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We're seeing more and more listings with lower prices but, at the bottom you often see "subject to lender approval." So, obviously these are short sales.
My question is: have the listing agents already talked to the lenders about these prices and have some kind of preliminary approval?
Or ... are these prices basically meaningless where the agent is trying to get some nibbles and hope that the lender will eventually go along with it?
We're seeing more and more listings with lower prices but, at the bottom you often see "subject to lender approval." So, obviously these are short sales.
My question is: have the listing agents already talked to the lenders about these prices and have some kind of preliminary approval?
Or ... are these prices basically meaningless where the agent is trying to get some nibbles and hope that the lender will eventually go along with it?
Most lenders won't do anything without an offer. I would not pay any attention to the listed price. I would look at the condition of the property, evaluate the neighborhood, check the comps, and determine what I am willing to pay for the home, and make my offer based on that. The offer may be at or below the offer price.
You can have your agent ask the listing agent how they arrived at the listed price.
Lenders want the agents to bring in offers. Agents will lower the price to something guaranteed to bring in offers. Absolutely no guarantee that a lender will accept the listed price.
IMO, short sale listings are contributing to driving down prices. For example, in one condo community, there are 29 units for sale and only 9 are traditional re-sales. Agents keep lowering prices to solicit offers. It's almost like a closed bid auction. And, for the most part, it's not working.
The Florida Association of Realtors have now issued short sale addendums for both buyers and sellers, and MID-Florida MLS has implemented required wording for broker compensation. It's not perfect, but at least it helps.
Last edited by TampaKaren; 04-07-2008 at 01:33 PM..
There are not that many foreclosures/ short sales in my area and so when there are, I like to follow the listing trail. In most cases, such homes begin as FSBO/MLS listings with prices seriously inconsistent with the market. It appears that the owners feel entitled to make a nice profit, even when they are defaulting on their 100% loans.
They do not sell and either relist with short sale potential or are foreclosed and bank-owned. The strategy that is most typically used is to price it to a point that it encourages multiple bids.
All things considered, when they do sell, the prices are rarely terrific bargains.
I am sure in areas where there are a lot of potential short sales and foreclosures, their is money in the streets. Right now, the relo company -owned homes are usually the best values in my area and impossible to compete with.
It depends on a case to case basis. Some Realtors are clueless on them but the knowledgeable price them to get an offer immediately. Gotta have an offer before the banks look at the file.
As Brandon has said, it depends on the bank and the agent. Most of the pricing is 'made up', pulled out of thin air. Some of the listings will be pre-approved by the bank pricing. Those agents either have a good working relationship with the bank or have submitted an offer to the bank already to find out what they would actually accept. They've either done it with a 'straw' contract or they have submitted a HUD1 with the owners short sale package.
We're seeing more and more listings with lower prices but, at the bottom you often see "subject to lender approval." So, obviously these are short sales.
My question is: have the listing agents already talked to the lenders about these prices and have some kind of preliminary approval?
Or ... are these prices basically meaningless where the agent is trying to get some nibbles and hope that the lender will eventually go along with it?
I saw a home that was closed on with the builder for over $ 300K. The listing was for $ 150K (short sale was stated). Months later we saw the same listing showing up again on realtor.com but at that time for $180K, so we think the bank denied the $ 150K or even lower offer and the bank might have told them that the want $ 180K. This was a couple of months ago and I haven't looked at that listing again. The neighborhood is in the middle of nowhere and there were great plans of building shops and other communities in the near future but with this housing market, that can take years before shops and more homes will be build in that area, so prices in that community fell drasticly since homes were build in '06 and most people had ARM that will reset. Too bad since the homes look great but IMO it will be an area with more trouble to come like in many areas in the Tampa area where homes were build in '05 and '06.
Short sale listing without the lenders preapproval of the price are certainly unethical, and should be illegal. This practice is driving down appraisal values because now lenders want to know what comparables are listed for--whether they have bank approval or not, and this has the effect of driving down prices.
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