Making an Offer on an Oakland County Michigan Short Sale Listing? The Asking Price Means Nothing!
First a quick run down about how the short sale process works. Owner lists a house with a real estate agent. The owner owes more on the house than he can sell it for and is either unable or unwilling to bring the short fall to the closing, so it is listed subject to short sale approval. The banks do not pre-approve houses for short sale and the banks do not set the asking price.
The point is, the seller and his agent set a price to ask for sale and it has nothing to do with what the bank (or banks) will take for a pay off. I know how I price a short sale listing, but every agent is going to have their own ideas of what works best. Some agents appear to have no rhyme or reason behind their pricing. When considering buying a short sale listing, one of the factors to consider is the abilities of the listing agent. He or she is a major component to getting a favorable approval.
One of the myths floating around out there is that the banks will approve anything. There are some great deals, but they exist in all types of sales: short sales, foreclosures and regular sales. But I can honestly tell you that is a rare to non-existent happening that a bank will approve a payoff of $50K for a house worth $150K in this market and owes $300K. Something IS NOT necessarily better than nothing. The banks aren’t going to just forgive debts because it’s the easiest thing for sellers and real estate agents. In Michigan the banks have 10 years to come after the deficiency, and if they don’t release the seller from that deficiency there isn’t much incentive for the seller to approve the short sale and continue to closing.
Short sale listings tend to sell at the low end of fair market value and even slightly under today’s fair market value. And they should if you consider a 6 month wait on the part of the buyer to even find out if they can buy the house. I like to equate that wait and uncertainty to sweat equity. But the current asking price has absolutely nothing to do with the final sale price. It is very possible/likely that you will wait it out and the short sale gets flat out rejected. Or you may get a counter offer. During that time you hope interest rates don’t go up.
Before we make an offer on a short sale listing, I will do a detailed market analysis on the house. There’s no need to make a low offer that you can’t or won’t move off of if the bank won’t accept that low of a pay off. There’s also no need to make an offer so high that your lender won’t approve the mortgage due to a probable low appraisal.
I have a series of blog posts about buying a short sale listing. Some about the downfalls as well as the perks to buying a short sale listing. After reading the posts outlining the good and the bad, if you are willing and able to still pursue possible short sale listings, there are more posts about negotiating with a short sale seller. The incentives for a short sale seller are very different than those of a traditional seller.
Jackie Hawley Keller Williams Realty, Clarkston MI
Cell: (248) 736-6407
Buying Real Estate In Oakland County Michigan
