Updated 3 months ago on . Most recent reply
Short sale question
Hi Everyone,
I'm very new to the real estate investing game. Recently saw a property near me on zillow that was selling very cheaply compared to the comps. Upon further looking into it the property is a short sale listing subject to third party approval. My question is does the price set by the seller mean anything in a short sale because the bank can just deny that price and ask significantly higher.
Thank you
Most Popular Reply
#2 Starting Out Contributor
- Realtor
- Hanover Twp, PA
@Eitan Glucksman, I've dealt with some short sales as an agent. A few thoughts:
1. In my experience the listing price does not reflect much that is useful. When I have represented a short sale listing, we usually INITIALLY listed it for what it would take to pay off the mortgage and have the seller walk away with $0 basically.
After listing it at that price, we work to get the lender to approve the short sale. They will look at whether the seller has an inability to pay and whether they believe the eventual market sale price will be lower than what it will take to pay off the mortgage.
2. In my experience, after a short sale is approved, you start adjusting the list price to attract more interested buyers.
3. The lender often will not give the listing agent any clue what they might accept for the property! They usually won't even give input into the listing price.
I think they want to see that the listing price and any price reductions reflect that the agent is trying to get the most they can for the property.
4. Be prepared to wait! It varies a LOT, but sometimes the lender takes a long time to respond to an offer. If you are lucky it might only take a week but I have seen it take 4-6 weeks to simply get an acceptance/denial for an offer. Ask the listing agent, they make have some idea what that lenders process is like.
5. Its like anything else, there could be multiple bidders! So, it may well go for more than the listing price! It used to be a common tactic back during the great recession to price a foreclosure LOW LOW LOW to get buyers to come and make offers and they get them to make their highest and best KNOWING there are 10 other offers. The property would go under contract FAST and for OVER asking price.