Short Sales- A Different Prospective
I have been working foreclosure sales and have been showing some “Short Sale” homes, here in Gilbert Arizona. I have noticed that the prices listed on the short sales listing seem to be abnormally low, even for this market. When I checked with one of the listing agents, I was told he was just pricing it low to get the inquiries, but had no idea how much the lender would take for the property. Another agent told me that he has presented several offers to the lender but the lender waiting to if some better offers would come in.
Foreclosure sales are easier to negotiate; the lender owns the property and has a vested interest in getting the property sold. In a short sale, the lender has the upper hand. The property owner still owes them the balance of the note and they can still foreclose if the home doesn’t sell. Of course, the argument has been made that it might be cheaper in the long run for the lender to accept a low short sale offer and save money on the foreclosure action.
Last week I saw an example of what a short sale would be like in a car dealership and having been in the automotive industry for too many years, I couldn’t help but laugh. James, a Boston REALTOR®, came up with the following scenario, and gave me permission to share it on my blogs:
Imagine going to a car dealership and having the following conversation:
Buyer: I see you want $20K for that red car, will you take less?
Sales Agent: Actually, I don't know if we'll take $20K.
Buyer: Then why do you have a sales price of $20K ON the car then?
Sales Agent: We'll that's just a guess of what I think the owner will take. I won't know until I take him an offer.
Buyer: Why don't you just ask him what he'll take?
Sales Agent: He won't tell me.
Buyer: He won't tell you how much he wants to sell the car for but you are trying to sell it anyway?
Sales Agent: Yup.
Buyer: If I offer him the full $20K how long will it take for him to get back to me with an answer?
Sales Agent: Oh, 4-8 weeks, but if someone else comes in and offers more we'll take their offer instead, and we won't let you know that you've been outbid until we've sold it to someone else.
Buyer: Let me get this straight. You mean I can offer him the full $20K for the car and he might not sell it to me and in the process you might sell it to someone else and you won't tell me until you've sold it to someone else?
Sales Agent: Yup.
Buyer: This is crazy.
Sales Agent: That's not the half of it. Even if he agrees on the $20K and we sign a sales contract the owner will send another sales agent over to get an opinion of what he thinks the car is worth. If he thinks the car is worth $25K then we tear up the sales contract and you don't get to buy the car.
Buyer: You're kidding
Sales Agent: Nope. That is how we do things around here.
Buyer: How long does this entire process take?
Sales Agent: Oh, 2-4 months. But it really all depends.
Buyer: Depends on WHAT?
Sales Agent: Oh things really. No particular things. Just things.
Buyer: Yeah, okay... thanks for the 'help.' (walks out the door)
And that boys and girls is how short-sales work.
For more information about foreclosures, short sales or resale homes please call or email and I can set up a search or personal tour for you.
Ed Cassady
Ed@EdCassady.com
480-892-5300 Office
480-229-6610 Cell
www.RealEsate4Gilbert.com