Brandon Nelson
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Can You Low-Ball a Short Sale?
You’re shopping for a house, and your agent tells you the one you’ve fallen in love with is a “short sale.”
“Cool!” you think. “You can low-ball the ______ out of short sales, and get just a SCREAMING good deal! Right?”
Occasionally, perhaps. But rather than talk about hypotheticals, let’s look at some cold, hard data for Bellingham and Sudden Valley short sales that have closed since last August, and see just how low they’ve sold for in relation to the list price.
- In Bellingham and Sudden Valley, according to the NWMLS, there’ve been 32 closed short sales since last August.
- All but 6 reduced their price before getting an offer.
- The average sale price to list price ratio was a very-NON-low-ball figure of 98.39%!!! (That’s higher than the average for conventional sales!)
- The lowest “low-ball” to occur, was a closing at 92.27% of list price. (That house was listed for $569,000 and sold for $525,000.)
- Fifteen sales — nearly half — sold for 100% or more of list price.
Now, we did have some listings drop, drop, drop their price, and then sell for a fraction of their ORIGINAL list price.
For example, one house started out listed for $260K, and eventually closed for $165K — though its list price was only $169K when it finally closed.
So, to get back to your original question: “Can I low-ball a short sale?” Sure… but, statistically speaking, you’ll likely face a counter-offer from the seller’s lender trying to bring you back up to very near that list price — if they counter at all. Keep in mind, for those 32 that sold, another 37 either cancelled or expired with a “no-go” on the sale.
there is an interesting war going on in this city (and state really) between those who feel the seller should be grateful for any and all offers, and those who believe the sellers hold the cards still. Seems almost political, and full of emotion. The outcome is not clear. Being a Downer, I fall in the camp of the low ballers……. But, I know that I have been wrong since about 2003, about when Bham left the fundamentals of the joe shmoe house should cost 3x the Joe schmoe annual wage. If nothing else, this is an interesting time in RE. Just the fact you can’t effectivaly low ball a “short” but then they will drop the official price and get close to 100% of that is weird. There is opportunity and frustration in bank ownership, they have alot of this property on their books at the price they lent on, and the FDIC lets them play their games to make them look better. So, when they do sell, the loss is in the actual margin, but also in what they were counting as an asset on their books. Just the huge loss projected by the FDIC at Horizon, 500mil, as opposed to what Horizon was saying, shows the kind of games these banks have been playing with reality.
Brandon, have you had anyone low ball on bank owned property rather than a short, just curious…
Hey Debbie
Have I low-balled a bank-owned property, aka an REO? Let me address that in today’s blog! Thanks for the comment!
Brandon
[...] Downer, asks the question: Can you low-ball an REO? This is in response to last weeks’ post about low-balling short sales, where we discovered that, according to NWMLS stats, short sales have been selling for over 98% of [...]