I recently took another short sale listing, to help the homeowners avoid foreclosure. I ran the comps, reviewed the first and second mortgage loan payoff amounts and devised an intelligent starting list price. Additionally, my client clearly understood my recommended list price reduction strategy, based on a specific timeline, the surrounding active listings in the immediate area, the number of missed payments on the mortages and even seasonal market trends and short-term forecasts.
So, what happened when it came time to implement the first price reduction? My client disagreed with any such reduction and wanted the home to remain very close to the initial list price....of course!
And what did the initial list price reveal to us? It revealed what I knew from the very beginning; we did not have a single showing and/or a single offer to purchase. Yet, I agreed to start at a price which would otherwise avoid the need for a short sale, to appease my client's desires and strategy.
Meanwhile, my client is wasting precious time in a market which is about to experience a substantial rise in short sales and foreclosures.
Until the bank receives an initial contract/offer to purchase and performs a BPO valuation on the property, we won't know what the bottom line numbers are on any given short sale transaction. In the early stages of a short sale, the list price is sort of a moving target, designed to pull in offers and yield some very valuable information from the bank...which is what they are willing to accept as their minimum NET amount on the HUD statement.
Obviously, this particular client is clinging to the fantasy that the home will sell for a "seller's market" price, in a "buyer's market" and thus avoid the need for a short sale. Unfortunately, every week that passes without any offers to purchase is one week closer to a foreclosure auction sale date!
My next step is to offer a little emotional counseling and help this client get past their mental block of what it is that will actually be necessary to help them avoid foreclosure. They are clearly clinging to hope and fantasy, which is dangerously equivalent to denial and thus impending foreclosure, if they continue to block the progression of this short sale.
Depending on a number of variables, including the number of missed mortgage payments and whether or not there is a foreclosure auction sale date set by the bank, you simply must respect a pre-planned timeline by which you will orchestrate the short sale process for success.
At the end of the day, they hired me as an expert in my field, to help them avoid foreclosure. I have no doubts we'll achieve success, but as with most short sales, there are a plethora of emotions to navigate through on the journey towards accepting reality and achieving short sale success!
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