Short Sale Mastery Series----Proper Pricing Proves Profitable

By
Real Estate Agent with Keller Williams Realty REB.0755718

Short Sale Mastery Series----Proper Pricing Proves Profitable

I have my national CDPE designation and I am a member of the Keller Williams Realty Fairfield County Short Sale Task force.  My goal is to educate my peers and the General Public so that more of these Short Sales are successful and no more homeowners lose their homes to foreclosure.

I have been involved with numerous short sales both on the listing and the buyer sides.  I also see numerous Short Sale listings from my peers that are constantly back on the market.  One of the main problems with the low success rate in Short sales is the Poor Pricing Strategy employed by most Listing Agents.  There is some false idea out there that the property should be priced way below market.  I have also heard that some agents sacrifice the first offer on a property to "get an idea of what the bank will accept"  These strategies are wasting time and are also contributing to the low short Sale Success Rate.  What can we do to get these Short Sales approved with a greater success rate?  PROPER PRICING STRATEGY!!!

First we need to make one very important assumption. Banks are not going to accept any and all offers and we need to prove to them that our offer is what the market will provide!!!  So how do we do this???

 

1. Do a standard market analysis of the property including an absorbtion rate analysis.  You need to factor into your analysis the number of months supply of homes in your subject properties specific price range and then price it accordingly.  For instance:  A Bethel, Ct. Colonial in the 350-400k price range has a 10 month supply of homes(competition) in this price range.  We know that in the past 6 months only 3 homes are selling each month in this price range and that there are 29 +1(your subject property) or 30 homes for sale once the subject property is listed.  We need to make sure that our subject property is one of the 3 homes that will sell this month but not at such a low price that it will be rejected by the mortgage holder. 

2. Based on the information above we can now develop a Pricing Strategy for this property.  We might decide to list this property for $359,997.  This would put it at the lower level of its competion and (997 are my lucky numbers and a great marketing strategy in that it makes this property stand out on the MLS).

3. Now we need to take a systematic pricing approach that will not only test the market but eventually prove to the bank that the offer that we will generate is market tested and we will be able to back it up with the proof that it was marketed at higher price ranges but will no acceptable results.  We will get these price reductions signed by the homeowners, in advance, when we take the listing.  The pricing strategy on this sample home might look like this:

7/1/11      $359,997

7/15/11    $349,997

7/30/11    $339,997

8/15/11    $329,997 and we generate an offer on 8/21/11 of $319,997 which we submit to the bank. 

We will also provide the bank with the number of days on the market at each price and the number of showings and any offers that we received.  This information proves to the bank that the offer that we generate is an "arms length transaction" and that the market didn't generate a higher offer when we had it marketed at the higher price points.  We will also provide them with our marketing plan and show them how many web-sites that it was exposed to(over 500 in our case).  This strategy also helps when an out of the area appraiser comes in with a value that is higher than our offer.  I hope that this information will help you to be successful in keeping more homeowners out of foreclosure and instead become successful short sale stories.  Your feedback is appreciated!!!

NEXT TOPIC:  Don't we have to submit any and all offers to the bank?

Posted by

Marvin BeninsonOur Clermont, FL.Greater Orlando team is called The House To Home Realty Group.  Our office is located in Clermont, FL. 34711 and we cover The Greater Orlando/Clermont areas.  Visit us at HomesinGreaterOrlando

My team, The Beninson Associates covers the Western Ct area.  Our office is in Ridgefield and we cover Bethel, Brookfield, Danbury, New Fairfield, Newtown,Redding, Ridgefield and Western Ct generally.  Visit us at http://www.homes4saleindanbury.com  to Search for Homes 

Call me for any questions on Short Sales and Foreclosures or Real estate in general in Ct or around the world 352 404-6722 or 203 733-0147.  We also specialize in 55+ communities in FL. and CT.

 

 

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