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List Price Frustration!
Hello Ladies,
Has anyone else found list prices to be completely made up? We put in a full price offer on a short sale and not only was it rejected, but a few days later the price was raised $15k. This was done by the seller, NOT the bank. I completely understand that once the offer is accepted by the sellers, the bank has to approve and could counter for more money.
In my industry asking prices are a starting point and if not negotiable, you will pay whats asked, not over, so this concept is completely foreign to me and completely frustrating. It seems like such a game to list a house lower then what will be accepted by the seller.
We are looking at a short sale tomorrow that we drove by today. The neighborhood is awesome and we loved the house's curb appeal. Unless this house has a huge hole in the ceiling (which was actually the case with one house we looked at, lol) or is in total despair, we will likely be making an offer.
To make a long story short, do we even consider the list price when making our offer or do we look at comps and make an offer closer to what the house is worth? I looked up the court records online and know exactly what the seller owes to the bank, so I take this into account?
Thanks!
Re: List Price Frustration!
I think it is both. You need to look at list prices, because they do give an indication of what the seller is willing to accept. However, you also need to look at comps, because the seller may be overvaluing the house, especially in this market.
I think this also depends on your area. I would never offer the listing price or over the listing price. Here it is seen as a jumping off point for negotiations. But I know in some areas that is common, and probably even more so in a hot market when there may be multiple bidders.
I think real estate transactions are just their own animal all together. It's such a crazy emotional process that anything can happen.
Where we are (which is a COMPLETELY different market from Ft Lauderdale - both of my parents live there), the list price is the list price and no one would expect you to pay more.
There is a strategy that is sometimes used where they intentionally price a house below market value to generate multiple offers. Perhaps they tried that on the house you looked at and raised the price when it didn't work? It's also possible that they got so many offers, they thought they'd see what would happen with a higher price (my REA saw this happen once).
I think 75% of sellers are good, reasonable people. 25% are completely out of their mind with regard to the value of their home. You can say something like "No, you cannot sit back and let your home fall into disrepair and expect to sell it for the same price as the one down the street that was fully updated with brand new systems." but it won't get through.
Don't get discouraged. H and I had to offer on a few places before getting the one we're under contract for. Once we had two rejections under our belt it made it easier to stay objective and realize that more houses would come. I would suggest determining what you're willing to pay for a house (taking comps into account) before you offer and go in with a max in mind. That will keep you from going too crazy.
Realize that with short sales, the bank DOES NOT have anything to do with the seller's acceptance of the price. The bank is not party to the sales contract for the property. However, the seller does have to obtain approval from the bank to be released from the mortgage AT THE SALES PRICE of the property.
If the bank doesn't agree to the sales price, the seller needs to come back to you, because you as the buyer has to agree to change the price, too. It's not a unilateral move on the seller's part.
Some lenders have short sale programs where a price is pre-approved by the bank for a "fast-track" sales process. But if this is not a competitive price in that market, then the property will languish. Good agents and sellers communicate with their bank to get an idea of what is needed to pay off the loan/what the bank will accept as settlement in full for the debt. They will also consider what the market conditions are for pricing the property.
To sell, a property needs to be priced competitively. However, this doesn't mean properties are always listed at competitive prices. Short sales are not always listed competitively, which is definitely counter-intuitive. I wonder if the seller on the offer you were rejected on had an appraisal done or got some other information about market value in that area?
Are you working with a buyer's agent? What did he/she say about why your offer was rejected?