Why It's Wrong to Treat Distressed Listings Like Regular Sales

Why It's Wrong to Treat Distressed Listings Like Regular Sales

By Michelle Carr-Crowe, CDPE and Homes in Cupertino Schools Expert

In a recent post an agent asked Short Sale agents to consider not pricing the homes so low "just to get a quick sale. Price them at a fair price to begin with and if your not getting showings then tell the home owner up front you will lower by $5000 - $10,000 bi-weekly depending on the price range. Let's keep the values up it's better for all of us in the end."

Even though I am a neighborhood expert in homes in Lynbrook and Cupertino Schools (San Jose, Saratoga and Cupertino) and would love nothing better than to help current owners maintain value, I am not in charge of economic or market forces. It sometimes surprises people to learn it is ethically wrong for listing agents to try to artificially "prop up" property values.

Market value is ONLY what a willing, qualified and able buyer and seller agree upon. I will give them comparable sales data and counsel each party about their goals and whether this transaction can meet them - but the buyer and seller make the final decisions, not me.

There are offers I've presented where I feared the owner might shoot me because they were so insulted...yet they accepted. And other offers where it was reasonably close (within less than 1 percent) and they rejected.

They decide, not me.

Distressed property owners and listing agents need to MOVE the properties fast-they often do not have the luxury of time. Not only are there the notice of foreclosure and trustee sale timelines, there is the sobering reality of added health risks that these situations place on homeowners.

Can you live with yourself if your client suffers a heart attack or attempts to commit suicide because your real estate advice was to "hold on the price another month" only to have another short sale or foreclosure pop up at a lower price-and sell?

Many of the people I'm helping through these situations suffer from high blood pressure, diabetes and heart conditions - they are already fragile and trusting me to guide them out of danger to a safer place.

In my opinion, getting a distressed property on and then quickly off the market, especially if you generate multiple offers, helps the other homeowner and neighbors the most. The worst markets are where there are homes languishing unsold for months and sometimes years.

On the other hand, when I hear neighbors complain that a listing price is TOO LOW, I suggest they consider creating a partnership and invest in buying the home themselves. (I have seen several do this and benefit financially from it.)

If it's that great a deal and value, the neighbors should take advantage of the situation. If it isn't, the best thing they can do is tell their friends, neighbors and relatives about this great value.

I know it seems unfair that distressed sales are still "comps" however, we all need to work together to get out of this situation. Treating a distressed sale like a normal sale risks the very real danger of your client ending up in foreclosure, the hospital or the morgue-and I'm not willing to gamble my client's health to help someone else feel better about property values. It's wrong and unrealistic.