Q: How is pricing a short sale different than pricing a non-distressed property?
Robin in Tacoma, WA
A: In reality, many of the same principles that go into pricing a non-distressed property apply equally to setting the list price of a short sale. Price depends on the location of the property, its condition, the availability of strong comparable properties, and the amount of competitive inventory.
When pricing a short sale, the key is to strike a balance between what a buyer will pay and what a bank will approve. It’s not unusual to see agents apply an across the board discount to a short sale property (for example, a 10% price reduction). This is a mistake. In so-called “hot” neighborhoods, short sales often can be priced at market value. When the bank’s appraiser does a value determination of a short sale property, they generally will try to seek out comparable short sales in the neighborhood. If there are none, the appraiser will use non-distressed properties as comps. If an agent lops $30,000 off the value of a home just because it’s a short sale, it’s unlikely that such low offers would be approved by the bank.
Pricing a short sale correctly is one of the services we offer when we co-list a property. If you need assistance with your transaction, we’re happy to help. Call Richard Eastern at (206) 612-5541.