$70,000 below asking price? 20% off? Those must be the magic numbers, because they are the types of offers I have been getting on some of my Destin Florida short sale listings. For example and illustration, I have a Destin short home listed in at $420,000. The two most recent comparable sales were $430,000 and $425,000. The buyer’s agent presents me with an offer for $350,000. Hmmmm… will the short sale lender accept $350,000? I doubt it.
There are “magical” numbers floating around the internet that short sales sell for 82% of list price, or 80% of market value, or 85%. You get the picture. I can tell you right now- except for certain HUD and other short sales, there is no standard “percent off” that will guarantee you can buy that property for x amount off. I can tell you this- what mostly works is…. drum roll… market value (or pretty darn close!)
Remember, each short sale, whether it is serviced by Bank of America or Wells Fargo or Chase, likely has a different secondary market investor. The secondary market investor, for example, Merrill Lynch, Bank of New York, etc., for the particular mortgage loan, will have different criteria for what it desires to agree to a short sale. There is no “one size fits all”.
Don’t forget to take into account that the investor does not just look at the contract price. They look at what they will net at closing. So after paying some closing costs, such as real estate commission, state conveyance tax, doc stamps on deed, tax prorations and past due homeowners association dues, the investor might only net $300,000 on that $350,000 offer. Are you getting the picture? In addition, if they do use a standard “percent off” calculation for certain short sales, they are not going to use the list price. They are going to use their independent appraised value- which might be higher than the list price.
So if you are going to offer an amount substantially lower than market value for a short sale, be prepared. You’re either going to end up paying closer to market value or you’re not going to get the home.
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email Wendy: [email protected]
www.ShortSaleSuperstars.com for real estate agents