Home Selling in Phoenix>Question Details

Azgirl2000, Home Seller in Tempe, AZ

Short sale listing price: should it be at market or way below? My agent wants to list low and have their investor buy it.

Asked by Azgirl2000, Tempe, AZ Sat Aug 7, 2010

I am doing a short sale, and want to occupy property as long as possible to save $. I have an agent that wants to list property at $75K, then have the investor group they work with buy it for cash. They obviously want to get a deal, which is ok, but I am concerned about how it will look to the bank, as well as potential tax implications for me. Market value is ~125K. I have not signed any listing agreement yet. Would I be better off going with another agent who will list at market value and try and find buyer on open market?

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Answers

151
Listing it way below market will likely backfire. The bank will ask for a BPO by a bank agent and he/she will provide with a market value so there's a possibility it will be declined.
2 votes Thank Flag Link Tue Sep 28, 2010
2 Andrew,

Flipping is not fraud - unless you "trick ... the lender to accept the offer" as you put it. Then, I guess the lender would be misled or deceived. Maybe out in MA the lenders are ok with that, but here in the southwest, where prices have dropped 50% or more since late 2006, the lien holders are requesting, and receiving, fair market value.
2 votes Thank Flag Link Wed Aug 25, 2010
Looks like you have a lot of answers, but when an agent wants their investor buddies to buy the place under market value, then turn around and resell it for $50k more, they are committing fraud. Additionally, you may be on the hook to pay taxes or a deficiency judgment for that $50k so they are not upholding their fiduciary responsibility to you. Be careful with this one!
2 votes Thank Flag Link Tue Aug 24, 2010
Listing price is not always the accepted price i a short sale. From what you have said so far it seems you have a jack ass for a Realtor! He or she should know that a low price will most likely get a rejection from the financial institution that has the final say in acceptance. Market value is the norm these days since at market value the house is still worth less than the original loan amount. You have to worry about this price also, you may get a 1099 form for the difference of the loan and the sale price, you would be responsible for the capital gains tax (You would however if you owned and lived in the home 2 out of the last five years , be able to take your residence exemption of $250K for indiniduals, and $500K for Couples) Most banks will give you a 1099 but only if the forgive the difference in the loan and sale, that is why it is considered a capital gain to you. But !!! lets say the back decides not to forgive the difference, they have 5 years to go after you for the difference. So this Realtor is not acting on the best sesults for you but for his company. This partly upsets the role of a Transaction Broker! since this is not a fair market practice! Do not be lead down a path where you will be financially responsible for the actions of an ignorant and foulish agent! If this is a Realtor, I would go to the local board of Realtors and I would have them investigate the ethics of this transaction
2 votes Thank Flag Link Sat Aug 21, 2010
That's outright fraud! I'd seek an attorney or you may be trading your home for a 6'X6' townhome courtesy for the state for the next 5-10 years!
Web Reference: http://www.for4closures.com
2 votes Thank Flag Link Sun Aug 15, 2010
The goal when selling short is to match the offer to the lien holder's BPO (that's another can of worms). The BPO is done by another agent who evaluates the current market conditions surrounding that house and gives his or her assessment, or opinion of value.

If your offer and the BPO are within the right tolerance for the lender, you'll get an approval. If it falls THAT far below, as you suggested, you'll be denied. It's simple math.
2 votes Thank Flag Link Wed Aug 11, 2010
Dear AZGirl,

Thanks for bringing this to the forum. At a recent event hosted by Bank of America, this type of sales strategy was discussed. In the industry it is often refereed to as a straw sale and highly frowned upon by the banking industry. I'd report the agent to the Arizona Department of Real Estate and have them determine if he/she is violating the conditions of their license and endangering clients.

