This week we closed on Rick and Cathy’s Clinton Township home. Rick was a builder before he had to go on disability because of a variety of health problems. The timing couldn’t have been worse for them because the house was left with multiple projects at varying stages of incompletion. This of course made it very difficult to find a buyer, but when we did, this $145,000 home sold for $130,000, but most importantly, the two mortgage holders wrote off over $110,000 in debt (it was very over-leveraged) and put in writing the loans were paid in full (“settled”). Big discounts do happen when they are justified.
That story is a good lead-in to this week’s tip. Once you’ve decided to take on a new client who needs a short sale, one of the most important steps in the entire process is pricing the property “right”. This is where Realtors® drop the ball most often. Why? I have two theories, and it’s probably a combination of both.
One: Realtors® are programmed to get as much for a house as possible – to serve their client. Let’s think about that. Who is the client, the lender or the homeowner? It’s the homeowner – and how much will the homeowner make on a short sale? Zero, right? Getting a higher sales price does not benefit the homeowner (your client).
Two: Realtors® look at the debt on the house and think “the bank needs as close to that as possible”. Nothing is farther from the truth. The lender is looking at what the property is worth, not what the debt is (there are a few exceptions to this rule).
So what’s the goal of “pricing it right?” – it’s to get an offer as soon as possible. The longer it takes, the more valuable market time you lose. Do NOT worry about the lender turning down the offer. You have little control over that. Focus on what you can control, which is pricing and marketing so you can get an offer in fast.
I don’t know how to stress this enough, so I’ll just be blunt: You are hurting your clients by pricing their house too high. Price it to generate an offer within 3 weeks – your job is to get an offer, any offer, as soon as possible.
Because of my website, I frequently get calls from families facing foreclosure throughout the state of Michigan. I probably get 1-2 per week from the Jackson area. I’d love to work with those that want to sell their house, but can’t right now because I need help.
Do you know any Realtors® in the Jackson area that would be interested in working with my team? I’m looking for one or two key agents to pass these leads to. They can be seasoned or rookies – I just need someone with a lot of energy and a ton of motivation. They’ll learn quite a bit and together, we’ll get a lot of houses sold.
Now that you’ve decided on the price, it’s time to “list it right”. That’s the subject of the next blog