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Oddvision, Home Buyer in

Short Sale - actual selling price vs listing price

Asked by Oddvision, Thu May 2, 2013

I know that the lenders all have to accept the short sale price before the offer can be accepted. However, while I have seen many short sales go to "pending" from active, I don't know what offers were accepted, and none of them have made it past pending in the month I've been watching so I don't know what the final sale price was. Do short sales typically go for anywhere close to the listing price, or do they just list low in order to build interest?

As an example, I'm looking at a short sale in Fullerton, CA listed at $620,000 on a street where standard sales are listed at $900,000 - $1M . Do you think an offer of $630,000 or $650,000 would even have a chance?

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I see that my colleagues already point out that you short-sales are difficult and could be a very frustrating and confusing.

Your best bet into work with a good Realtor who can guide you through the entire short-sale process as at times it could be confusing and difficult to understand - there for a good, experienced agent will be able to help you to navigate and answer all your questions.



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0 votes Thank Flag Link Thu May 2, 2013
Thanks for the answers all... Yes, I know the seller can accept the price but the mortgage holder(s) have the final say on if they accept it - I just summarized that part. I was asking questions because I did not understand. Having never dealt with a short sale nor seen any short sales in the recent past that had closed so I could see the final sale price, I was looking for information on how realistic the list price was.

No, I did not think a list price was a "magical number". Wow.
1 vote Thank Flag Link Thu May 2, 2013
The bank will get a BPO (Broker's Price Opinion) that will help them determine the market value of the home. If the offer submitted is lower, they will either negotiate the price up to the value they have determined, or reject the short sale.

Keep in mind that the listing agent and seller set the price but the bank must accept it. So the difference between list/sale price will vary greatly.

Whenever you see a Short Sale go from Active to Pending the same day, the Listing agent has likely already sold it themselves (double ending the deal). In these cases, the prices will usually seem low.

Keep checking and see what these properties actually sell for. It's interesting, but could take several months.

Good luck!

Mark Mintz
http://www.eastsidedigs.com
310-991-3808
0 votes Thank Flag Link Wed May 8, 2013
What are the recent similar kind closed sales nearby?
Get me the address and I can send you some recent closed sales nearby.
0 votes Thank Flag Link Thu May 2, 2013
Regardless of whether or not your offer stands a chance, the advantage usually goes to the buyer that gets their offer in first and get it accepted by the seller owner. Once over this hurdle your offer will be entertained by the seller's lender.

There are many factors that enter into their consideration including the local market, condition of the property, the terms of your agreement, multiple loans, liens, etc.

"He who hesitates is lost" comes to mind in these situations. Make an offer that you can live with and protects your interests and then wait to negotiate with the lender. The fact that you are considering offering over the asking price is a good thing but from the sound of things, you won't be the only person in the hunt. But getting started with a game plan may serve to benefit you!

Good luck,

Bill
0 votes Thank Flag Link Thu May 2, 2013
Typically, list prices of a short sale are low to generate that all important first set of offers. Lenders often won't look at a a seller until there is an accepted offer. Generally speaking, list prices are artificially low to generate a lot of interest. I personally hate this game, but it is very common.

Good luck to you.
0 votes Thank Flag Link Thu May 2, 2013
Ugh. I assume you're frustrated by the lack of a clear answer to a straightforward question.

If the comps are in the range of $900,000-$1 million--anywhere in the country--then an offer of $650,000 would have a very, very slim chance. Assume that the banks have at least a rough idea of what the comps are. And assume that while the banks are willing to part with the property at a loss--it is a short sale, after all--in most cases they're not willing just to dump the property.

I'm guessing the $620,000 was just a placeholder, a number to attract attention and get people bidding. There's a very slim chance I'm wrong and that the bank actually is willing to allow the property to be sold in that range. More likely, though, the listing agent put in a very low number just to attract attention.

It also depends, somewhat, on the condition of the house. If it's in terrible condition, and the bank is aware of that, offer a comparatively low amount. And it depends on how much you want the house and what you can afford.

Here's my quick evaluation. Offer:

$650,000 if you really don't care about that particular property, but want a shot at a tremendous bargain.

$800,000 if you want a reasonable shot at a short sale when the comps are $900,000-$1 million.

$900,000 if you love the house and are willing to pay full retail price (or close to it) for the property.

Hope that helps.
0 votes Thank Flag Link Thu May 2, 2013
Perfect, best answer - thank you!
Flag Thu May 2, 2013
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Hi Oddvision,
I grew up in Fullerton and know the area well. Email me what information you are looking for and I will be happy to send it to you. Just click on my profile for my contact information.
Good luck,
0 votes Thank Flag Link Thu May 2, 2013
Your first mistake is think that the LISTING PRICE is some magical number that is set in stone:
Particularly for Shortsales; the Listing Price may be a number that someone, (not the Bank) picked out the air. It may have no relevance to anything. As you point out; it may be a low number to attact attention.
Some Buyers think that if they knew what the Bank had in it, that they could offer a little more: That senario fails for several reasons.
The best method is to have a Realtor do a CMA to determine the Market Value: Now you have some solid ground to stand on.
If the house is really "worth" $1m, then a more realistic number would be $850. (Imagine, 5 years from now, talling friends that you bought it for $850?)
0 votes Thank Flag Link Thu May 2, 2013
Well said, Michael. He is right on. Why would the bank accept an offer of $630,000 on a property worth $1,000,000? Would you sell your home $300,000 under market value? Short sale does not mean fire sale. If you are interested in buying a short sale you can possibly get a good deal, but you must be willing to pay close to the value and ready to wait it out. Good luck.
0 votes Thank Flag Link Thu May 2, 2013
No, you have it backwards. The lenders don't accept the short sale price before accepting the offer. The offer is accepted first and then sent to the lender for approval. The lender can take 2-10 months to decide if they will approve or not, hence the long pending periods.

So, if you know the market price is around $1M, then there's no point in putting in a lowball offer around the list price on a short sale. Those list prices are irrelevant since the lender hasn't approved them yet. They might as well be $1.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Thu May 2, 2013
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