It is important that we all work together to remove people who do not operate with integrity.
2 votes Thank Flag Link Sun Aug 8, 2010
The listing price of a short sale should reflect market value. The problem is that market value will end up being in the eye of 4 or 5 Broker Price Opinions requested by the bank, plus what a buyer's appraisal says. The shorter the sale price the more likely the bank's Price opinions will be above the listed price. Buyers walk if the short sale price is much lower than the bank's counter based on Price Opinions.As for your investor group buying for cash, their acceptance will still be based on how short of market the bank is willing to let your property go for.Is this legal or ethical? And if you want to stay as long as possible and are not on the foreclosure precipice, better you price at or near market value. Then, if the house sits and sits, you and your agent should begin to reduce list price. At the point you begin to get showings is the new market price and your agent and negotiator can use the traffic count from the Supra Lock Key records to prove it. I have a short sale pending @ $149,9K....last sale in the subdivision was $151 K....we have a chance of closing. Another short sale @ $145K was Broker Price Opinioned at 190K...buyer walked!!!!!!!!!!!!
2 votes Thank Flag Link Sat Aug 7, 2010
You must list it at market value to begin the process. If after some time you don't have any offers then you reduce the price. Of course if you are in a foreclosure situation it is always nice to have an investor bid on it in the beginning to see where the bank stands and to prolong the foreclosure, but most likely they will go with market value or slightly below market value based on a cash offer. You must play your cards right in this situation because each short sale is different and each will have a different outcome.

You also must consult an attorney and an accountant regarding the implications you may have prior to listing your home. Make sure a short sale is the right choice for your situation. Feel free to email me your contact information and I can send you a list of three attorneys and accountants.
2 votes Thank Flag Link Sat Aug 7, 2010
I'd stay away from this Realtor. The banks aren't fooled by this practice.
1 vote Thank Flag Link Sun Feb 6, 2011
List it market value. The bank will do their appraisal (BPO), as part of the short sale approval process, and recent sold comparables will be used to determine current value.

As far as the agent having "their" investor buy it--this is definitely a red flag, and I would suggest you find another agent to represent your best interests, not "theirs".

Best wishes to you.
1 vote Thank Flag Link Mon Oct 4, 2010
List at market, the bank will do a BPO and appraisal to find out what its really worth. Get the bank as much as you can to show
1 vote Thank Flag Link Mon Sep 27, 2010
Please read up on Short Sale's Next Biggest Scam: Short Sale Flopping.

http://articles.latimes.com/2010/sep/05/business/la-fi-lew-2…

http://www.businessweek.com/news/2010-06-10/banks-face-short…

and...list elsewhere. By selling to his/her investor, the listing is really not on the open market and is defrauding the lender.
1 vote Thank Flag Link Sat Sep 25, 2010
All,
Thanks again for the advice. My new agent listed at 139K, and received offers of 139K and 147K. I accepted the 147K and am waiting to engage with negotiations with the lender.

Azgirl2000
1 vote Thank Flag Link Fri Aug 27, 2010
Hi again AZgirl. Here's an article from our REALTOR Magazine about an agent that was found liable for short sale fraud:

Agent Found Liable for Short Sale Fraud

The U.S. Bankruptcy Court for the District of Utah determined that a real estate agent and investment group misled a client in a short sale transaction.
By Robert Freedman | September 2010

In re Fabbro
U.S. Bankruptcy Court for the District of Utah


A Utah real estate agent was found guilty of fraud for steering his client into a short sale with a phony buyer and then later flipping the property for profit.

The client had a $380,000 mortgage on her house and listed it for sale but couldn’t find a buyer at her $399,000 asking price. Her tax adviser referred her to a real estate agent with short-sale experience, who brought in an investment group. The agent didn’t disclose that he was also a member of the group.

A representative of the investment group met with the client and obtained her signature to list the property for $344,900. The wife of that representative—without disclosing her relationship with him or her involvement with the group—came forward with an offer to buy the property for the asking price, even though she lacked the financial means to actually buy it.

The investor group presented the $344,900 offer to the lender, which countered that it wouldn’t take less than $352,000, the appraised value. The representative’s wife upped the offer to that amount; the lender agreed. The real estate agent subsequently changed the listing status from contract pending to active to attract a buyer.

Eventually the property attracted an offer for $441,111. The investors used $352,000 of the proceeds to complete the short sale and shared the remaining profit.

