How to set pre-foreclosure listing price?

Question

I'm a non-agent investor, my previous pre-FC short sales all were listed before or during the process, bu this one isn't. Bank (Wells Fargo) needs listing ag. as part of SS package. Debt is $255k, I'll offer half of that. Home still occupied, but owners as well as agent are cooperating well, Bank says they won't do a BPO till they get the offer, which includes MLS listing agreement.

Since it's pre-FC and not REO, bank doesn't have a price in mind from what I can tell. Agent wants to know what price it should be listed at...the debt? Something less? Agent's best guess after looking at comps? Obviously I don't want it too low, may attract distracting other offers. Is the important thing for the bank just to see that it's listed, or do they closely scrutinize the listing price for signs of irregularities?

James Ward · Answer

Thos,

You will run into problems if you keep looking at a Short Sale byway of Loan Balance.  All Lenders look at the current value.  You must make sure that you base all of your offers and all info that justifies those offers on the current value, or your perception of the value.

As for working with the Lenders, make sure that you are fully justifing your offers.  Stand strong on your offers.  And be prepared to walk away if needed.

As for the "listing" price.  You will find many many different opinions on this.  And most are successful with how they list and when.  As a negotiator, I like the properties to be listed as soon as possible, if that is the way a Buyer will be found.  As for the price, I like to draw attention immediately.

I hope this has helped.

Dave Grosse · Answer

Thos - I'm fairly new at SS but I'd say ask your realtor for a FMV(Fair Market Value) and put it up for just above that.  There is another thread somewhere in the Short Sale Forum where similar concerns have been discussed.  If I find it quickly I'll add it to my post here for you.  IN a nutshell some prefer to list it for what they want to sell it for and others have thrown it out there for what they want the BPO to come in at.

While it seems slick, I don't like the idea of putting it on the MLS for the desired BPO value for a few reasons:
   
1. The BPO could still come in higher than the list price.  this leads to...

2.  If the BPO is higher than your list price, then you either have to get a lower BPO &/or raise the listing price, which could make other agents not want to show your deal.

I'd say to list it just above FMV and do your best to get a low BPO.

What do you realistically think you can sell for?

James Ward · Answer

Thos,

What are you attempting to accomplish?  Are you attemtping to perform a Short Sale and then resell?

If you give us a little more info about what you want to accomplish, we can give better advice.

Thanks.

Thos. A. · Answer

My goal is to buy it as cheaply as possible, then fix and flip, or possibly just flip. The other houses I've shorted have been bought at 30-50% of loan balance, though I've ended up keeping most of them as rentals. All homeowner hardship info has been submitted, and now I just need to work with Loss Mit at the bank to get the deal I need.

Thos. A. · Answer

Though bank has probably sent field services by to check occupancy, etc. they don't generally even think about value until after the SS pkg is submitted, then they order BPO. Since I control the owners and access, I control the BPO (agent can't get it without me). I think, though, my SS listing agent isn't as "in my pocket" as I thought. I dropped this listing in her lap, explained that I would be shorting the house and needed it listed, arranged the meeting with owners, and she still put together a pretty flattering listing when all I needed was the basics. I let her choose a price almost at the debt--$260k--but the house is a mess and shows terribly, so I'm hoping it doesn't attract much attention.

Ali Samana · Answer

Thos,

This is a short sale, I am not too fimiliar with them but I will pitch in my .02.

From my understanding, your offer does not matter much as far as the bank is concerned.  I would get myself a good SS negotiator (Scott Hubbard, James Ward on this site) and have them work with you.  Once you put in a package, the bank will have a BPO done and then the real negotiation begins.

I wouldn't want to put a too high of an offer in just to see what the BPO comes in at.

Good Luck!

Adrian G. · Answer

Can we get more details on the property?

Banks are not in the business of buying and selling homes...they deal with loans. They cant sell to u without it having being listed..More details are needed.

How to set pre-foreclosure listing price?

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