Friday, February 13, 2009

Pricing Your Short Sale to Sell

It will be important to have a good understanding of pricing strategies to be successful with your short sales. The price will need to be competitive with the market to generate an offer but not so low that the bank will say no to the offer during review.

An additional concern your client should have about pricing is that the lower the price is that they accept and do get approved the larger their exposure is on the potential deficiency balance the bank may try to come after later. If on the other hand the bank chooses to write of the debt and 1099 your client then the exposure to the seller would be to potentially a larger total tax implication. So you have quite a balancing act to pay attention to here.

Before I go further remember you along with your seller set the pricing and strategy NOT THE BANK! I've heard agents make comments like 'well the bank told me to price at X-dollars'. Please remember you, not the bank, are the local professional. You, not the bank, are familiar with what is going on in your local market. Your fiduciary responsibilities are with your seller and not the bank(s) needing to approve the final offer.

The rest of this is all just my opinion / experience to date. What works today may not work tomorrow or may not be the best approach for your market so make sure to network with your area Short Sale Realtors and see what's working best.

BPO Value - 90%
From our closings and speaking with Short Sale Realtors across the country the general observation is that if you can get an offer price at 90% of the BPO value that the deal should get approved. That doesn't mean a number under that won't fly but it can be a nice reference point if you are just starting in all of this.

Setting your price
Use your knowledge here. Price to sell not sit on the market. Depending on your seller's situation and foreclosure timeline your approach will be different.

Price Changes
Don't play around here because you need to sell and I would suggest a price adjustment every 2 weeks until you find an offer you can work with. Set a strategy with your seller from the start.