What is a bank approved price?
Gainesville short sales which say “bank approved price” can be misleading. When you see a Gainesville short sale that says “bank approved” it can mean that there had been an offer on the home, and the short sale lender approved the price that the buyer offered for the home — but then the buyer walked.
In this example it means that the price was “bank approved” for that particular buyer based on the agreed-upon terms and conditions that the buyer, the homeowner, and the lender reached — before that buyer walked. The “bank-approved” price might be different for the next buyer who comes along — depending upon the terms and conditions of the new offer, and depending upon how much time has gone by since the short sale lender last received an offer for the home.
Pricing a short sale
Gainesville short sales are not priced by the short sale lender. Gainesville short sales are priced by the homeowner after reviewing recent comparable home sales with their Realtor.
But — and this is the tricky part — since the short sale lender is getting paid less than what they are owed on the mortgage when the property sells, they have to figure out how much of a hit they are willing to take. Generally they will not share the bottom line number they are willing to take. Which means we all get to play a few rounds of “Psychic Friends Network” with the lender.
In order for short sale lenders to figure out how much of a hit they are willing to take, they first must have a firm idea of the home’s market value. Which is why it is VERY important for the short sale lender — and the homeowner — to evaluate the most recent comparable sales in the neighborhood when making pricing decisions.
The Gainesville homeowner gets their pricing information from the Realtor. The short sale lender gets their pricing information from the appraiser who is sent out by the bank to appraise the home once it is listed as a short sale.
In a perfect world, these numbers should match up, or be pretty darn close — because the Realtor and the appraiser pull their most recent sales figures from the same place — the MLS.
But these numbers don’t always match up, for a variety of reasons — and there is not enough wine to go through all of them here.
Suffice it to say that if a meeting of the minds doesn’t happen amongst the Realtor, the appraiser, and the short sale lender in terms of market value, the short sale lender could end up demanding a price for the home which is higher than market value.
If the “bank-approved price” is higher than market value, the buyers won’t come.
And if the buyers won’t come, the property will just sit on the market.
And if the property just sits on the market, it’s more likely to go into foreclosure.
And if the property goes into foreclosure, the homeowner’s credit is ruined for 7-10 years — as opposed to being shot for just 2-3 years if the homeowner sells the home as a short sale before time runs out.
If you are facing a short sale
There are very real consequences to not selling a short sale during the time allotted. If you are a homeowner facing a short sale, you increase your chances of success by hiring a Realtor who understands and can navigate the short sale process on your behalf.