The client then filed for bankruptcy. As part of the bankruptcy process, the Chapter 7 trustee filed an action against the investors and sought to void their purchase. The agent and the representative were accused of fraud, breach of contract, and other violations.

The U.S. Bankruptcy Court for the District of Utah found, among other things, that the agent and the investor representative misled the client in multiple ways. The court ruled that the bankruptcy trustee could void the investment group’s purchase, and that the agent and investor representative may be liable for punitive damages. The court scheduled a hearing to receive further evidence.

GOOD LUCK!!

Scott Miller, Realty Associates, Boca Raton, FL
1 vote Thank Flag Link Thu Aug 26, 2010
It is extremely difficult to sell a short sale to most investors as they are not going to live in home but sell it as quickly as possible for a profit. The lower they offer the more the profit. This will not work unless the offer meets the investors(short sale lender) guidelines as I mentioned before. I do not negotiate short sales for agents who have investors as I have found it is a waste of everyone's time unless I know the investor is willing to offer an amount greater then the 80 or 88% threshold(see prior answer below). The bottom line is you can get a great deal on a short sale but the reality is it needs to meet these guidelines based on if it is a conventional, FHA or VA short sale loan! 80% is better then paying market value andere is no way a lender will approve a short sale on less then that-trust me!
1 vote Thank Flag Link Thu Aug 26, 2010
Az girl followed the consensus advice and listed with another agent. She wrote that the opening list price is $139K which is about 11% over the previously estimated value. This is more likely to allow her stay in the home longer, as it will likely get fewer showings than a market or below market price.

I believe listing within range 10% above to 10% below the current approximate value is within an acceptable range.
Who knows, if she keeps her house immaculately clean and presentable, it might fetch such a good price.
1 vote Thank Flag Link Wed Aug 25, 2010
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
I have a seen a number of answers stating that you will receive a 1099. This is not true as if this is your principal residence and meets the guidelines set by the federal government you will not have tp pay taxes on the deficiency. This is from the result of the 2007 Act passed by congress called the National Debt Relief Act. Here is the link to IRS-http://www.irs.gov/individuals/article/0,,id=179414,00.html to cut and paste explaining this. Don't worry about a 1099! Also lender may want P note or cash contribution but it is highly unlikely for a 1st trust lender to ask. Mainly 2nd trust lenders are now asking for that fyi. Either way I would negotiate zero for either one as foreclosure is alot less favorable to either 1st or 2nd trust lender then a short sale!
1 vote Thank Flag Link Tue Aug 24, 2010
The SS lender will follow FNMA or FHA/VA guidelines in accepting the offer based on what the investor(if there is one who owns the note) will take. Investors own more then 98% of US loans...They are bought in groups often as mortgage backed securities.....A FNMA backed loan will need to have an offer atleast 80%($100K) of the BPO done. An FHA/VA backed loan will need 88%($110K). These figures are based on the market value being $125K... The $75K offer has no chance at all gaining approval!!! The investor is hoping they(SS lender) will take a low offer in order to flip and make money but their offer is way too low based on what you are saying. Keep in mind the SS lender is just a mediator and accepts an offer based on the guidelines mentioned above however it is up to the investor who owns the note to ultimately decide if they are willing to approve the sale and take less then what is owed! My advice is get a better contract or a new agent who knows short sales......
1 vote Thank Flag Link Mon Aug 23, 2010
READ THIS CLEARLY: IF YOUR AGENT HAS A POCKET BUYER THAT WANTS TO MAKE A CASH OFFER YOUR AGENT IS A CROOK AND YOU WILL GET A FORECLOSURE AND GET SCREWED

YOU WILL LOSE YOUR HOUSE TO FORECLOSURE IF THE SALE PRICE OF YOUR HOUSE IS NOT WITHIN 95% OF THE APPRAISED VALUE OF YOUR HOUSE.

WE HAVE 50 SHORT SALES. I don't always talk in caps. but people who think a lender will avoid foreclosing on you for the "privilege" of taking $50K less then they would if they just booted you and sold it for fair market value is smoking crack.

