How to Price a Short Sale to Sell

Reblogger Melissa Zavala
Real Estate Broker/Owner with Broadpoint Properties Cal BRE #01324959

My colleague, Broker Bryant Tutas of Central Florida, writes just about the best explanation I've ever seen on how to price a short sale so that two important things are accomplished: 1) an offer is received, and 2) the offer is accepted by the bank. If you work the short sale market and do not have time to read this post now, bookmark it for future reference. As a former English teacher, Bryant's post gets an A+ from me!

Original content by Bryant Tutas 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.

The BIO for Bryant Tutas

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Rainmaker
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Kent Dills
Broker, Dills Real Estate - Bellingham, WA
Real Estate 817-495-8028, Bellingham, Washington

Good choice for a re-blog Melissa.  BB absolutely knows how to price a short sale and ALL AGENTS/BROKERS WHO DO BPOS should read this blog post - as most of them don't adjust short sales when doing comps.  If they did the adjustment for the "negative market condition", then short sales wouldn't be dragging down market prices as much as most people think they are. 

Jun 22, 2010 01:51 AM #1
Rainer
5,822
Anita Derling
WEICHERT REALTORS, Howell, NJ - Jackson Township, NJ

As a Realtor in New Jersey who has done quite a few short sales, you are right on. Right now, short sales have become a bad word and unless the price is attractive buyers and agents don't want to waste time with interest so attractive and future rates very uncertain.  Price is key....prenegotiation is key as well. Get their support, talk to our negotiators supervisor and need be their supervisor. Be agressive with the bank if possible. Your client's future credit depends on it.  Anita Derling Weichert Realtors

 

Jun 22, 2010 02:19 AM #2
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Melissa - appreciate the reblog on this. I missed it the first time around and it's pretty sage advice.

Unfortunately there seem to be many short sale listing agents who would be better served, and would better serve their clients, by reading this.

Jeff

Jun 22, 2010 03:17 AM #3
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Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

Thanks for reblogging this, I too missed it 1st time around.  It's good to get all the insight we can with more and more properties coming on the market as short sales every day.

Jun 22, 2010 03:48 AM #4
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Melissa Zavala

Broker, Escondido Real Estate, San Diego County
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