As we have seen in this market with a lot of short sales and bank owned properties, many of these homes are listed way below their fair market price. Why do the banks or agents list it so low. They want to sell right away, within days of the listings, and they want to get a higher than list price. This form of marketing creates and auction like environment. Whie it may be good system for sellers and listing agents, it certainly would be frustrating, misleading and time wasting system for the buyers and their agents.
In fact, I talked to an agent who represents the bank a few days ago. They just listed a foreclosure house in Orange for $500000. This is a newer house, about 3500 sq ft from inside. When I talked to the agent on the status of the house, he said in the first 2 days they had over 250 showings and it will sell over $150,000 over list price! They already many offers the first day it hit the market.
If one is selling a home with a Short Sale scenario, here are some reasons one may want to start listing it at a fair market price or even just slighly higher.
If you list at fair market price, and if it does not sell at the list price, you can always reduce the price. This way you have a history of price reductions and a track record for the lender to accept the buyers offer price and not the list price.
If the property is listed too low to begin with, and if it sells at a much lower price, there is chance the seller could file a lawsuit claiming it could have sold for a much higher price.
If the list price is low and the seller accepts the offer, it must still be approved by the lender. They usually have several appraisals and Broker price opininons(BPO) to come up with a sales price. At the end of the short sales period, the approval which typically be from 90-120 days, you may have a price issue with the buyer who wants a lower price and the lender who wants a higher price. And now the buyer may back out and there is no deal.
On short sales, it makes sense to list at fair market value!
This will benefit the seller, the buyer and the lender and will make the short sale transaction much easier and faster to close.
Mike Patel's Blog: Real Estate - Talk 