If you want it to take awhile offer them fair market value and then it WILL take a while because they will take you seriously and not THROW OUT your offer and just FORECLOSE on you.
1 vote Thank Flag Link Wed Aug 18, 2010
ALL: thank you for all the answers and information! Ihave signed with another agent at a list price of $139K.
Very good advice!
1 vote Thank Flag Link Wed Aug 18, 2010
I just have to reiterate the need to report this agent to the Arizona Department of Real Estate. Only though action can we remove unethical practitioners from our industry.
1 vote Thank Flag Link Wed Aug 18, 2010
Hi Azgirl. I'm with the Urban Team below. Hmmm, it takes about 3 seconds to figure out that this seems highly unethical, maybe borderline fraud. Since when can an 'investor group' your agent works with cooperate in setting the price on YOUR home, which you say that they say is 40% under market?!!

This is pure collusion, very uncool, stay away or you'll be implicated....the higher the property sells for, the better for you. Less deficiency judgement to deal with and have to negotiate-down in the end.

FIND ANOTHER AGENT!!

GOOD LUCK!

Scott Miller, Realty Associates, Boca Raton, FL
1 vote Thank Flag Link Mon Aug 9, 2010
Hello AZ and thanks for your post.

Given that you've already voiced concerns about this selling "scheme", my suggestion will resemble Doug's (below) that you find an agent that puts YOUR interests first (not the interests of other clients). Short sales are tricky simply because it requires negotiating with the bank to accept a "loss" on the home at sale. Listing the home for far below the market price needlessly complicates the sale, making it more likely that the bank will not agree to the sales transaction especially when the sales price is compared with the bank's own appraisal or BPO for value.

Anyone who would jeopardize your short sale or suggest selling your home in a manner that makes you feel less than confident is not the agent for you!

Work with a trusted agent like Doug below. I wish you very good luck!!

Sincerely,
Grace Morioka, SRES
Area Pro Realty
San Jose, CA
1 vote Thank Flag Link Sat Aug 7, 2010
Your question was asked on Trulia some time ago, have you been able to resolve your situation and meet your goals?

Would you like professional representation in the Arizona Real Estate market?

How could I help you?

Doug McVinua

HomeSmart Real Estate

Arizona Homes for Sale by a Guy from Iowa

http://www.McVinua.com

Doug@McVinua.com

Direct 602-751-7577
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Mon Jan 3, 2011
Hello
I agree with several other of the agents. I would interview other agents. The house should be listed at market value or just below. The bank will have a bpo done so they will know the value. Also get advice from a cpa for your tax concerns. Thanks
0 votes Thank Flag Link Fri Oct 8, 2010
Your agent must represent your interest. It just sounds like he is trying to take advantage of your situation. And he is walking a very thin line. I would interview several other agents and go with someone that you feel comfortable wth.

Leonid Vekslin
Golden Real Estate & Investments
702-538-6253
leovek@aol.com
0 votes Thank Flag Link Thu Oct 7, 2010
You hit on some important points - one, what is your potential tax implication? A CPA can only answer that for you - not a realtor. Second, if the agent has a buyer lined up to give you a low-ball cash offer - run! The agent has a fiduciary responsibility to his client (which should be you), to obtain the highest and best offer. In your scenario that responsibility seems to get confused.

I've seen these deals before and when the investor backs out because the banks BPO's are for a much higher value, you are the one who will loose the home potentially to foreclosure as the clock runs out on finding a new buyer to sell the home short to at a fairer market value that the bank will accept.

Sandy Farmer
Realtor, CSSN
John Hall & Associates
sandy@land-homes.com
Web Reference: http://homesales411.com
0 votes Thank Flag Link Thu Oct 7, 2010
I agree with previous postings, and will add a few thoughts...

