I’ll start this post, like I started the last “Listing a short sale is a little like venturing into the wild, wild west. There’s only a little order…”
Market value is a perfect example of the lack of order and wild aspects of the short sale process.
Some of your comments:
“In my area the short sales sell for less than current market value. Why would anyone want to go through the whole process with all the ups and downs and go arounds of a short sale unless the buyer is getting a deal?”
“Shortsales definitely [sell] for below market in many/most cases. Some banks will accept 85% of market value if you know how to work the deal.”
“[One Company] typically requires lot of persistence and an offer fairly close to fair market value. [Another Company] can be very concerned about your seller’s financial condition. If your seller is saving money every month, [another company] may reject the short sale.”
These comments really hit the nail on the head… one market can be vastly different than another. I still stand behind my statement that “Market Value Matters,” but what you all have stumbled upon is the real major question…
Has “Market Value” has Become a Subjective Term?
Well that depends. There will always be instances and areas that don’t fit the norm. Large states with an abundance of defaulting borrowers can have exceptions. Parts of California and most of Florida come to mind.
The tilting point for market value comes when traditional sellers are forced to lower their prices to that of short sales and foreclosures in order to compete.If an area isn’t seeing this yet, then short sales have their own parameters for market value. For example, if you can look at short sale stats and see that they typically sell for 20% less than traditional listings, then you can set the market value for short sales in that market.
Even with that keep in mind, there’s no set percentage of market value a bank is willing to accept. Each property, location, bank, and negotiator combination is different; and when you add in investors and PMI you have even more chaos to consider.
The bottom line is the bank is mitigating a loss when it approves a short sale, and doing that It has to make economic sense for them to accept. If your offer is not in line with bank’s expectations, the BPO, and market value, the short sale stands less of a chance of being successful..
The Sure Shot When it Comes to Market Value
The sure shot in these transactions is market knowledge. Banks want to see numbers that make sense and that sense varies from market to market.
An agent’s only sure shot is to treat each of these transactions like an individual experience, and that means every offer needs to include research to support it.
These transactions are more of a bear than traditional sales, but they can also be a great opportunity for us to prove our value and earn a few lifetime clients.