Mar 29, 2011

Tip 11-2011: Short Sales and Listing Price

The listing price, as agreed to between the realtor and the seller, reflects what they believe is the current market value.  This listing price in our current climate should not be too high or there is no activity.  This can especially be harmful for short sales when a foreclosure is pending.

With a short sale, the listing price is extremely important.  The listing price needs to be part of an overall short sale strategy.  One important factor is how delinquent the seller is with their loan payments.  Another factor is whether a foreclosure is pending.  Finally, the short sale lender may not want the initial listing price to be too low.

One thing to remember is that a contract at a “full price” offer does not necessarily mean a successful short sale.  Unfortunately, the short sale lender will obtain their own opinion as to the value of the property.  This opinion will be in the form of either an appraisal or a BPO (broker price opinion).

If the lender’s BPO is significantly higher than the contract price, then the short sale will probably not be approved.  Should an unrealistic BPO cause such a problem, there are methods of challenging the value, but it is an uphill battle.

There are some short sale lenders, which if given enough advance notice, will predetermine what listing price they will approve.  FHA and some lenders which claim they allow a HAFA (Home Affordable Foreclosure Alternative) Short Sale may pre-approve a listing price.

Please contact us if you have questions or need legal advice.

Senior Partner
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia


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