“This House Has Not Been Stigmatized As a Foreclosure” (Yet):

Real Estate Agent with Home Expo Gallery, LLC (Keller Williams)

In the past 6 months, I have found more and more cases where the BPOs and Appraisals that Loss Mitigation Departments are receiving are higher than foreclosures in the same area - and even in the same subdivision.

I have a client who is working on a Short Sale with one of the Big Banks.  The bank sent me an appraisal on the property, after I submitted the one and only offer I have received for this property in six months.  The negotiator came back and countered the offer asking for $35,000 more than the buyer was willing to pay.  Not surprisingly, the buyer dropped his offer and I was at square one again.

I contacted the negotiator and asked her how it was possible to have an appraisal $35,000 higher when her own company has a foreclosure property under contract in the same subdivision for $35,000 less than the appraisal claims this house is worth.  She stated that the Appraisal showed a higher value because the house had not been "stigmatized" as a foreclosure yet, and the tax records show that the foreclosure is a few square feet larger than the Short Sale.  The loss mitigator stated that they would not review any offer below the appraisal's number, and I needed to increase the listing price to match it.

Two months passed, and a new negotiator has been assigned to the file.  I shared the same information adding that yet another house foreclosed by the same bank has already closed, and both the foreclosures are less than the $35,000 additional that the bank is asking any buyer I receive to offer for a short sale on my client's house.

In the Real Estate market we are enduring in Georgia, it is like pulling teeth trying to keep a buyer happy during a transaction that involves a short sale.  It is even more frustrating when you are competing with foreclosures and a 6 month long process to close.  I cannot count the number of times I get a call from a buyer's agent asking to see one of my properties now, and when they find out it is a Short Sale, they do not bring their buyers.  They just skip those houses.

So where is the real stigma?

Comments (3)

Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

One of my favorite snippets, heard in the very first short sale training I went to was "The only thing consistent about short sales is that they're inconsistent."

I just successfully made a case on valuation and got a bank to sell for less than appraisal. Keep trying! Good luck to you.

Jun 15, 2010 06:10 AM
Jenny Hellman
RE/Max Results - Floyds Knobs, IN

Good luck on your sale. I have only worked one short sale and it was on the buyers side...it took from April to October just to get a response back from the offer! Then once we negotiated a price it took till Mid-December to close!  Luckily I had a patient buyer!

Jun 15, 2010 06:15 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Once foreclosure becomes routine in an area, the matter of stigmatizing by foreclosure label ceased to be.

The loss mitigation clerk is stigmatized by prejudice and should be fired for incompetence.

Jun 15, 2010 11:26 PM