Short sale vs. market value.
I took a quick look at a short sale place in Ballard Saturday:
http://www.redfin.com/WA/Seattle/7741-2 ... ome/166011
I hadn't planned on stopping, just saw the sign and stopped on a lark. The agent said the house was a short sale for $521K, but the appraised value was $580K (might have been $570K, memory fades). So, if the appraised value is reasonably close to actual current market value, why would a bank sell it for less than what they might reasonably expect to get. Is the short sale price typically set low just to sell a place and cut a bank's loses?
http://www.redfin.com/WA/Seattle/7741-2 ... ome/166011
I hadn't planned on stopping, just saw the sign and stopped on a lark. The agent said the house was a short sale for $521K, but the appraised value was $580K (might have been $570K, memory fades). So, if the appraised value is reasonably close to actual current market value, why would a bank sell it for less than what they might reasonably expect to get. Is the short sale price typically set low just to sell a place and cut a bank's loses?
Comments
Why are the banks co-operating? Because my offer is fair. The property listing sat around for several weeks at about 80% of the 2006 price, with no offers. So my offer, at 73% of the 2006 price, probably looks good to the banks.
In part, banks as an industry have screwed themselves by making short sales difficult and bureaucratic. That ensured that short sales would not get good offers. The banks are now much better at this, and are trying to make short sales easier; but it'll take a while for them to see better short-sale offers as a result.
Also keep in mind that banks do not want to foreclose and end up owning property; that is toxic to their balance sheet. So they want to short-sell and avoid foreclosure.
Make an offer that you think is fair. And let the banks worry about whether they should accept it. It's a good idea to knock at least 10% off the asking price. Also, use The Tim's pricing calculator to make sure you aren't offering too much.
When I started this process as a first-time buyer about a month ago, I barely knew the difference between drywall and escrow. I certainly didn't know about short sales; all I wanted was to take advantage of a plunging market.
If I can do this, anyone can.
Make an offer that you think is fair, that will protect you from price drops for a few years. Then let the chips fall where they may. If you get the place at your price, then great! If not, stay in your rented home.
It would be good if you could keep us updated on how your transaction goes. I had the thought that banks would forestall short sales and see what this govt bailout is all about. Why should they foreclose now at 70%-80%, when they can sell the house to the govt for 100% of the value
Congratulations!
Just curious -- where's this home located? How did you search for short-sale properties? Did you use an agent to negotiate with the banks? If yes, would you share the agent's info (assuming you are happy with him/her).
Since Redfin wouldn't show me the property, and I didn't have a buyer's agent, I simply called the listing agent and asked him to show me the place. Impressed by his professionalism, I then hired him as my buyer's agent for the property. That proved to be invaluable in negotiating with the banks, because I'd cut out one middleman (the buyer's agent) and thus saved myself time.
If you want to specifically find a short sale, look for large price drops, or do a keyword search for "Short Sale", "lender approval", or "lienholder approval" on Estately.com. Ask the listing agent how many short sales he's done; if he's experienced with that, and you feel comfortable, then hire him as your agent. You're really negotiating with the bank(s), not the seller(s); so it helps to have one person who can speak on behalf of you and the seller.