Lenders setting short sale prices?
August 11, 2008
A Realtor sent in a letter to the editor in the October 2008 “Florida Realtor” magazine expressing his opinion that it is wise to allow the bank to set the list price on short sales. Here is the letter:
“If the listing agent determines that the sale of a home won’t satisfy the loan, he or she should contact the bank in first position and notify them that the homeowner wants to market the house for sale, and that the transaction will constitute a short sale. The bank can then do their BPO [broker price opinion] and set the “market price.” Imagine that. In a matter of seven to 10 days, we now have a property on the market, in the MLS, advertised for sale at a price that we know the bank will accept.”
From my experience this just isn’t how the short sale process works. And it definitely isn’t a realistic idea about how to improve it. The first few phone calls to a lender in 1st position are typically to low-level employees in the Loss Mitigation Department. These people aren’t authorized to give the banks bottom line or to order a BPO.
In fact the bank doesn’t want the listing agent to know their bottom line. They actually wish to hide this from them much the same as the seller of the home, in a normal sale, doesn’t want potential buyers knowing their bottom line. The whole concept behind real estate negotiation is to attract a buyer ready, willing and able to pay the highest dollar amount that the current market will bare.
Asking a bank for their bottom line is like walking into a car dealership and asking for their bottom line. No dealer is going to leave money on the table and come right out and tell you what they would accept. Their goal is to sell as high as possible while your goal is to buy as low as possible.
When you bid on an item on eBay why do you think you don’t know the sellers bottom line? Quite simply they are playing their cards close to their chest in hopes of attracting a buyer willing to pay even more than their bottom line. Welcome to America and capitalism.