You must have a legitimate hardship-loss of job, divorce, death of spouse to be eligible for the bank to do you the favor of a short sale. There are two documents you need to have the bank agree to. First is the release that says the bank allows you to sell the house for less than what is owed and 2nd, the mortgage satisfaction letter. Bank's might say sure, you can sell but you still owe money for the deficiency. If AZ is a recourse state, they can send collection agencies after you! The satisfaction is where the bank pushes back and if you have any assets they want you to bring money to the table.

FHA is wise to tricks like selling the house below market and renting it back from the buyer to stall foreclosure process. Another example of what not to do, sell your house to a brother in law for less than what is owed and asking the bank to write-off the shortage. As mentioned, this must be an arms length transaction and if not you could be party to fraud.

Call the bank and tell them you cannot afford the house and why. Saying you are ticked that the house isn't worth what you paid and don't want it anymore isn't a hardship. They probably have a short sale package they will send you and instructions for you to process the application.

You need an attorney familiar with short sales and bankruptcy law in your area.

Dual agency on short sales might be a problem with HUD. Don't list your house with an agent only because he might have an investor that has expressed interest in homes such as yours. If that investor truly is interested, he will buy it with that same agent if your house is listed by someone else. Interview several agents, ask each for a distressed BPO analysis, not a normal CMA to determine value.
0 votes Thank Flag Link Thu Oct 7, 2010
If you can do the HAFA program, that will be best for your tax implications and not having to give the bank anything more ($).
You can even walk away with $3,000
To find out if you can do a HAFA, check out this blog article attached.

Don't wait too long to take action. Banks are more tight on postponing auction dates. The Short Sale will take at least 90 days in most cases, even if you have an offer to purchase the house.
0 votes Thank Flag Link Wed Oct 6, 2010
Is the market value of $125k from an appraisal, or comparables in the neighborhood? The best way to get a good feel for the market price is a combination (preferably an appraisal). If the agent has a good reputation in your community and can provide recommendations, that Agent should be giving you professional opinion as to the pricing. If you're going to hire a professional- you must trust their judgement in their field of expertise. My opinion ? Find out what information they are using to arrive at the list price of $75 . If it's comps in the neighborhood... you should trust and go with them. A good Agent will have buyers or investors to bring to your home.
Web Reference: http://www.jean-beck.com
0 votes Thank Flag Link Wed Oct 6, 2010
Your mortgage company will do a BPO to determine Fair Market Value for your home. I usually price my Short Sale listings a little higher then what the comparable foreclosures in the neighborhood have sold for, but less than what the comparable owner-occupied homes have sold for.
In defense of the other agent to a bit, once I know of a home that may become available in a short sale, I am already contacting my resources trying to find a buyer. With a Short Sale, time is of the essence and as a listing agent I want as many offers as possible.
Regardless if the cash buyers submit an offer or not, the bank has the ultimate decision on whether to accept the offer or not. If its too low the bank will counter back.
As far as looking for another agent, I would look for an agent that holds the CDPE designation, they will likely have more experience than a regular agent in regards to a short sale. Believe me you want the agent with the best experience to be handling this situation for you. Short sales can be difficult and some agents do not know the process or timelines that need to be achieved in order for the sale to be successful.
I hope this helped.
0 votes Thank Flag Link Wed Oct 6, 2010
The listing price isn't necessarily the price that the bank will accept anyway so pricing it way below market might actually be a moot point. Believe me when I say that banks are doing their due diligence too -- they're not going to just let some investor buy one property for 2 cents just because it's an all cash deal. They send out agents to do Broker Price Opinions so they truly have an idea of what the market is dictating for your property.

I say work with the agent you trust and will work for your best interests regardless. Best of luck!
0 votes Thank Flag Link Mon Oct 4, 2010
you should market the property at around market value. Here in the Phoenix area market values are anyway determined by Short Sales and Lender Owned properties. Just go by what the floorplan sold for in the past 3 to 6 months. Make sure you make adjustments for condition etc. You can go a little below market value to attract a buyer but not too low because you don't want to loose the buyer when the lender counters at market value. Some agents offer properties at way below market value in order to attract an offer quickly and with that get a foreclosure auction postponed. The person who makes the offer is in for a disappointment.
Dagmar Mouritsen
(602) 489-4456
0 votes Thank Flag Link Sat Oct 2, 2010
Hello, the main point to pricing a short sale is to know how much you owe on your mortgage versus the market value price. If you can meet somewhere in the middle of the two then the asking price will make sense to buyers and a decent offer price will come in as well to suit the bank.

