How To Price a Short Sale Listing

Even under the best possible conditions, pricing a house is a tricky proposition. When it comes to pricing a short sale, the stakes are even higher - and the process is even more complex. After all, there are many additional players and considerations involved in pricing a short sale properly. The unique circumstances of a short sale make choosing the right price a real juggling act. The price has not only has to be acceptable to the buyer, it is has to appeal to the bank, the buyer's lender and the seller, too. More in-depth information about pricing a short sale is outlined below.

Considerations for the Seller

The seller is under a great deal of pressure during the short sale process. He's not only trying to avoid foreclosure, but he's trying to get a buyer and a lender to be on board with his plans. If mortgage debt forgiveness taxes or deficiency judgments are involved, he's also going to want to get as much money as possible for his house. Still, the seller can't list at a high price - he'll scare away the majority of would-be buyers. Ideally, he'll price the house quite low and successive bids will help the price creep up to a more acceptable range.

Considerations for the Bank

A homeowner can't hope to get the ball rolling on a short sale without the bank's permission and cooperation. As a result, it's imperative to come up with a price that the bank finds suitable. The best way to do this is by basing the asking price on pending sales. The short sale process typically takes at least 90 days; by pricing it based on pending sales, its asking price will mesh with comparable sales at closing - and that's right where the bank will want it to be.

Considerations for the Buyer

Buyers don't get involved in short sales because they're easy to purchase. In fact, the short sale process demands a great deal of patience from the buyer. The primary incentive that a buyer has for purchasing a short sale is its low price. Buyers become interested in short sale homes when they are priced below market value. In exchange for waiting at least 90 extra days, then, the buyer will enjoy a very low price. If that low price isn't a part of the equation, the buyer might as well just purchase a house the traditional way.

Considerations for the Buyer's Lender

In addition to making the three preceding entities happy, the asking price of a short sale home should appeal to the buyer's lender, too. At the end of the day, the house has to apprise at an amount that meshes with comparable sales. If the asking price is too high, it will not appraise. At that point, the only way that the transaction will come to fruition is if the buyer is willing to fork over the difference out of his own pocket - and that's not very likely to happen.

A Tricky - but Worthwhile - Balancing Act

Pricing a short sale listing is a definite art. On the surface, it looks nearly impossible - after all, how are you supposed to appease all of these different people? In reality, though, coming up with a price that will keep everyone happy is more than possible. The trick lies in taking the time to consider all of these different points of view. With a little work - and a lot of finesse - it's possible to nail down an asking price that will push a short sale forward and keep everyone on board.