Todd and Farrah talk about short sales, prices, and if they are still good deals.
Todd: Hello. Welcome to Todd Miller TV. Today I have Farrah. It’s going to be on the blog. Farrah, thanks for being on here.
Farrah: No problem.
Todd: OK. So this is Farrah’s first time ever being on the video blog as you know out there, so she might be nervous. So if she is, don’t sweat it. But what she’s really good at is working with buyers. You’ve worked with a lot of buyers, right?
Farrah: Yes, it’s my specialty.
Todd: OK. If you’ve called me and said you want to hire me as your agent, on the buyer side, chances are I’ve – I don’t work with buyers. I haven’t worked with a buyer in like seven years and you’ve probably done 40 or something in the last year, a lot.
So they will end up working with you. So we’re going to talk about a specific buyer issue which is that list price when they make offers. So let’s start for example with a short sale. Let’s say you’re looking at houses and you find a short sale that they really like and the price is – we will just say it’s 180,000. That’s the list price.
They make an offer of 180 and it gets accepted. What happens later on if the bank comes back and says, “We need to get 195. We’re not going to sell the house for 180”? How does that play in it? How do you talk to buyers when that price changes and explain what that is?
Farrah: Well, the bank then wants the fair market value and as homes continue to appreciate every month, they want the – the bank wants to get a better deal. You’re still going to get a better deal with the short sale.
Todd: Than you would with a regular house, right?
Todd: OK. So why would a short sale agent price the house artificially below what it’s worth?
Farrah: To get multiple offers, to have lots of offers in, to get it off the books quickly.
Todd: OK. So there’s an artificial thing, meaning there’s a timeframe. A normal seller is like, we will price it kind of high and wait a month maybe and then we will drop the price but a short sale can’t do that. You have to get that thing under contract, get the package in, and then get it accepted because you may get foreclosed on.
So is it realistic then? But don’t you think if somebody sees the price and they think they’re getting a great deal, then later when the bank comes back with a higher price, maybe 10,000, 15,000, that they feel like they’re like not getting a good deal sometimes?
Farrah: True, but however usually, it’s still a good price comparatively if you were to go out and get a non short sale house. It’s still a good price.
Todd: OK. So you still think a short sale, they can get a better than market value.
Farrah: It might not be worth the wait because they’re not necessarily going to get that good of a price.
Farrah: So if timing is a factor, it might not be worth waiting six months to save a couple of grand on a house.
Todd: Do you think a lot of agents tell their clients, “Let’s not look at short sales”?
Todd: Why do you think they do that?
Farrah: Because you’re not going to get paid for like six months, nine months, however long it takes.
Todd: So the agent is going to take longer to get paid, right? Then the person, like maybe they want to move in, in a month. They may say, “I’ve just seen a house I can get in a month.” So there are probably less people making offers at short sales than regular listings.
Todd: OK. So a short sale is a better deal but you’re going to have to maybe wait for it.
Farrah: Yeah, there’s definitely a hassle.
Todd: Is there also a possibility just it won’t happen under any circumstances?
Farrah: Absolutely. It could go into foreclosure.
Todd: It could get foreclosed or maybe the bank just has a terrible system in place and they just never – like no negotiator can actually get it approved. If you’re the buyer agent representing the buyer, is it your job to make the short sale happen or is it the listing agent’s job? Who is really talking to the bank?
Farrah: The listing agent. It’s basically their responsibility to talk to the bank and get it approved or get it pushed along.
Todd: What happens if like three months go by, your client is under contract on a short sale and then the house comes on the market that – hey, we lost the light. So it happens and then a house comes on the market and they really like it. Can they usually cancel out the short sale if it hasn’t been approved and go get the other house?
Todd: So until you have short sale approval, they’re really not locked into the deal.
Farrah: Well, I will tell you, you have to execute a contract meaning both sides have signed and agreed to a price. Yeah, you’re not locked in.
Todd: OK. Very cool. So you like working with buyers.
Todd: You’re really good with it, investors and owner occupants.
Farrah: Anyone who wants to buy a home, I would be more than happy to work with you.
Todd: Have you done a listing before?
Farrah: Yeah, I’ve done listings. I prefer to work with buyers.
Todd: But do you work with a lot of buyers?
Todd: OK. Well, anyway, I thought I would introduce you to Farrah. We do have some videos out there where she’s just talking about what she likes about real estate and everything. So she was super brave. She did a great job for the first time being on the video blog. But Farrah is somebody you would work with if you’re working with us on the buyer side because like I said, I just don’t work with buyers. I don’t have the patience for it and she does. So anyway, well thanks for being on the blog.
Farrah: All right. Thank you for having me.
Todd: All right.
Farrah: Oh, to meet some of you.
Todd: Yes, you for sure will. That is my update for today and hope to see you another video. Thanks. Hey, the light came back on!