As you might have read in the post, Why are REO properties priced all over the place? banks price REO properites using varying methods and some banks do a better job than others.
Well, short sale price setting is not much different.
In general, most short sale experts say to price the property at or near fair market value, although a few will begin with the total payoff amount owned by the seller. How frequently prices are dropped will depend in part on whether the property is in pre-foreclosure. Most banks have a formula for what percentage under market value they will accept and might vary from 8 percent under to almost 20 percent under.
I usually try to price short-sale properties in the lowest 20 percent of a neighborhood comps both traditional and REO properties to peak buyer interest and initiate buyer activity. It’s the same 80/20 rule all over again. 80% of the activity is where sellers are pricing homes in the bottom 20%. However, it is important for seller and buyers to understand that the banks underlying debt is what drives their motivation.
Note: Most lenders will get a broker’s price opinion or even an appraisal to see what the property is worth before the listing agent and the seller set a list price. One way to help ensure that the bank’s estimate of value is realistic is to offer comps of recent sales, both traditional and REO properties.
For more information on pricing your sale for a short-sale in the Prescott area, please contact me.
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thanks for your response/tweet on short sales. I came across a property I want to put an offer on and didn’t want to pressure the agent on price. It is the lowest price in the neighborhood, so it may be one to jump on. Thanks.
Put some pressure on the agent…find out if the bank will put forth a call for best and final offers…don’t leave money on the table if you can negotiate with strength.
PS