Nate's Bright Ideas: You Can't Low-Ball A Davenport, Florida Short Sale, It's A Waste Of Time

No Low-Balls Please I had a home buyer in Davenport, Florida call me last week and ask about a property they saw listed. It was a short sale and they thought it looked like a great deal. This automatically got my "Spider-Senses" going. As with most things in life, if it sounds too good to be true, it probably is.

And this is the case with most short sales as well. There is the possibility that it is a pre-approved short sale, and the lender has already given the listing agent the net price they will accept to approve a sale. But the odds aren't good. Normally, it's priced low because the listing agent is trying to get the thing under contract with a buyer quickly. Obviously, selling your home quickly is a good thing.

The problem is, when the lender sees the price on the sales contract they will balk if it's too low. I'll give you a good example. As a matter of fact I'll give you my example. The house my buyers called about was listed as a short sale for $100,900. I already know that a home of this type in that area in Davenport, Florida is worth about $135,000-$147,000 depending on it's condition and location. So there's no way a lender is going to accept $100,000.

So the first thing I do is call the listing agent to find out why he priced it so low. It ended up not being a pre-approved short sale price. And his response may shock you. Here's a brief synopsis of our conversation:

Short Sale Newbie: "You're the 8th realtor to tell me that this house is priced too low and won't get approved, what do you think it should be priced at?"

Me: "It's your listing man, I'm just trying to figure out what the deal is for my buyer."

Short Sale Newbie: "Well, I didn't even do a CMA (Comparative Market Analysis) on it when I priced it. I figured it didn't matter."

Me: "Why wouldn't it matter? The seller's lender has to approve the sale and the BPO (Broker Price Opinion) on this property is going to come in a hell of a lot higher than $100,000"

Short Sale Newbie: "What's a BPO?"

At this point, I could see this conversation was going nowhere, so I politely excused myself from it. As the consumer, you need to know that the lender is going to send out for a Broker Price Opinion to try to value the home. If it comes in at $145,000 and the sales contract is for $100,000, either you or the buyer will have to bring the extra funds to closing. And that probably ain't happening.

So you just wasted 4, 6, or maybe 8 months of your life (and the buyer's life) because now the deal is dead in the water. A short sale needs to be priced properly. The seller usually can't walk away with any of the closing funds anyway. So the best way to price it is right at market value. If you don't get any showings you lower the price a little bit every couple of weeks until you do. At least that way, you can show the lender that you tried to sell it for as much as possible.

This will also keep buyers from calling their realtor with unrealistic expectations and then being upset when the truth is laid on them. On a short sale, the market will sort out the price for you if you initially price it correctly.

If you'd like more helpful hints on getting your Davenport, Florida short sale sold please visit www.centralfloridashortsales.com. And if you can't find the answers there, I guess you'll just have to call me. :)

Image courtesy of Dricker94 at Flickr