Short sale myth busted!

Good Morning and Welcome to Todd Miller TV, your resource for what’s current in Las Vegas Real Estate market. And I wanted to bust a myth today. And tell you about an opportunity, you all in the same vain. The myth is that the best deal on a Real Estate purchase today is an REO, it’s bank owned home. And that you should stay away from short sales because short sales are too expensive. They sell for too much money. The going myth is that the reason why the banks really want to do a short sale because they sell for more money and there’s this statistics down there that say you know, the average short sales sells for 160,000, the average REO is for 120,000 so, these aggregate numbers have been thrown out there sop people see them and go “Oh my gosh, I want short sales ’cause short sales, or I wanna REO ’cause REO is such a great deal.” You know it’s only 120,000 where the same house as a short sale would be 160,000, that’s why the banks want to do them, and that’s a myth. ‘Cause actually, if you think about it, it doesn’t make sense. So let’s go into this a little bit. Why this is? Okay so you’ve got a house. It’s a/let’s just call it a 100,000, round number, okay? And there’s 2 of them. They’re right next door to each other. They’re on the same condition, they’re on same lot’s, they’re virtually identical. One of them is an REO, it can close in 30 days. Meaning it’s ready to go. You just put your offer in and you buy it. The other is a short sale. You’re gonna put your earnest money down, you’re gonna be under contract for 6 months, you’re gonna have to wait and wait and figure out if the banks is gonna accept it or not. Which one do you think you would rather buy? That, the REO right? So, why would the short sale sell for more money? If anything, the short sale would sell for less money. Does that make sense? I mean you would have to actually lower the price to get someone to get an offer. So we have these numbers that say short sale sell for more and people have grab these and ran with them. As a matter of fact, it has gotten so bad to where seller or buyers have told their agents “I just want foreclosures.” So the agents go to the MLS, they click “short sale-no, REO-yes” And they’re out there writing offers on every REO, every bank owned home they can find. And ofcourse they, you know, the offers, you know, there’s multiple offers, they get pushed up above list price and they sell for a lot more money. Then you have the poor short sale sitting there, and no one’s putting offers on it, So the agent reduces the price, reduces the price, reduces the price, someone finally writes an offer. So as I go through the MLS and I’m pulling comps for my REOs and for my short sales listings, And I’ll see this, you know, out of the blue I’ll see this sold or this listed into really low price and I clicked on it, it’s always a short sale. It’s never the REO. So you probably scratched your head and go “but wait Todd, I saw these numbers, and the numbers said, the short sale sells for more than the REO.” And that’s misleading, and this is why. ‘Cause they’re not doing Apples to Apples comparison. Look, you’re a Real Estate agent, your bank client who gives you a 100 houses a year says “Here’s a 30,00 condo, go list it and sell it.” And you go “Okay, Thank you!” And you put it on the market, you sell it, you lost money on it actually because the staff and the cost to do that you don’t make what the bank pays for it unfortunately. So, we do that as a service to our client, we loose money selling a $30,000 condo. So, if you’re a Real Estate agent on a short sale and someone comes to you and go “Hey, I’ve got this house, a condo it’s only worth $30,000, will you short sale it for me?” The agent goes “Sorry, I can’t help you.” So here you are stuck in this $30,000 condo, She let it foreclose. Now, you’ve got a $300,000 house. And you go to a Real Estate agent and go “Hey, can you help me short sale this?” They go “Yeah, we can help!” So they short sale it. Now they go “But you know the house is worth $300,000, but you know, because it’s a short sale, no one’s gonna want to write an offer, so we’re gonna list it for $270,000.” Yeah, $270,000, so you’re actually selling it less for what it’s worth because they wanna get an offers. So you look at the reports and other day and go “Wow, the average/this REO sell for 30, but this short sale sell for 270. So short sale must sell for more. They don’t. They sell for less. So here’s the thing that/here’s the big secret that most people don;t know. Forget just looking for REOs. You know, look for all of it. Include short sales in your search and be patient. There’s opportunity in them. Okay? If you’re willing to be patient, you can grab a short sale for way less than market value. Way less than what an REO for sell for, way less than what an equity seller would sell for. They’re 40% of the market place right now. There’s a t5on of opportunity. Okay? So I want you to remember that going forward, tell your Real Estate agent you want the best deal and not to exclude short sales, and if you have the time to wait, if you’re an investor, or if you’re an owner-occupant, and you do have some time, look at those. There’s a ton of opportunity in them. We’ve written a ton of offers on short sales for investors, and you know what, they’re very happy with the profit that they get. They don’t care that it wasn’t an REO, they like the fact that there’s not multiple offers in it and they get the deal on it. That is my update for the day, I hope it was informative. You can post some comments if you thought it was and I hope that you’ll tune in to my next episode. Thanks!