The New Wild West of Real Estate...Negotiating a Short Sale ( Part 4) Setting the Right Price!

By
Real Estate Broker/Owner with Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate

*This is part 4 of a 6 Part Series. Click here to read (Part 1, Part 2, and Part 3)

cowboy bootsSometimes, even taking preventative measures does not preclude situations which make it necessary to sell a home through a Short Sale.  Short Sales are an option to consider if your home will probably NOT sell for the Amount You OWE on the Loan after you have paid all the costs associated with selling your home. 

A Short Sale is a negotiated Solution which requires patience and persistence.  It's not a simple negotiation.  It will require negotiating with a potential buyer, jumping through the hurdles to get an acceptable offer to all parties AND THEN Negotiating with the bank & perhaps their subsidiaries including the Investor who may suddenly seem to appear out of "nowhere" with a monetary interest in your property. 

The Investor is your Ultimate Money Man & makes the final decision in most cases. You may or may not deal with him/her directly in the process but be assured that their influence is substantial. 

While it is true that the bank does not really want your home back...they are bankers not real estate agents...they DO want as much money as they can possibly get for the loan.  After all...you did agree to pay them the amount you signed for. 

As you can determine from the description of the amount of work required to successfully complete transactions of this nature, it is probably NOT the best strategy or timing to try to Negotiate the Commission downwards with your real estate agent.  They will be doing a tremendous amount of work for which they risk not being paid.  If your agent is successful, the bank may insist they reduce their commission.  It's prudent to let the banker be the bad guy.  You need your real estate agent firmly in your corner. 

Now, in situations similar to what many residents of the State of Michigan have faced recently, there are a number of neighborhoods for which the Value of the homes have dropped considerably.  First of all:  KNOW YOUR CURRENT VALUE.  It is wise to invest in an appraisal or accurately prepared Comparative Market Analysis. If you would like a referral to an honest, competent appraiser, you can contact our office.  Our team at Audu Real Estate can also provide a thoroughly researched Comparative Market Analysis. 

This is NOT the time for games.  In-fact, if you choose to utilize a Comparative Market Analysis, ask the Realtor ® to create the analysis using ONLY Sold Comparables and Expireds.  This will give you the most realistic picture of what the market in your area is currently doing.  The fact is that many homes currently on the market will NOT sell, so why use a Non Starter to determine how to price your home.  Focus on the Success Stories...the homes that have SOLD to increase your chances of Success!

Having arrived at a price that will SELL your home, Reduce that amount by 1-5%! Then...Put it on the market.  Jump into the game like you really mean it.  Time is not your friend in this process.  As more homes go into Foreclosure, the Value of every home may continue to trend downwards!

Many times homeowners think that because they are not going to be getting much out of their home, they are giving the house away and therefore don't really put effort into presenting  the home properly. There is also a temptation to be uncooperative about showing your home because you are resentful about having to sell it. This is a big Mistake.  We will discuss WHY trying to get the most out of your home even if you won't be taking money out of the deal is to your best advantage in a future blog post.

Click this Link to Continue reading more of the series

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Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Sally,  Thanks for your comment.  This is an increasingly significant part of our market here in Grand Rapids, Michigan.  Unfortunately, many agents don't have any experience or knowledge about how to facilitate this type of transaction.  Doubly unfortunate is that many homeowners are having to navigate this "territory"  during the home selling process.
Jul 14, 2007 03:20 PM #2
Rainmaker
585,915
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Lola - Ditto what Sally said - great job!!!  We seem to be negotiating one or more a month so this is all great info to master. Thanks for such quality info. I've subscribed to your blog so I don't miss your posts anymore :-) 
Jul 14, 2007 03:26 PM #3
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Cyndee, Thanks for reading and commenting.  More and more agents will find that this kind of sale is part of their "portfolio."  Sometimes, the home starts as a normal sale but because it does not sell at the initial listing price becomes a short sale.  Either way, it's important for agents to know how to deal with this type of sale and how to accurately prepare and advise clients.  Thank you for Subscribing to my blog. 
Jul 14, 2007 03:42 PM #4
Rainmaker
278,337
Dom Naidoo
Westside Properties - Venice, CA
Malibu to the Marina Real Estate
great comment Lola! I look forward to your future posts. Helpful information is always appreciated!
Jul 14, 2007 03:59 PM #5
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Thanks for your comment and visit Dominic
Jul 14, 2007 04:00 PM #6
Rainmaker
585,915
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Lola - Congrats on getting it featured! Well deserved and it should help many here.
Jul 15, 2007 03:27 PM #7
Rainmaker
308,091
Dawn Workman
Veracity Real Estate Group, LLC - Camas, WA
Camas Real Estate Expert, MBA, 480-540-8100
Great post!  I have bookmarked it for future use, as it seems the short sale seems to be very popular around me.  
Jul 15, 2007 04:00 PM #8
Ambassador
1,091,182
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
That's right...recognized where due.
Jul 15, 2007 04:01 PM #9
Rainmaker
365,138
Mike Russell
Mike Russell & Associates - Overland Park, KS
Overland Park Kansas Real Estate
Great post, some times the hardest part is getting the seller to admit that they are in danger of losing the home so that we can market the home properly for a short sale.
Jul 15, 2007 04:17 PM #10
Rainmaker
317,125
Joeann Fossland
Advantage Solutions Group - Tucson, AZ
Master Certified Coach to Motivated Agents
This is definitely an area that every real estate agent needs to be knowledgable about. Thanks for sharing this information! Sounds like you are good at it.
Jul 15, 2007 04:17 PM #11
Rainer
32,950
Beth Butler
Beth Butler - Big Mouth Consulting - Miami, FL
Lola - I have bookmarked the series - we are seeing many short sale opportunites in our market.  Thanks for some great stuff.
Jul 15, 2007 04:35 PM #12
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Cyndee,  Thanks for stopping by to read, rate & comment.  I'm sure that was important!

