Most people who read my daily Phoenix AZ real estate blog and musings on Scottsdale AZ real estate know that I have not been a fan of short sales.
To clarify, I am referring to the vast majority of short sales listed on the AZ MLS (multiple listing service) that are, in fact, not approved short sales. These are listings posted by Phoenix AZ real estate agents who are picking arbitrary prices, hoping to solicit offers.
The offers are subsequently, submitted to the banks for their approval.
The problem I have is that the sales prices and offers to purchase have little bearing on whether or not banks will accept the short sale.
When deciding on whether or not to accept a short sale, the banks weigh heavily the financial hardship and current financial condition of the borrower before deciding on a price. As are a result, the prices on the MLS are random, arbitrary at best.
The prices, then skew the actual market for houses. Buyers do not know true market pricing. In fact, short sales adversely affect those who are trying to sell their homes. And buyers are mislead on what is really for sale at what price.
However, there is an upside to short sales that are approved by the banks.
First of all, It would be almost impossible to be approved for each Short Sale. The bank would have to do a Broker Price Opinion on all properties all the time. Short sales are a pretty good model, but they could be streamlined to speed up the acceptance. The most frustrating thing to a buyer is waiting all that time and the find out it’s rejected.
The other issue is a (potentially) false market as prices are random. We need a system in place to keep short sale listings priced at/near market so other home prices are not dragged down by the neighbor who is selling the home short.
Short sales are not all bad.
In fact, approved Short Sales can save the bank money, help the seller avoid foreclosure on their credit, help the buyer get a great deal on a house, and help the community by not having a vacant house.
If you are a buyer, make sure you contact a real estate broker who is knowledgeable with Phoenix AZ REO s and Scottsdale AZ lender owned real estate.