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.
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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No, I did not think a list price was a "magical number". Wow.
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 to you.
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.
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?)
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.