comps will be within 1 mile, 10% of your sq', and 10 years of your home's age. Generally this information is available at the tax assessor's website.

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Permalink Reply by Samson_is_Furry on May 9, 2011 at 3:28am

Jim, thanks for that tip. I checked out our area and there are two sold comps within 12 months in my small neighborhood. Our Centex community was built in 2005. Homes started around $280k. It's a gorgeous subdivision dropped in the middle of very different subdivisions. I believe the surrounding areas within 1 mile list between 80k and 150k (all older homes). It seems like the value of our area is trending quickly towards the surrounding areas. 

 

I did notice that there is an active listing a few houses down from mine that just dropped from $225k to $209k. That makes me think $175k isn't too unreasonable. 

 

Thanks again!

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Permalink Reply by Jeff Payne on May 9, 2011 at 3:50am

Mike, what are the sold comp prices for the 2 that sold and when did they sell? 

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Permalink Reply by Samson_is_Furry on May 9, 2011 at 4:11am

It appears that there are three sold comps from my neighborhood in the past 6 months:

 

11/9/2010: $245,950 / 1945 sq/ft single family dwelling

11/16/2010: $215,000 / 1795 sq/ft townhouse

02/17/2011: $198,000 / 1688 sq/ft singe family dwelling

Going back 12 months:

 

6/18/2010: $213,000 / 1765 sq/ft townhouse

5/12/2010: $232,000 / 1673 sq/ft single family

 

My townhouse is 2068 sq/ft. There are 60 town homes on my street, 11 are active listings.

 

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Permalink Reply by Samson_is_Furry on May 9, 2011 at 4:17am

I think my neighborhood is dead! I've been in touch with one of my neighbor's listing agents and receive this update today:

 

Mike~

 

Not counting the one that is $209k (which is being sold by a relocation company that bought the owner out...it's a little tired looking from laying vacant for so long but wouldn't cost that much to bring back to life), there are six townhouses for sale.  It pains me to report that there has been very little activity on my listing (I can't even remember last time there was a showing) and after speaking with other agents who have listings in the neighborhood, they have also had very little activity.  I'm going to try and plan a neighborhood open house to hopefully being in some buyers...

 

I would have to say that now would not be the best time to put your home on the market unless you're in a position to list it considerably lower than the others (then your neighbors might not like you).  I'll send you a list of everything currently available in a separate email.

 

Please let me know if you have any questions.

 

Happy Monday,

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Permalink Reply by Jeff Payne on May 9, 2011 at 4:22am

Mike, assuming the two most recent townhomes are fairly similar to your property, it does not appear that there has been much of a market decline for those properties, they both sold for 120 per foot.   That would mean that your property, all things being equal except for square footage, would be approximately $248,000.  Lets assume that the market has declined 12% since the last sale, that still puts your FMV about 218,000 and you want to list it at what?  I would be very careful of this,  from my limited experience, low ball offers will find their way to the bottom of the pile.  It is VERY diffucult to convince a buyer that the property was listed at $175,000 and the bank now wants $200,000 or more for it.

My advice, although it might be too late, is to price it at FMV and work from there.

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Permalink Reply by Jeff Payne on May 9, 2011 at 4:23am

Harry, I agree with you, the lenders here are working the same as they do with you in California for sure.   Very unlikely that the lender is going to sell this short sale for a HUGE discount, if any, off of what they believe to be market value.

Harry Clay said:

Mike:

You never did say whether your property is indeed in active default, with a limited timeframe in which to sell, or if you merely want (or need) to escape a house that has suffered an as yet undetermined drop in equity.

There is a difference when negotiating with most lenders.

You also stated that one of your biggest concerns is that you not show more than 3 months late on your credit history. That doesn't sound like you're proving substantial hardship, another major lender requirement, in most circumstances.

You also admitted that the 3 most recent sold comps were quite possibly in the range of $215K, with the possibility that values are still declining, somewhat.

You pointed out that the nearest active comp / listing just moved down to $209K.

So you & your new team think that starting out with a listing price 16% below the nearest competition is "reasonable"?

It sounds to me like you're fishing for a fast & convenient Short Sale at an REO / Foreclsoure price...which is a contradiction.

If your strategy works...more power to you, & I wish you the best of luck.

But this scenario would never fly with the way lenders work with us out here in one of the hardest hit areas of the entire country.

 

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Permalink Reply by Samson_is_Furry on May 9, 2011 at 4:28am

Hi Harry, the company that I worked for when I qualified for this loan went bankrupt and closed in 2006. I've scraped by with the help of my parents ever since. I tried to sell the home in 2008 at FMV and eventually took the listing down when I dropped the price to my loan balance and still did not get showings. I applied for HAMP in 2009 and was denied because my deficit was too big. My parents agreed to help me through 2010 while I went back to school to get a more marketable degree. I graduated last Saturday. I have an entry level job lined up that will require me to relocate out of the country. It's a great opportunity for me, but I will make less than 20k USD per year. It's sufficient in the third world, but obviously not enough to cover my $1900/month mortgage payment.

