What’s up with the price change on this listing?

What’s up with the price change on this listing?

One of my clients recently sent me an email inquiring about a Short Sale listing in the MLS which had gone on the market at $300,000 and is now, a month later, listing for $344,000. He asked me to check on the reason for this strange price change. Many Realtors ® would not find this very confusing, as we have seen this type of price change frequently in the past few years; however, buyers who have just started looking at the market recently might. The time line is a bit short, but this may be explained by the new Short Sale regulations, which should be reducing the response time from lenders considering Short Sale transactions throughout the industry.

Let me explain. What I have seen before and what is consistent with the timeline of this listing, is a Short Sale that was placed on the market at a lower than "market value" price in order to attract an offer that would then be ratified by the seller and submitted to the bank for review. When the Short Sale department rejected the contract and sent back an acceptable price, the original buyer rejected the bank's new price and the listing agent put the property back on the market at the bank's new price and added to the listing remarks that the price has been accepted by the bank. Though this procedure causes less certainty for buyers looking at properties newly listed as Short Sales, it does help show buyers a more accurate listing price once the bank has responded to the original, "too low", offer.

Buyers have to understand that in some of these cases there is a short window of opportunity after this process is complete to get a contract into the bank for review before the property continues towards foreclosure, or in some cases, deed-in-lieu. Many changes are occurring in the financial market in regards to Short Sales, and it is important to talk with a Realtor ® that has up to date information on what changes have been implemented and by which financial institutions.

Buyers also have to understand that just because a property has had a price accepted and provided by the bank, this does not mean that the price is a "bargain" or even an accurate representation of the value of the property. A bank will use a BPO (Broker's Price Opinion) to establish this price, and it is just what it says it is: an opinion. At this point the help of a trusted Realtor ® can be invaluable in determining whether or not to pursue the property. For further information on the new regulations mentioned in the first paragraph, click here.