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

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?