My desire to avoid a 90 day late is simply an effort to mitigate the damage to my credit. I realize that a short sale is going to do some damage. If there are ways to lessen that damage, I simply want to understand what they are.

Everyone on this board has been more than helpful and I really do appreciate the wisdom and experience that I have found here.

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Permalink Reply by Jeff Payne on May 9, 2011 at 4:32am

Mike, your neighbors agent most likely does not want to see you do a short sale because it will affect the neighbors sale if it is not a short sale, or it could affect it. 

I talk to agents all the time that say this same thing but I pay no mind to them, sometimes I do say "You are right, this business sucks, might be time for us to ge out"   In reality, I am on track to sell 150 homes this year :)

My thought is that you have to start somewhere on your price and it is always easier to go down on price than it is to go up.  You have to paint a picture to the lender/investor that you tried to sell for as much as possible and show them what it took to get an offer.  Anyone can price a home for $50,000 under market and get offers, those offers would not come from me though because I would advise my buyers that this listing agent may not know what they are doing based on their pricing..... just my opinion

Mike said:

I think my neighborhood is dead! I've been in touch with one of my neighbor's listing agents and receive this update today:

 

 

Mike~

 

Not counting the one that is $209k (which is being sold by a relocation company that bought the owner out...it's a little tired looking from laying vacant for so long but wouldn't cost that much to bring back to life), there are six townhouses for sale.  It pains me to report that there has been very little activity on my listing (I can't even remember last time there was a showing) and after speaking with other agents who have listings in the neighborhood, they have also had very little activity.  I'm going to try and plan a neighborhood open house to hopefully being in some buyers...

 

I would have to say that now would not be the best time to put your home on the market unless you're in a position to list it considerably lower than the others (then your neighbors might not like you).  I'll send you a list of everything currently available in a separate email.

 

Please let me know if you have any questions.

 

Happy Monday,

 

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Permalink Reply by Samson_is_Furry on May 9, 2011 at 4:34am

Jeff, what I have learned is that Fannie will want at least 90-92% of a BPO. This information was the catalyst for my uneasiness with the strategy and this thread. Unless the BPO was under 200k, it's obvious to me that the bank is going to reject it.

However, with a comparable active listing now at 209k, I don't know what to do. They had very little activity when it was listed at 225k.

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Permalink Reply by Jeff Payne on May 9, 2011 at 4:38am

Mike, where did you get the 90-92% of BPO number?  Keep in mind that 90% of 200,000 is 180,000 BEFORE any expenses come out, take probably another 8 to 10% off of that and you get a NET of $162,000.  I might believe the 90% number if you are talking about NET numbers but not gross numbers

You have to start somewhere and my thought is you start at FMV and do systematic reductions in price until you get to what is really FMV or what a buyer will pay.  You can then show the lender that you tried to get as much as possible for the property.  A good listing agent will document, document, document EVERYTHING, all showings, all sign calls, all inquiries.....etc.

Mike said:

Jeff, what I have learned is that Fannie will want at least 90-92% of a BPO. This information was the catalyst for my uneasiness with the strategy and this thread. Unless the BPO was under 200k, it's obvious to me that the bank is going to reject it.

However, with a comparable active listing now at 209k, I don't what to do. They had very little activity when it was listed at 225k.

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Permalink Reply by Jeff Payne on May 9, 2011 at 4:43am

Dang Harry, sometimes I have to remember that Mike is not my seller :)  Sure do want to help him though.  Thanks for your contributions here at short sale superstars

Harry Clay said:

That explanation would certainly qualify as a reasonable hardship, which is something all listing agents need to verify if we expect a reasonable chance of success with typically reluctant to cooperate lenders.

I would still expect your credit union to stall you out, & really make you work hard to achieve short sale approval. I highly doubt it's going to come as fast as you hoped.

That's why so many of us are suggesting that you systematically work the price down from a more realistic starting point, & establish a marketing history that proves to the lender that you have judiciously pulled the highest & best offer possible, given the allotted timeframe.

Mike said:

Hi Harry, the company that I worked for when I qualified for this loan went bankrupt and closed in 2006. I've scraped by with the help of my parents ever since. I tried to sell the home in 2008 at FMV and eventually took the listing down when I dropped the price to my loan balance and still did not get showings. I applied for HAMP in 2009 and was denied because my deficit was too big. My parents agreed to help me through 2010 while I went back to school to get a more marketable degree. I graduated last Saturday. I have an entry level job lined up that will require me to relocate out of the country. It's a great opportunity for me, but I will make less than 20k USD per year. It's sufficient in the third world, but obviously not enough to cover my $1900/month mortgage payment.

My desire to avoid a 90 day late is simply an effort to mitigate the damage to my credit. I realize that a short sale is going to do some damage. If there are ways to lessen that damage, I simply want to understand what they are.

Everyone on this board has been more than helpful and I really do appreciate the wisdom and experience that I have found here.

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