Short Sales - No Rules or Regulations when it comes to Listing Price

Our current recovering real estate market is one that causes complications, confusion and fustration for real estate professionals, lenders, and the ultimate victim is the client that is trying to purchase a home.



Recently, a listing appeard in the Southwest Forida area for a home built in the 70's on a half acre lot, with a listing price of $70,000. Needless to say, one of our affordable clients wanted to jump on it immediately. To protect him from falling victim to yet again, another short sale situation that was not even close to final negotiations, I contacted the professionals handling the sale to discuss their strategy and sales price.



The informed me that they had paid for an appraisal (done by a certified appraisal, from another County in Southwest Florida) that used only short-sale or foreclosure comprables. NOW THAT IS A WONDERFUL DECISION. We must now use comparisons for sales based on the type of sale that is occurring - a distressed or hardship situation, or a sale with no imminent restrictions.



This professional then informed me that the price that they had chose was based upon the appraisal, and that their statistics showed that lenders would accept anywhere between 50-80% of the appraised value for the final sale. That being said, the listing was at 50% of the listing that they had received (with which I did not entirely agree). However, the listing amount was only 13% of the debt that is owed on the home. I don't know about you, but that seems very extreme.



So, now come the consumers. They are so overjoyed at a truly affordable price - $70,000. The home, just by looking at the photos and according to the appraisal, would require $70,000 to bring it to a habitable situation. Hmmmm.



So what's a consumer to do or think. According to this professional the property has been on the multiple listing service for 10 days and has received more than 20 contract for purchase. Obviously, the ultimate goal is to find a buyer for a property, and to relieve a seller from a distressed situation. For the bank, the goal is to not own this home, but to sell it to a qualified buyer. However, lives are at risk here. The potential buyers are PEOPLE. The seller, so said, is an aged individual not of good health. The bank and our economy are challenged by absorbing so much poorly managed refinancing (this house was refinanced on 9/20/2005, 2/15/2006, and 2/15/2007.)



My conclusion, please just be aware. Ask the professional that you are dealing with to do as much research as they possible can on the property for sale, so that knowledge drives your decision as well as economic affordability.