Comments for Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog http://joefacenda.com Just another blog_solution Sites site Mon, 02 Jan 2012 14:50:44 +0000 hourly 1 http://wordpress.org/?v=3.3.1 Comment on A Distress Property Primer by Joe Facenda http://joefacenda.com/2011/12/30/a-distress-property-primer/#comment-90 Joe Facenda Mon, 02 Jan 2012 14:50:44 +0000 http://joefacenda.com/?p=277#comment-90 Doug, thanks for the comment. You are correct. Only a small portion of short sales settle. Very often it is the buyer who backs out after waiting months for the bank to approve the short sale. My short sale contracts (and those of many buyer agents) will have a clause in the contract that the bank must approve the contract within 45 or 60 days. Reality is that this is unlikely to happen. After that time frame, the clause states, the contract remains in force unless the buyer sends a notice to the seller wishing to terminate the contract. Once notice is sent, unless the seller can get approval within 3 days of the notice being sent, the contract dies. So, the practical side of most short sales is that after some reasonable waiting period, a buyer begins to wonder if this is ever going to happen and starts to look at other properties. Often they find something that they like and is a home that gives them a real chance of settling so they back out of the short sale. Now, depending how long into the process the first contract terminates, the short sale home could become very attractive to a 2nd buyer. Often, a substantial amount of the property review has been done so a 2nd buyer stepping in will have a much shorter time to wait for approval. On the other hand, when the first contract dies, the bank may shift the whole file over to the foreclosure department. There are no hard and fast rules as to how banks deal with short sales. Each carves a unique trail that ends up either in a settlement or a sale at the courthouse steps. Doug, thanks for the comment. You are correct. Only a small portion of short sales settle. Very often it is the buyer who backs out after waiting months for the bank to approve the short sale. My short sale contracts (and those of many buyer agents) will have a clause in the contract that the bank must approve the contract within 45 or 60 days. Reality is that this is unlikely to happen. After that time frame, the clause states, the contract remains in force unless the buyer sends a notice to the seller wishing to terminate the contract. Once notice is sent, unless the seller can get approval within 3 days of the notice being sent, the contract dies. So, the practical side of most short sales is that after some reasonable waiting period, a buyer begins to wonder if this is ever going to happen and starts to look at other properties. Often they find something that they like and is a home that gives them a real chance of settling so they back out of the short sale. Now, depending how long into the process the first contract terminates, the short sale home could become very attractive to a 2nd buyer. Often, a substantial amount of the property review has been done so a 2nd buyer stepping in will have a much shorter time to wait for approval. On the other hand, when the first contract dies, the bank may shift the whole file over to the foreclosure department. There are no hard and fast rules as to how banks deal with short sales. Each carves a unique trail that ends up either in a settlement or a sale at the courthouse steps.

]]> Comment on A Distress Property Primer by Doug Francis http://joefacenda.com/2011/12/30/a-distress-property-primer/#comment-82 Doug Francis Sun, 01 Jan 2012 14:36:41 +0000 http://joefacenda.com/?p=277#comment-82 I have always heard the statistic that only 20% of short sale listings ever get to closing. For short sale sellers often it is the buyer who, after holding out for two months, decides to withdraw their offer and move on leaving the seller back at square one. I have always heard the statistic that only 20% of short sale listings ever get to closing.

For short sale sellers often it is the buyer who, after holding out for two months, decides to withdraw their offer and move on leaving the seller back at square one.

