You Are Now The Listing Agent For A HAFA Related Short Sale And The Lender Has Indicated A Target Price Of $200,000. So At What Price Are You Going To List The Property?

Recently a number of posts have been published about agents potentially being sued as a result of "mishandling a short sale or foreclosure."  Personally I think HAFA makes this possibility even more real.

Please do not think I am against HAFA.  I am not.  I think it is the best program that the government has come up with and the only program that I think will bring some much needed structure to the short sale process.  Only hope Freddie and Fanny come out quickly with their own HAFA-like program.

Ok, so you are now the listing agent for a HAFA related short sale and the lender has indicated a target price of $200,000.

•·        Do you automatically list the property at the lender's indicated price of $200,000?

•·        Wanting to come as close to $200,000 as possible to make the lender's final approval as easy as possible, do you list it at $220,000 with the expectation that you can negotiate a final price around $200,000?

•·        What do you do if, knowing your local market as well as you do, you know that the lender's target price is way off and that the max market value of the property is $175,000?

•·        Is the lender's target price a material fact and hence do you have to reveal it to buyers and their agents?

•·        What steps do you take if after two to three weeks of being listed at/or near the lender's target price, you have had no showings?

•·        If you do have to reduce the listing price, does this require the approval of the lender or is this strictly the homeowner's decision.

Believe me, we (my wife and I work together,) have no clear answers to any of the above.  I am hoping others smarting than us, can shed some light on the answers.

Being in a quandary about the above, I do know of several steps we will be taking with any HAFA related short sale in the future.

•·        We are willing to take a bit less with our net commission as a result of paying for our own appraisal of market value by a professional appraiser whom we know and trust.  This would become critical, if in our opinion the lender's target price is way off or we are getting no traffic. 

•·        I am not certain of its value, but we will have the homeowner sign a "hold harmless" agreement.

•·         A short sale is much more than just a real estate transaction.  There are legal issues to consider and also tax.  We will not take a short sale unless from the very beginning the homeowner agrees to have an experienced short sale attorney on the team.  It will be the attorney who does the negotiations with the bank, not us.  We are not trained attorneys and we will only be asking for trouble if we try to do their job and it is there job with legal issues. 

•·        We will have in place a marketing plan that the homeowner will sign off on as to how long we wait before dropping the price and by how much, if we are not getting traffic.

As a result of the steps we will be taking we probably will lose some short sale listings to other agents, but we will have the peace of mind of knowing with the ones we take, that we have protected both ourselves and our homeowner as best we can.