The other day I made an offer on a nice home in Evans Colorado for a buyer client of mine.  It is a nice home with some great features.  I hope the bank approves the short sale because it will be a great deal for my buyer.  But I doubt they will. 

Why don't I think they will approve it?  That's because the listing price and the full listing price offer that my buyer made is about $25,000 lower then what the same type of home would sell for as an actual bank owned foreclosure.   My buyer wants a great deal as he is an investor looking for an investment property so he won't offer the full market value.

The mortage on this property was $157,000 in 2006.  I'm not sure if the seller has paid off any of it.  Most of the time they haven't.  Our offer is $110,000.  So that minus commission and a few closing costs means the bank will lose about $53,000 on this property.  Now if the bank does foreclose on it they do have attorney costs, foreclosure costs, preservation costs, and closing costs but could sell at $135,000 they could be out only about $43,000.  

Why didn't the owner or the listing Realtor list the home for a higher price?  Because they wouldn't get buyers due to the short sale status.  As it was after 5 days on the market we were most likely the first people to look at this home as there wasn't even a lockbox on it.  We are the only ones to have submitted an offer.   This sounds great doesn't it?  Yes for me and my buyer yes as there is a lack of competition.

Normally if this home was an actual bank owned home listed at $110,000 it would have had about 20 showings on it the first day on the market and at least 7 offers by the next day.  Many of which would be well above the list price.   But short sales are well known never to get approved by the bank and can drag on for months.  This means not many buyers, especially first time home buyers will want to wait that long. 

In awhile the bank will send out a couple of real estate agents or maybe an appraisor to give them a real value on this home.  Nothing in this neighborhood like this home has sold for less then $125,000 in the last 6 months.   This is where my clients offer will probably not get approved.  The bank can see that they might make more just foreclosing then approving this.  Plus this seller made a mistake.  They moved out.  A seller shouldn't move out of a house as it shows abandonedment when they are behind on payments.   If the lender finds out it is "abandoned" they can have the locks changed, winterize the property and even speed up the foreclosure process due to the owner abandoning it. 

But what does this story have to do with my title headline.? I do alot of home values in the Greeley Colorado real estate market for lenders and banks.  More then 500 a year.  I've noticed generally many of the current short sale listings are listed much below the actual market value in hopes of attracting buyers.  I think this practice of listing for a low low value will end up costing the sellers and the listing agents a lot of time.  The listing agent for the time and money spent on marketing this property.  The sellers because they might be just delaying the foreclosure. 

The thing I really don't like about these lower then market short sale listing prices is if they do get approved and sell for that lower price it causes a decline in values of the entire neighborhood even though it shouldn't have. 

I do not do short sale listings yet.  I'm not sure I will do them, but I'm toying with the idea of it.  I haven't really decided if it's in a sellers best interest to even try one.  The effect on a sellers credit is still sort of unknown.  It is a hard choice to price it for the market and hope a buyer will want to put up with a short sale or price it low and maybe get a buyer only to have the lender not approve it.  Maybe with the new government rules for lenders about this will make them easier.

  If the lenders and banks would embrace these short sales and make it much easier and a much shorter time to sell one then the listing agents wouldn't need to do this.    It would only help the values on their regular foreclosures as well.  As well as forestall a bunch of abandoned homes in a neighborhood.   The problem is that the large home loan lenders such as Bank of America, Wells Fargo, Citi are so overwelmed by the requests for these that they haven't come up to speed on how to handle them yet. 

If you have any questions about the Greeley Colorado Real Estate market feel free to give me a call at 970-302-1233 or send me an e-mail with the form at the end of this article. 

You also might find interesting Greeley real estate information on my website at www.greeley-weldcountyhomesforsale.com.

Also you can visit my Greeley RE/MAX webpage at www.weldcountyproperty.com.

Thanks for reading and have a great day!

Marc Oster

RE/MAX Alliance

First Name* Last Name* Email* Question is about -- Please select --BuyingSellingInvestingOther Question / Comments Enter the code:    Please wait...