If you owe a little more than $75, say $100K then $75K is not such a bad offer. Not to mention, the buyers must be aware that they may have to counter offer and if they qualify or have the funds if the bank comes back at a higher offer.

You also need to know if the agent you're using has been successful selling short sales because there's a lot more involved than the standard sale. Walk into an office and ask the broker for a qualified agent.
Web Reference: http://www.RhondaHolt.com
0 votes Thank Flag Link Sat Oct 2, 2010
If your agent is not doing his/her best to accommodate your best interests, they are not doing their fiduciary responsibility. I would look for another agent without personal interests in your property.
0 votes Thank Flag Link Sat Oct 2, 2010
List your home with the most experienced short sale Realtor within your area. The strategy proposed is not a bad one. Please remember that it's not who sells the home....it's which agent that has the ability to propertly and effectively negotiate your short sale transaction, get approval and find a buyer who is willing and committed to your property in order to close. Check out how may short sales your agents have taken short sales vs. how many they have closed? Also, ask about who negotiates the short sales on your behalf? Are they certified? What's their closing ratio? Surely, no one has a 100% closing ratio when it comes to short sales. If they make the claim,,,,,RUN! And if they ask you to sign the deed over, RUN QUICKLY!

As complicated as this industry is becoming, you certainly cannot rest with mediocre abilities.

Do your own due diligence.

Best,

Drew Foma'i
First Team Estates - Newport Beach, CA
(949) 464-7634
Tweet me @RealDealwithDru
Follow me on Facebook @1000by2013
0 votes Thank Flag Link Sat Oct 2, 2010
Hello Azgirl2000-

The bank will dictate the price- the buyers can offer what they want but the end result is "what will the bank take"
You do not have to accept the first offer- maybe you want to give a deadline of accepting offers.
Most important- if you do not feel this Agent is not on the "up and up" go with your gut!! Do you have a CPA you can talk to to find out what the tax implications will be? you may want to contact them also.

Best of Luck!
0 votes Thank Flag Link Sat Oct 2, 2010
I believe banks are increasingly looking for market value as they have gotten their processing more under control. This doesn't sound right to me.