]]> Comment on Price a Home at Market or Price High and Negotiate? by Joe Facenda http://joefacenda.com/2011/12/14/pricing-a-home/#comment-21 Joe Facenda Sun, 18 Dec 2011 16:14:01 +0000 http://joefacenda.com/?p=168#comment-21 Gary, Thanks for the comment. The key phrase in your note was "slightly above." Pricing a home is both a bit of science and a bit of a gut feel. One has to take in the market direction and the strength of that direction when the home goes on the market. I can look a comparables and tell a seller that based on those numbers, the home should sell for $x. But if the market is in a strong upswing or inventory is extremely limited, we will push that number and, conversely, if we are in a tough market, we will need to stick with that number or pull back a bit. Comparables are looking in the rear view mirror. Anticipating the road ahead is just as important as knowing where we came from. Going out a few thousand above the suggested price typically doesn't hurt. If the value works out to, say, $465,000, it is likely a $470,000 or $475,000 price will not turn away a buyer. But a $500,000 price will and that was the main point of the post. Some sellers feel that if the home goes out at $500,000 and buyers think it is worth $465,000, they can always make an offer. The problem is that when a $465,000 home is priced at $500,000, it is competing against other $500,000 homes and the buyers in that price range will see more value elsewhere. They won't make the offer. At the same time, the $465,000 buyer will not look because the home is out of their price range. I would guess that when your home sold above asking it was due to multiple offers. Attracting multiple offers works well for a seller. Many times a buyer will want to fight for the right home and just the fact someone else also sees the value will make them want to push a little harder. I have seen some agents price slightly below market just to generate that excitement. To me that is a dangerous game. First, on the surface, it feels manipulative and, more importantly if it doesn't work, the seller may have only one offer at the lower price. Bottom line, the numbers I posted give support to something I felt intuitively but each home is unique and the challenge is to find the right balance between the value of recent, comparables, the uniqueness of the subject property, the number of competing homes for sale, the current direction of the market and the seller's timetable. Again, thanks for the comment. Gary,

Thanks for the comment. The key phrase in your note was “slightly above.” Pricing a home is both a bit of science and a bit of a gut feel. One has to take in the market direction and the strength of that direction when the home goes on the market. I can look a comparables and tell a seller that based on those numbers, the home should sell for $x. But if the market is in a strong upswing or inventory is extremely limited, we will push that number and, conversely, if we are in a tough market, we will need to stick with that number or pull back a bit. Comparables are looking in the rear view mirror. Anticipating the road ahead is just as important as knowing where we came from.

Going out a few thousand above the suggested price typically doesn’t hurt. If the value works out to, say, $465,000, it is likely a $470,000 or $475,000 price will not turn away a buyer. But a $500,000 price will and that was the main point of the post. Some sellers feel that if the home goes out at $500,000 and buyers think it is worth $465,000, they can always make an offer. The problem is that when a $465,000 home is priced at $500,000, it is competing against other $500,000 homes and the buyers in that price range will see more value elsewhere. They won’t make the offer. At the same time, the $465,000 buyer will not look because the home is out of their price range.

I would guess that when your home sold above asking it was due to multiple offers. Attracting multiple offers works well for a seller. Many times a buyer will want to fight for the right home and just the fact someone else also sees the value will make them want to push a little harder. I have seen some agents price slightly below market just to generate that excitement. To me that is a dangerous game. First, on the surface, it feels manipulative and, more importantly if it doesn’t work, the seller may have only one offer at the lower price.

Bottom line, the numbers I posted give support to something I felt intuitively but each home is unique and the challenge is to find the right balance between the value of recent, comparables, the uniqueness of the subject property, the number of competing homes for sale, the current direction of the market and the seller’s timetable.

Again, thanks for the comment.

]]> Comment on Price a Home at Market or Price High and Negotiate? by Gary Moonan http://joefacenda.com/2011/12/14/pricing-a-home/#comment-20 Gary Moonan Sun, 18 Dec 2011 12:51:51 +0000 http://joefacenda.com/?p=168#comment-20 Having sold only two homes, I don't have your experience nor I am in your industry. So, my experience may be unique. Both homes sold for asking price or more. Both were listed slightly above market and sold within 60 and 30 days respectively. Both listing agents pegged market price much lower than neighboring homes which was my reason for setting a higher price. Had these sales had a hard deadline, I would have priced them at or slightly below market to shorten the market time. Having sold only two homes, I don’t have your experience nor I am in your industry. So, my experience may be unique. Both homes sold for asking price or more. Both were listed slightly above market and sold within 60 and 30 days respectively. Both listing agents pegged market price much lower than neighboring homes which was my reason for setting a higher price.

Had these sales had a hard deadline, I would have priced them at or slightly below market to shorten the market time.

]]>