Fact: Short sale properties sell for less than market value.
Fact: Neighbors do not like when a home sells that can lower the comps of the neighborhood.
Fact: HOA Directors by job definition have their noses in other people's business.
Fact: HOA Directors sometimes complain that a short sale in their community is priced too low.
Fact: The seller needs relief from the mortgage payments and the HOA fees and needs the property sold. In a short sale, usually, the price is not the seller's main concern.
So how does the Realtor explain the lower price when accosted by the HOA Directors?
- Fewer buyers will be interested in the property because of the uncertainty of how long they have to wait to get a short sale approval, or counteroffer, or total denial. Buyers are especially wary of short sales in an appreciating market where a 3 to 6 month wait for a failed short sale offer may result in the buyer having to pay many thousands more for a comparable property when he/she reenters the market.
- Fewer buyers mean less demand. Less demand means lower price. The short sale lenders understand this, therefore they let the house go at somewhat of a discount.
- Therefore, the condo is indeed worth less than market value by virtue of its short sale status, regardless of its intrinsic value if it were not a distressed property.
- If somehow the HOA has the right to impose a price that the market will not pay, the condo will eventually go to the foreclosure sale. This could cause them to have an abandoned condo in their midst with diminishing value due to neglect, deferred maintenance and sometimes even vindictive damage to the condo to purposely lower the value as a way to get back at the HOA directors who blocked the owner's ability to avoid foreclosure via a short sale.
- HOA directors generally have very little knowledge of how a real estate market works. The market will do what the market will do, however, the lesson will remain unlearned by the HOA directors.
Dave Halpern has successfully closed hundreds of short sales in the Louisville, KY area. If you are behind on payments, or owe too much on your home, Call Dave Halpern, Realtor, at (502) 664-7827.
Keller Williams Realty Louisville East