GA Home Buyer Baiting
You know me for my factual information on the Atlanta Short Sale market, but what you might not know is that in the world of short sales there is something I am calling, “BUYER BAITING.” The simple explanation of this is dropping the price of a home so low that any buyer in the market would want it to generate an offer. This doesn’t sound like a bad thing unless you know how short sales work. See, short sales are basically a traditional sale with one difference. The bank is lowering their payoff to approve the sell. How does the bank know whether or not a deal is a good one or not? That’s a great question – they do their own appraisal or something else which is called a Broker Price Opinion (aka BPO). In short the bank pays someone to tell them the value of the home. Here’s where the problem arise… consider this scenario.
A home owner is facing foreclosure, the new real estate agent not knowing exactly how to do the short sale, decides to list the home at a ridiculously low rate in order to attract a buyers offer. So far so good – until 60 days into the short sale process (the seller is happy because now they are living mortgage free and have not been foreclosed on) the bank has done their evaluation and they find that the home is 5K, 10K, or 100K over what the offer is for, yes even a full price offer. To be completely fair, this could happen to anyone in a short sale, but more often in this situation. What happens in this situation?
If the bank is wrong on the price then you can fight them, but more often, the buyer loses because they were searching based on their expectations and price range. Let’s stop here and consider this example home.
Here’s an example of Buyer Baiting. There can be all kinds of problems with short sales, but in this example a Lawrenceville home had an original list price was $190K, then the reduced price all the way down to $95K. That’s actually not too far off from market value but the when the bank comes back to this home and tells everyone that their minimum is $105K and your maximum offer is $100K, you’re out, you’ve wasted all your time and it’s time to start over and begin looking again.
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