Getting Short Sales Approved

Short Sales – the Market of the Moment

I have been asked this question by a couple of homeowners recently who are contemplating short sales. Will you list my home for the amount of the existing loan? They both claimed that the bank told them they had to do this. Does this make sense to anyone? Even to the bank?

Not in my opinion and here’s why…I will give you an example from one of my phone conversations with the homeowner….

They purchase the home in 2004 for $600,000 and currently owe $545,000. It is tenant occupied and the tenant is still in the property. The homeowner stopped making payments a few months ago and on January 4th the bank filed a Notice of Default. This home is currently worth approximately $375,000. If I list this property at $545,000 when it’s worth $375,000, do you think anyone will even be tempted to look at it? Not a chance…in this market that anyone will look at it! And if the bank has filed a Notice of Default then we have approximately 3 months left before the homeowner loses the house as we have already lost a month!

When I explained this to the homeowner, the response was “The bank said I must list it at $545,000 – the remaining balance on the loan or they will not consider the short sale.” I explained that they need to call the bank back and spend some time explaining the current value and the fact that they will lose this home in 3 months if they are forced to list it at this price.

We list short sale properties at the “current market value” – in this case $375,000. The bank requires a BPO (Broker’s Price Opinion) and generally an appraisal to help them substantiate the sales price. I have never had a bank tell me I had to list the property at the current loan balance for them to consider a short sale. I hope this is not a new trend among some banks! Unfortunately, this homeowner may find an agent willing to list the home at an overpriced listing amount, just to get their sign in the yard, but this will end up being a horribly frustrating experience for this homeowner when they end up losing the home to foreclosure.

to help them!

For more information on Short Sales

If you are a seller and wish to contact us for a FREE consultation regarding a possible short sale on your home, please call us at (916) 230-0371 or send email to Lori@ModeandDurhaM.com.

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Lori Mode of Keller Williams Realty, Elk Grove
Certified Distressed Property Expert
DRE License #00935148
www.AllElkGroveHomes.com
(916) 230-0371

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