*Consult your assigned Negotiator before making price changes.
**All Listing Agreements should include: “BROKER CAN ADJUST LISTING PRICE OF PROPERTY AT THEIR DISCRETION, NO FURTHER NOTICE REQUIRED. COMISSION AND FEES TO BE PAID BY LENDER AT CLOSING INCLUDING $1,500 PROCESSING IF REQUIRED”
Listing price
Pricing the property needs to start at what the sellers owes (maybe a little higher to cover closing costs). This is a good faith effort on the sellers part to get the Lender all the money that is owed. Many properties available today make reference to “short sale, foreclosure, pre-foreclosure or bank owned”. In theory this means that the ability to sell the property might not be in the hands of the property owner.
How do you price a property for sale with so much confusion surrounding it? It might help to understand the lenders situation and position on the particular property. First; is the lender agreeable to a short sale? If they are, it is important to understand that the Lender will attempt to assign market value to the property. The appraisal is very important to the lender. It has much bigger implications than the deal you are working. It is the number the Lender will use to represent losses and sell the mortgage note if it goes bad. The listing agent needs to be on top of the game. She needs to understand the market, know what the property will appraise at. Know what it will sell at. From this knowledge it will be possible to price the property correctly.
Once the Lender authorizes a short payoff, they want their money. You better have a buyer waiting to close. The entire premise of the Lender agreeing to the short sale is that you have a ready and willing buyer. The listing agent needs to project out to the moment in time when short sale approval arrives and ensure that buyers are available at that price.
Reducing the price
The pricing needs to be reduced gradually until it intersects with the Lender approval. In the meantime the pricing strategy should have produced several possible buyers at different prices.
PROPERTY 1234 River St. Sellers owe $320,000.
Lender is agreeable to the submission of a short sale offer.
The listing Agent does extensive research and concludes: Market rate is around (appraisal) $280,000.
Possible sale price will be around $272,000.
The list price on the listing agreement and MLS will be around $339,900
This will show the lender good faith, and an attempt to recover all of the money owed. There will not be any activity on the property for the first month. It is clearly priced $60,000. over market rate.
After the first month it is time to plan a price reduction schedule that will coincide with the appraisal. If we know that the Lender will take ten weeks to get the appraisal done. We have six more weeks to get our pricing down to $280,000. Use an approach that is gradual, in this case maybe $10,000 per week. At some point the listing price will hit the desired price point. Calls showings and offers will increase dramatically. If that happens at a higher list price, you might leave it there until the appraisal comes back. By the time you get the appraisal back you should have several offers and even more follow ups to do. It is now time to put the deals together and present them to the Lender.
