How Does an Agent Price a Short Sale?
March 25, 2010
How do I price a short sale? This was a question posed to me by an agent who was in the process of working with a seller to list a property that was going to be a short sale. How did she know that it needed to be priced as a short sale? Because the seller owed more than the selling price of other properties of similar size, age and location.
The answer to the question of "How do I price a short sale?" is basically the way that agents traditionally recommend prices for traditional or "standard" sales. The present market is a tad cloudy on this issue because frequently, lender owned properties are priced at extremely competitive (i.e. low) prices. The strategy being to entice multiple bidding which generally drives prices up and lender sellers believe that in that strategy they will obtain the best possible price.
The first step in any real estate pricing process is to do a comparable market analysis (CMA). This will include similar properties that are listed for sale but that have not yet sold; similar process that have accepted offers but the transaction has not yet closed (pendings); and similar properties that have sold in the past two to three months. One of the challenges of the present market is the small number of properties in both the pending and sold categories.
The goal of any seller should be to obtain the best POSSIBLE price in a reasonable amount of time. To do so, the pricing must be both realistic and competitive. If it is not, ultimately sellers will wait a long time and generally will end up settling for a lower price than they might have obtained with a price that reflected present values.
Buyers in today's real estate world are very well informed. They have searched on the Internet and they know what properties have sold and which have not. They seem to feel that the days on the market are an indication of an overpriced listing.
But, back to the original question - "How do I price a short sale? Basically the same way you would price any property with perhaps a bias to the lower end of the comparables. Your goal and presumably the sellers is to sell the property. The reality is that the lenders will ultimately decide how much loss they are willing to take and the likelihood of the offeree being able to comlete the transaction.
How do I price a short sale? This was a question posed to me by an agent who was in the process of working with a seller to list a property that was going to be a short sale. How did she know that it needed to be priced as a short sale? Because the seller owed more than the selling price of other properties of similar size, age and location.
The answer to the question of "How do I price a short sale?" is basically the way that agents traditionally recommend prices for traditional or "standard" sales. The present market is a tad cloudy on this issue because frequently, lender owned properties are priced at extremely competitive (i.e. low) prices. The strategy being to entice multiple bidding which generally drives prices up and lender sellers believe that in that strategy they will obtain the best possible price.
The first step in any real estate pricing process is to do a comparable market analysis (CMA). This will include similar properties that are listed for sale but that have not yet sold; similar process that have accepted offers but the transaction has not yet closed (pendings); and similar properties that have sold in the past two to three months. One of the challenges of the present market is the small number of properties in both the pending and sold categories.
The goal of any seller should be to obtain the best POSSIBLE price in a reasonable amount of time. To do so, the pricing must be both realistic and competitive. If it is not, ultimately sellers will wait a long time and generally will end up settling for a lower price than they might have obtained with a price that reflected present values.
Buyers in today's real estate world are very well informed. They have searched on the Internet and they know what properties have sold and which have not. They seem to feel that the days on the market are an indication of an overpriced listing.
But, back to the original question - "How do I price a short sale? Basically the same way you would price any property with perhaps a bias to the lower end of the comparables. Your goal and presumably the sellers is to sell the property. The reality is that the lenders will ultimately decide how much loss they are willing to take and the likelihood of the offeree being able to comlete the transaction.
posted by shirley harry at 8:16 AM
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