We have a client who was interested in buying a home that had become a short sale. The price of the home was $485,000 so she offered $425,000 - they rejected her bid and we moved on. About a month ago, she called up saying that the home had dropped to $385,000 and wanted me to see if we could see it - it was under contract already but I told her it would not settle. And it did not...why? It was not seasoned on the market the right way.
This is a common mistake for those who do not know the best way to handle a short sale. By placing the home at a low price, you do generate offers and get something quick. But in this last instance, the home appraised for $470,000 so the bank said no way. The home was priced so ridiculously low that the bank figured they could reject this short sale and still have almost $100,000 to play with. The bank wants to see that an effort has been made to generate the highest possible selling price - so the huge drop in price and then an appraisal that comes back $90,000 high does not satisfy the banks requirements.
What do you do in this situation - well we have a plan and a formula for that. The first thing you hav
e to determine is when is the drop dead date. This is when the foreclosure filing will take place. You also have to find out what homes are selling for in the area - not listing for - selling for. After you adjust for the condition of the home, you should have an established price and a set rule for reductions in the list price. By "Seasoning" the property, the bank or investor will see that every effort to maximize the property's selling price was made and that this may be their best offer.
Do you need help deciding if a short sale is what you need to do? We are Short Sale experts in Northern Virginia and now hold the CDPE designation. What is that you ask? Visit our website to find out more.
Jimmy Mulhern
http://www.HomesInVirginia.net
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