Dawn, I'm glad that you are finding this series beneficial.  It is information which people need to know as they consider if this is an option which they should persue.

Hi Michael, Denial is one of the biggest obstacles that needs to be overcome to move forward.  The home is such a huge emotional investment that is is really hard to face the fact that it may no longer be affordable.  Thanks for adding this insight to this conversation.

Jul 16, 2007 06:02 AM #13
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Sally, Thanks for stopping by to read, rate this post and comment! :)

Joeanne, Thanks for reading and commenting.  Our industry continues to change and requires our expertise as agents to change and expand to meet the demands of new circumstances.  Although short sales and foreclosures are not new, the fact that so many are happening all around the country at this time is unusual.

 

Jul 16, 2007 06:05 AM #14
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Beth, Thanks for reading.  The last two sections of this series will also contain some very helpful information.
Jul 16, 2007 06:06 AM #15
Ambassador
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Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

Beth, this is a great post on a horrible subject.  I do short sales here in California and let me tell you, the all have a story and it is sad.  I just can't wait for the market to get out of this "normal" stage and get back on track.  There are too many people lives being touched by this market.  I have listings now that are short sale and with the market not moving -- the sellers don't know what they are going to do and I've been marketing way hard and nothing. 

I just hope the "biggies" whoever they are hurry it up and come up with something to change the situation and save homes.

I am going to continue reading your postings.

Jul 16, 2007 08:40 AM #16
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Rosemary, Thanks for reading, commenting and Subscribing to my blog.  I am thankful that you are finding this information to be timely and relevant.  It is unfortunate that we are all learning through this devastation about some of the dangers that were inherent in some of the financing and personal decisions that were made in the last several years.
Jul 16, 2007 08:57 AM #17
Ambassador
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Excellent, Lola. This is such a tough area and it seems more homes don't get sold this way successfully but end up as foreclosures (at least in my area). The financial situation is bad enough but dealing with the bank compounds the problems. Some excellent advice for short sale sellers to be aware of.

Jeff

Jul 16, 2007 04:30 PM #18
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Jeff, You're absolutely right.  I will cover the bank issue in Post #6.  In some ways, this may be one of the most unexpected elements of the entire process.  Thanks for stopping by to read and comment.
Jul 17, 2007 03:33 AM #19
Rainmaker
712,521
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Lola,

It appears that I am doing your posts in reverse order. You make a good suggestion for your sellers to obtain an appraisal. This is very important. The appraisal should be by an appraiser on the lender's approved list. An appraisal will be taken much more seriously by the Loss Mitigation Department than the bank's own BPO. If you have an appraisal the bank has to know that it represents the maximum they can expect to receive, out of which they will have to pay their costs of foreclosure, repairs to the property, carrying costs, and marketing expenses. Getting your short sale "approved" by the lender is going to be a whole lot easier with this appraisal in hand.

You have done a tremendous job on this series.

Bill Roberts

Jul 19, 2007 11:54 AM #20
Rainmaker
387,817
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Bill, I deeply appreciate your compliment.  Thank you for not only taking the time to read this series but to add valuable insights through your comments.
Jul 19, 2007 12:22 PM #21
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