The Fauquier Times this week interviewed Alvin Henry, a local real estate appraiser of more than 20 years. The article is entitled: "Market Woes Equal More Affordability." (Ok, maybe a little more affordability).
"In his time on the job, Henry has evaluated loads of properties and seen the market rise and fall.This week's property transfers in Fauquier County show that most of the buying and selling from April 7-13 took place with a bank as buyer and sometimes as a seller.
'Every cycle is different,' he said recently from his office on Waterloo Street. 'In this cycle, local builders haven't been hurt. They had low inventories and not a lot of spec houses. It was the homeowners -- the people who went out and bought -- who were hurt this time.
'I've never seen this mass of foreclosures, this large quantity of bank-owned properties that we're seeing now. This is far reaching. It's across the board. This is big.'"
Another local real estate agent (besides Frank) is really not happy with short sales:
"QUESTION 1# How would you feel if you found out that the short sale that caused everyone else to lower their price had a low dummy price to get offers and that the bank wasn’t willing to accept it in the first place?
QUESTION 2# How would you feel if you found out that the reason you aren’t getting any offers is because there are 6 contracts that are pending on the short sale and have been frozen while waiting 5 weeks for the bank to respond?
There really are people buying at this time. There is a good chance that you aren’t getting an offer because buyers already have contracts on other homes so they are FROZEN."
13 comments:
Low dummy price?
Hmmm.. doesn't the bank list at least what the loan amount is for?
I suspect this is one of those short sale "dummy prices". Recent comps on the same street have sold in the $600K range, although i wouldn't be surprised if similar houses on this street drop into the low $400s over the next few years.
Address: 14835 ASHBY OAK CT,
Haymarket, VA 20169
MLS#: PW6614580
Price: $419,900
Bedrooms: 5
Bathrooms: 3 full 1 half
Status: CNTG/KO
It's been waiting for bank approval since mid February.
Here's the sales history:
$670,000 2/28/2006
$580,000 11/23/2005
$357,664 4/3/2001
The theory that the asking prices of short sales is way below market sounds good on paper. And while it is a good way for agents to dismiss short sales as "not counting," it simply isn't true that their prices are artificially low. Here are a few examples:
26368 STRATHAVEN CT
CHANTILLY, VA 20152
List Price: $720,000
Prior Sale: $961,749 11/18/2005
-25.1%
Final sold price: $715,000 4/14/08
16274 RADBURN ST
WOODBRIDGE, VA 22191
List Price: $375,000
Prior Sale: $650,000 11/9/2006
-42.3%
Final sold price: $380,000 1/7/08
3110 19TH ST S
ARLINGTON, VA 22204
List Price: $471,000
Prior Sale: $650,000 7/25/2005
-27.5%
Final sold price: $390,000 2/15/08
2101 LOWELL ST S
ARLINGTON, VA 22204
List Price: $470,000
Prior Sale: $630,000 3/6/2007
-25.4%
Final sold price: $410,000 2/28/08
15221 LORD CULPEPER CT
WOODBRIDGE, VA 22191
List Price: $390,900
Prior Sale: $662,000 1/26/2007
-41.0%
Final sold price: $375,000 12/21/07
12000 MARKET ST #442
RESTON, VA 20190
List Price: $299,900
Prior Sale: $410,000 04/27/2005
-26.9%
Final sold price: $255,000 12/28/07
8459 SUGAR CREEK LN
SPRINGFIELD, VA 22153
List Price: $254,000
Prior Sale: $355,000 07/21/2005
-28.5%
Final sold price: $200,000 4/1/08
4376 PERSHING DR N #4
ARLINGTON, VA 22203
List Price: $215,000
Prior Sale: $265,000 9/28/2005
-18.9%
Final sold price: $206,000 2/27/08
bas, it is my experience that short sales list a price that will either drive interest or the seller is hoping the bank will accept.
On foreclosed properties it can be different. Some banks will have their agent put up a price they think the place can sell for quickly.
During my search in the community there was a unit that was put up at $120K. Don't remember if this was a bank owned or a short sale. When my agent talked with the listing agent, they admitted that they were "pushed" in getting the listing up on the MLS quickly and had not an idea as to what price to list. So they just put that number out. Really scary.
I personally stayed away from short sales during my search. I just did not want to deal with the waiting for a response. Though I did visit a few to see what conditions were like in comparison to others that I was looking at.
I was at a party recently that had a number of Realtors at it.
One of them said she couldn't get an answer back on a short sale because the homeowner was in the Bahamas-
how's that for financial difficuties?
For these "frozen" short sales, why didn't the potential buyers just add a clause to their offer that said they could withdraw their offer at any time for any reason before ratification?
john, thanks for the excellent info--I have noticed the same for recent sales in PWC...
chip said:
During my search in the community there was a unit that was put up at $120K. Don't remember if this was a bank owned or a short sale. When my agent talked with the listing agent, they admitted that they were "pushed" in getting the listing up on the MLS quickly and had not an idea as to what price to list. So they just put that number out. Really scary.
I agree that is scary.
This should be fraudulent if they don't sell it at that price if they get at least 1 offer.
I read about your deal Congrats!
Tabitha said...For these "frozen" short sales, why didn't the potential buyers just add a clause to their offer that said they could withdraw their offer at any time for any reason before ratification?
The whole "frozen" thing is a crock. An offer can be withdrawn anytime before it is accepted by the other party. A certified letter stating that the offer was withdrawn would free up the offerer to make other offers.
I don’t see anything wrong with sellers listing at a price well below what they *think* the house is worth (called a “dummy price” in the Fauquier Times article). It’s a good way to generate interest. Ultimately, the buyer determines the market value. Once the offers come in, the seller will know what the current market value is and can make their decision based on those offers. It’s much better than pricing too high and getting no interest at all, which is very common these days.
It's a bait and switch and possibly illegal.
M said: "It's a bait and switch and possibly illegal."
I'm not a lawyer, but i would be shocked to find out that a low list price is illegal.
Also, i don't think this would qualify as "bait and switch" since there's only one item involved and their intention is to sell that item. If the seller lists a house with an unusually low price and their intention is to get interest in a different house, that would be "bait and switch". A good example is when an agent advertises an old listing that they know is already sold just to get leads on potential buyers for other properties.
Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell.
FTC Guides Against Bait Advertising
It's not illegal because when you list a house you are "inviting offers to buy it" and not "offering it for sale at a specific price." i.e., the first part of "offer and acceptance" from a contractual standpoint doesn't start until the buyer puts in an offer. ... There could however be a problem commission wise. I forget the specifics, but when the seller signs the commission contract they agree to pay the broker their commission whenever a full price offer is brought to them irrespective of whether they accept that offer or not. There is a catch though and that is that the offer must be for a cash sale and there can be no contigencies or any other things that don't make for a clean sale ... such as a delayed closing date. From a practical standpoint though this probably doesn't matter if the agent is the one listing below value to help set a price for the house.
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