Now that you know what a short sale is, let’s discuss a common short sale pricing technique that you will see when you are viewing properties in the market. The main technique to be aware of is an unrealistically low list price.
One nuance to the way banks process short sales is that they will not even begin negotiating with an owner until they have a binding contract from a real buyer in hand. This sounds a little silly but it is what it is. Therefore, the first step for a homeowner that is applying for a short sale is to put the home on the market and get an offer on it immediately. The way to get an offer on a property immediately in most real estate markets is to price the property extremely low. There are always people out there looking for a great deal, so by listing a property well below market value, you will certainly draw attention and most likely get an offer quickly.
However, buyers must be aware that sometimes sellers and their agents will put the price so low compared to what the seller owes and what the market would realistically pay for the property, that there is no way the bank will approve the sale at the price or any price like it. The tactic is used by agents to get the bank to come back with a counteroffer to tell them what they would accept. This number may be way out of the current buyer’s price range so the deal falls apart for that buyer.
The benefit to the Seller, is that they can now put the home back on the market as a “Pre-Approved Short Sale”. This is an indicator to Buyers and their agents, that the bank has already approved this price and that the time to close will be much shorter for the potential buyer, than buying a short sale that is not already approved. Its a dirty little trick to play on Buyers but it is effective.