My Blog
Short Sale Reality Show
I have taken those Short Sale Classes, the ones that teach you how to negotiate the pre-foreclosure price down to 50 cents on the dollar, post pone the auction and sell it to another person at a higher price and do the double closing leaving the investor with a big profit, the bank with a big loss and the seller looking for a new place to live and a tax liability. They make it sound easy, honest and quick but what about the real world and the right thing to do.
I just listed a pre foreclosure for a friend. She had it listed at a price that would clear her first and the closing cost but no offers. When I listed it I went down to the lowest price comps would support which was above the first lien position. We had an offer with in two weeks, but the buyers came in 12% below our asking and 20,000 below the first lien amount. The BPO came back $50,000 over our listing price and they said there would not be any negotiating for less than that amount. Well what is an agent to do? I worked up the comps that showed the home was worth what I had it listed at and I asked the bank to do another BPO. If the selling agent can keep her clients in the purchase mode we may be able to keep this deal together. Some where in this deal there is a price that will satisfy the bank, bring the buyers equity, relieve my seller of her mortgage and minimize the downward spiral of the real estate market.
This experience has taught me that the banks have implemented some tactics to help stop the investors that are equity skimming. . First the banks will only delay the auction two weeks at a time. The Skimmers need longer periods of time to find a buyer. Second the banks BPO’s are high which helps the banks protect there return and in the long run holding out for higher prices is better for the real estate market. Banks need to exercise control over what they let foreclosures sell for. If they accepted low bids the real estate market would tumble. The banks need to walk the line of recouping what they can and getting rid of bad assets. If they let pre foreclosures sell for less than market value it takes future sale prices down which but the future pre foreclosures at a devalued price. No one knows the inventory banks are keeping off the foreclosure market or how long they are delaying properties in pre foreclosure from auction to allow it time to sell on the open market. I call this inventory the banks shadow inventory. It is undefined and kept out of site in the shadows.
Know to the question of what is right. It is everyone’s desire to buy a home for below market value. But if buyers get greedy and demand lower than market prices the real estate market continues to spiral down word. It is important that we try to help our Pre foreclosure clients sell their property and educate our buyers of pre foreclosures that they need to have reasonable expectations for what they can purchase the property for. We need to get the properties sold for the best price and understand why the banks need to minimize their losses.
More than ever before people buying foreclosures or selling in a pre foreclosure position need a professional Realtor to help them through these transactions. If you need help please call me at 206-390-1980 or e-mail at elizlockwood@msn.com
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