Pricing the Short Sale Right is Imperative for Success.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

http://centralfloridashortsales.comOne of the keys to having a successful Short Sale is pricing. Now there are folks that say pricing doesn't matter because the seller is receiving no funds anyway. Well....they're worng. Tell that to the seller who has to pay taxes on the "short".

It is imperative that the Short Sale property is priced right. When I say "priced right" I mean as close to market value as possible at a price that will get the property under contract quickly.

One of the problems I see in my market is that many Short Sales are priced way to low. Pricing low may generate a lot of activity but these deals, more than likely, will not close. You have to be able to justify the purchase price to the lender.

Pricing a short sale should be just like pricing any other property. You are looking for a price that will sell the property in a reasonable amount of time and at a reasonable price. The fact that the property is a short sale, requiring 3rd party approval, is nothing more than a negative market condition.

If the true market value of the property, if not a distressed sale, is $200,000, then what you should be doing is taking this figure and making an "adjustment" for the "negative market condition (short sale)". Depending on your market it could be a 10% to 20% downward adjustment. Let's say that your market is showing you that short sales are selling for 20% below a normal sale of similar properties. That means that this property should sell for $160,000. So maybe you price at $165,000 or $169,000 depending on your area's sales price to list price ratio. Reduce as necessary.

Now you have a property that is priced right AND you have a very good chance of getting the Lender to agree to the short sale. The higher the price the easier it is for the Lender to make a decision. What say you?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

 

 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. Jessica Sulliman 05/26/2010 08:30 AM
  2. Fernando Herboso - Broker for Maxus Realty Group 05/26/2010 08:42 AM
  3. Joe Jackson 05/26/2010 02:51 PM
  4. Gabe Sanders 05/26/2010 11:47 PM
  5. Monique Combs 06/14/2010 12:50 AM
  6. Melissa Zavala 06/22/2010 01:41 AM
Topic:
Home Selling
Location:
Florida Osceola County Kissimmee Poinciana
Tags:
pricing
short sale

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Show All Comments
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Reserved for TLW

May 26, 2010 06:47 AM #1
Rainer
36,925
Paul C. Wilkinson
CENTURY 21 Preferred - Menifee, CA
GRI, REALTOR -Menifee, Murrieta, Temecula - (951)

Byant -  I say, "Banks are stupid, but they ain't idiots".  I try to explain this all the time, and then find buyers frustrated with the "process" when the appraisal comes in higher and the lender wants to see more green at closing.  Short Sale listings priced too low will always provide some sort of grief before a transaction is completed.

May 26, 2010 06:56 AM #2
Rainmaker
171,862
Vicki Pedersen
Pedersen Real Estate - Riverside, CA
Providing Exceptional Real Estate Service

Bryant,  I couldn't agree with you more.  I have seen many short sales priced too low for the banks to accept offers in that range and have wondered what are these agents thinking? These agents probablyhave lots of activity, but I can't see that it would be worth to price a short sale too low.     

May 26, 2010 07:06 AM #3
Rainer
142,913
Robert Earl -The Earl of St Pete
St Pete LUXE Living Group - Saint Petersburg, FL
The Earl of St. Pete

Truly a very important step.  Just becasue it is a short sale, the buyers are still wanting to get a good value and they are going to need enough incentive, usually via price, to stick around for the entire process.  Great Posting.

Robert Earl

May 26, 2010 07:07 AM #4
Rainer
230,494
Stephanie Reynolds
Integrity First Financial Group, Inc. - Santee, CA
East County San Diego Homes 619-838-4408

This really is so important. It is frustrating when a property is priced to generate offers, but in reality the price is set way below market comparables. As Paul so eloquently put it, "The banks may be stupid, but they ain't idiots!" I am not sure what they are thinking.....and it is really unfair to all of the parties involved. Unfair to the seller who needs out. Unfair to the bank to play games and unfair to the buyer who "thinks" they have a chance.

May 26, 2010 07:44 AM #5
Ambassador
1,976,308
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Excellent advice Bryant, we list our short sales like any other property . . . The actual value for the neighborhood in today's prices. 

May 26, 2010 08:36 AM #6
Rainmaker
1,004,590
Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida

BB, this is key to our entire viability as associates.  Pricing has to be an area we become experts in.  95% of the time you can walk through a home and know it's market value immediately without further research.  Why would there be any differentiation with "shorclosures" added to the fray?  They are part of the equation within our market realm too.  Reasonable vs. Realistic, what say you?   

May 26, 2010 09:54 AM #7
Ambassador
920,196
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

HA HA...TLW IS ON THE BOOK OR THE FACE AS SHE CALLS IT.

I agree price it right, the BPO will confirm it and you are good.

May 26, 2010 02:34 PM #8
Ambassador
1,229,656
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

A+++++++++ explanation of how to price a short sale. I could not have said it better! This may be my first BB reblog!

May 26, 2010 03:35 PM #9
Ambassador
557,018
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Lol Missy...

I wasn't though. Whilst I bust my ass setting up our new home, Blog Boy, Blogs :)

Ka Ka Head :)

TLW...ROAR!

May 26, 2010 10:46 PM #10
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Well said Bryant and oh so true.  We need a price acceptable to both the buyer, the seller and the lender.  Different circumstances will dictate different prices.

May 26, 2010 11:46 PM #11
Rainmaker
434,738
Dick and Dixie Sells
Sells Real Estate, LLC - Trinity, FL
Realtors, Tampa Bay Florida Homes For Sale

What you are saying is so true. There should be a discount as to the short sale pricing, some but not off the cliff. We now send pricing history in with the contract which gives the banks the understanding that the property was marketed and reduced until offers come in. Good Post.

May 27, 2010 12:41 AM #12
Rainmaker
1,516,122
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

This is just common sense. Price a short sale way under the market you end up wasting your time with an offer that is near "list!"

May 27, 2010 01:10 AM #13
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

BB,

For the very reasons you cite, I price my short sales on the higher side and reduce every 2-3 weeks if we don't have an offer.  Found this makes clear to both the bank and BPO agents that the home did NOT go at a higher price. Perhaps this is one reason we get the shorts closed and other agents don't...

May 27, 2010 02:20 AM #14
Rainmaker
453,651
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Locale has a lot to do with it. Comps are very compelling. I see it in my market all the time.. overpriced and stagnate or underpriced and with multiple offers.

May 28, 2010 10:47 PM #15
Rainmaker
179,177
Ann-Marie Clements
Candidate for an Ed.D. in Educational Leadership - Saint John, NB
Ed.D. candidate, Innovative Proactive Principa

Hi Bryant,  It's always more successful to have the property "priced right" so it's off the market quickly and the potential buyers don't ask the question "Why has that property been on the market for so long?"...  ;>))

May 29, 2010 03:25 AM #16
Rainmaker
596,993
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Bryant -

Seems like some of the bigger lenders have made it clear that market price is what they are after.  That suggests that the days when short sales were often an outrageous steal are indeed over.

May 29, 2010 05:45 AM #17
Rainmaker
123,176
Kent Dills
Broker, Dills Real Estate - Bellingham, WA
Real Estate 817-495-8028, Bellingham, Washington

Agree with you about pricing right as a priority and the pricing methodology you use as well.  

Also agree that short sales are seen as a negative factor and build-in a small 5-10% discount accordingly.  Disagree with the poster who says bigger lenders want full market price.  Happens on occcasion but definitely still an exception from the norm! 

May 29, 2010 09:20 AM #18
Rainmaker
1,048,895
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Excellent job with your pricing explanation BB. This is exactly what I tell the sellers during the interview process.

Jun 23, 2010 12:55 AM #19
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