Are Short Sales Really Bringing Down Property Values?

Foreclosures
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Are Short Sales Really Bringing Down Property Values?

Jeremiah Peterson
Member since 2009 · 3 posts · 0 votes


"Yes, short sales liquidate housing inventory, but they are like poison to Brentwood real estate agents. Brentwood agents have been pricing the short sale below market value in order to attract buyers. Since to a lender there is a calculated value on the profitability of doing a short sale; Brentwood homes are often selling for 80% of their true market value."

Anyone else notice this in your neighborhood?

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Eddie Ziv
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by P NW:
There's so little selling that it is difficult to determine FMV. But it seems to me that short sales are offered pretty close to FMV, with the notation that they are a short sale, which should tip any buyer off that "best offer" is what it is going to cost. I don't look at the listing and say "gosh, what a deal"

The foreclosures, however, seem to be offered as low as 50% of FMV. You see the asking price and the photos of the property and it's almost stunning. You get this "holy cow!" reaction.

I hope that the foreclosures aren't selling that low, but even if they aren't it destroys the buyer's expectations when they see the ads (I've spoken to people who have tried to buy several and couldn't). They look at a house that's listed at FMV and all they can think is that they've seen one like it offered at $99,000 instead of the $200,000 for the normal listed one.

I think the banks are slitting their own throats, because there are people with $200,000 mortgages that see a similar house for sale for $99,000, and they decide to walk away rather than to pay $200k for a 99k house (even if 99k is not the actual final sales price)


It's time to get it into our heads! In many areas of the county, prices are not what the used to be. If you bought a house for $320,000 three years ago in, lets say Atlanta GA and the bank is selling a similar house next door for $95,000, this IS the FMV. Otherwise, the bank would have sold it for more (I'm not talking about a wreck of a house. I'm talking about a house in fair condition). That house should have never cost $320,000 in the first place, but market and mortgage manipulation brought the prices to that level. Yes, we may have rolled back those prices to less than inflationary level, but IMO, in today's market, the highest price that someone is willing to pay for any given property, is its fair market value...
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  • Account Closed
    OR · Member since 2008 · 1k+ posts · 845 votes
    16y

    There's so little selling that it is difficult to determine FMV. But it seems to me that short sales are offered pretty close to FMV, with the notation that they are a short sale, which should tip any buyer off that "best offer" is what it is going to cost. I don't look at the listing and say "gosh, what a deal"

    The foreclosures, however, seem to be offered as low as 50% of FMV. You see the asking price and the photos of the property and it's almost stunning. You get this "holy cow!" reaction.

    I hope that the foreclosures aren't selling that low, but even if they aren't it destroys the buyer's expectations when they see the ads (I've spoken to people who have tried to buy several and couldn't). They look at a house that's listed at FMV and all they can think is that they've seen one like it offered at $99,000 instead of the $200,000 for the normal listed one.

    I think the banks are slitting their own throats, because there are people with $200,000 mortgages that see a similar house for sale for $99,000, and they decide to walk away rather than to pay $200k for a 99k house (even if 99k is not the actual final sales price)

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  • Eddie Ziv
    Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
    16y
    Originally posted by P NW:
    There's so little selling that it is difficult to determine FMV. But it seems to me that short sales are offered pretty close to FMV, with the notation that they are a short sale, which should tip any buyer off that "best offer" is what it is going to cost. I don't look at the listing and say "gosh, what a deal"

    The foreclosures, however, seem to be offered as low as 50% of FMV. You see the asking price and the photos of the property and it's almost stunning. You get this "holy cow!" reaction.

    I hope that the foreclosures aren't selling that low, but even if they aren't it destroys the buyer's expectations when they see the ads (I've spoken to people who have tried to buy several and couldn't). They look at a house that's listed at FMV and all they can think is that they've seen one like it offered at $99,000 instead of the $200,000 for the normal listed one.

    I think the banks are slitting their own throats, because there are people with $200,000 mortgages that see a similar house for sale for $99,000, and they decide to walk away rather than to pay $200k for a 99k house (even if 99k is not the actual final sales price)


    It's time to get it into our heads! In many areas of the county, prices are not what the used to be. If you bought a house for $320,000 three years ago in, lets say Atlanta GA and the bank is selling a similar house next door for $95,000, this IS the FMV. Otherwise, the bank would have sold it for more (I'm not talking about a wreck of a house. I'm talking about a house in fair condition). That house should have never cost $320,000 in the first place, but market and mortgage manipulation brought the prices to that level. Yes, we may have rolled back those prices to less than inflationary level, but IMO, in today's market, the highest price that someone is willing to pay for any given property, is its fair market value...
    2
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  • Herm M.Pro Member
    Real Estate Investor · NorCal, CA · Member since 2009 · 273 posts · 43 votes
    16y

    Are you in Brentwood, CA?

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  • Scott Hubbard
    Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
    16y

    Using NAR statistics short sales sell for a higher median sales price than do REO's. Additionally, again based on NAR data, short sales actually close at a higher price than originally listed.

    Lastly, unsuccessful short sales are tomorrows REO's.

    The decline in property values are not caused by shorts sales or even REO's. Instead the cause is a multitude of economic and political factors not mention good ole' fashion GREED. Even in Brentwood, the market will determine price.

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