Today I received a great email from a reader. They were concerned about the listing price of their neighbors home and thought they may need to short sale because they owed over twice what the neighbors home is currently listed on the MLS for. I know that when you see a home listed ridiculously low it can make all of us wonder how low will this market go. There are a couple things we need to remember before we jump to conclusions.
- How did the listing agent obtain the list price of that property? Often times a listing agent will just continuously drop a listing price to try and bring in an offer. In theory this is a good strategy, if you are not getting showings or offers, price is everything. However, I can not tell you how many times a home will be listed at one of these low prices, a buyer writes an offer, they wait for the bank to respond. The bank’s response is almost always higher than the list price. Although most banks would rather have you sell your home short than take the home in foreclosure and then having to sell it themselves, they are still accountable to the end investors to obtain the highest price they can for the property.
- Are there major repairs needed that you are not aware of? Many of the homes that have been on the market as bank owned, were previously listed as a short sale and never received an offer or bank approval of an offer. A lot of these homes are in need of major repairs, everything from simple carpet replacement to fully frozen plumbing systems. Just this week I wrote an offer on a bank owned home, and upon the home inspection we found every single pipe under the home had been removed or was broken. The bath tub and shower were not hooked up to the drain and none of the toilets were anchored down. The previous owner had stripped things from under the house that you would have never guessed to be missing.
- The seller of the home may have purchased the home with more cash down then they borrowed. Many of the homes currently in trouble in Central Oregon are smaller mortgages, where a home owner lost their job, a spouse died or another devastating life changing event. In cases like this they may only owe half of what you would expect and so a list price of half of what you owe, could be only a couple thousand dollars short to the bank.
Every home, every short sale and every situation is different, knowing all of your options is important. Knowing what other homes have SOLD for is important. Your sale should reflect a fair market value, for the current situation, taking into account the average days on market and the time frame you have to get your sale closed. For more information please do not hesitate to call or email me. Even if a short sale is not the perfect answer for you, I will do my best to give you some great resources to have the power of knowledge on your side.