Best,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Sat Oct 2, 2010
There is a lot of this going on, and it is the best way to ruin something that could be a good thing for others. Agents need to realize that once the sale is closed, it's not over in terms of being able to be investigated. Some banks in addition to loss mitigation have fraud investigation departments. I mean a specific short sale fraud department.
0 votes Thank Flag Link Fri Oct 1, 2010
I agree with all that is posted. BUT remember fraud is fraud if you call it flippipping or a below market price. The lein can rove you and the buyer-realtor lowered the price intentally you go to jail do not pass go. Oh also get to keep the debt on your property. yhat is federal law under the new bank regs. No more cheap houses for uncle tom or my realtor. Watch out some banks are helping the feds catch illegal flippers.
0 votes Thank Flag Link Fri Oct 1, 2010
Find another agent!!! Your lender will base the approved sale price on a percentage of the BPO depending on if its a conventional or FHA/VA loan. Conventional loans have a lower percentage threshold of the BPO. An investor who tries to buy a short sale for 50 cents on the dollar will never do so as lender would rather foreclose then lose that much money. This will waste your time and credit points if you are already behind in payments as approval process could take a couple months then be denied.You will then have to start over with a new solid contract. I would suggest only taking an offer that is atleast 88% of the fair market value which your realtor/agent can determine! Best of luck and let me know if you need assistance negotiating your short sale with the bank at no charge to you or your agent.
0 votes Thank Flag Link Tue Sep 28, 2010
List your house with a Realtor at fair market value 125,000.00 based on a BPO the Realtor will arrange. Real comps within a mile of your house. An Note Investor will buy the note from the Bank at a discount, the Bank does not want a toxic asset on their books. The investor becomes the Bank 1. You close in potentialy 30 days or less 2. The realtor gets full commission 3.The investor will not issue a defe. judgement or report any neg. credit.on you. 4. You can negotiate with the investor on staying in the house or move. There are more options for you now. The A- C Transaction happens much quicker because the investor is the Bank an can deal with you direct it is a Win for you. This does not work with Bank of America Chase Citi Wells Fargo typically. The catch is finding a Realtor who has educated themselves on what is going on Today with Short sales. Most do not understand the Investor Buying The Notes from the Bank. find one that does and this will work great for you. Good Luck
0 votes Thank Flag Link Tue Sep 28, 2010
:) This is funny to me, and I am sure all the other agents reading this. I want to apologize not everyone in our industry is honest, and unfortunately your agent seems to be shady. The only one who looses here is you. You see if you take lower for your house, that is a bigger loss the bank will right off- on your account. They can come after you for the money they "losed." I would recommend getting a second and third opinion on your house and the situation you are in. I wish you the best of luck, obviously you are going through a rough time, I am sorry someone in my industry is trying to take advantage of your misfortune.
0 votes Thank Flag Link Tue Sep 28, 2010
In my opinion, you should always list at market value. Short sale does not mean under market value. It simply means you owe more than the current market value. That should be the only reason you would pursue a short sale. I would certainly find a Realtor that is willing to list at market value. Good luck!
0 votes Thank Flag Link Mon Sep 27, 2010
It is not that simple. You must have a hardship to qualify for a short sale as a job loss or something similar. The last one I did, the seller was required to list for an amount that would just get them out even for a period of 30 days. During that time the BPO's were done etc.
The deal you are talking about may be fine but it does not sound like an arm's length transaction and your mortgage company must approve it too. Maybe talk to another agent and see what the value is. Get several opinions and talk to your accountant.
If market value is $125K your mortgage company probably won't approve $75K. We had a contract for 132500 and the BPO came back at 135000 and we had to up the price to the buyer we had or get another buyer.
Web Reference: http://debbiescrimshire.com
0 votes Thank Flag Link Mon Sep 27, 2010
As several others have expressed, you need to be cautious with the investor that is purchasing the property. Do some research on their track record before proceeding with the deal. Find out some specifics, including whether or not they will actually close on a date certain. In many cases, investors are claiming to be cash buyers whenin actuality they are merely putting an option on the property and hoping to make money reselling it at a higher price to another buyer.

Second, protect yourself from exposure to deficiency judgements. Perhaps you can accept the cash offer only if the bank will consider waiving the deficiency. This will create a tax issue for you - the waived deficiency becomes ordinary income on which income tax is owed. Talk with a CPA - there are ways to avois this as well.

If the deal seems "shady" or the bank will not waive the deficiency, then I would recommend using another Realtor and gettignthe highest price that you can for the property - that is in your best interest.

Good luck!!
0 votes Thank Flag Link Mon Sep 27, 2010
Like others have mentioned, I would make sure to hire a professional Realtor that will have your best interests in mind. I would be very weary involving a real estate agent, who may not be a Realtor, that is in cahoots with a RE Investor to buy your home at below market value. They may be *potentially* trying to fraud the bank of the true value of the home in order to get a deal. I can’t say for sure that it’s fraud, but I would not jump into this type of situation with both feet without doing some serious due diligence about the agent and the investor team they are bringing in.
0 votes Thank Flag Link Mon Sep 27, 2010
Lately banks are requiring the house to be on the market for a specific period at a list price that reflects the amount owned on the mortgage even though it may be way above what you can get for it..The only way to combat this with the bank is to have your Realtor do a broker's price opinion to establish the market value..
Web Reference: http://www.asasplaces.com
0 votes Thank Flag Link Mon Sep 27, 2010
Sounds like a very big scam to me to make money for your realtor. Have you checked out the realtor?
0 votes Thank Flag Link Sun Sep 26, 2010
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