A customer who is selling an investment property as a short sale (more is owed than the property is worth) was perplexed last week when my market analysis for his bank showed the property’s market value 15% higher than the offer the bank was reviewing. I explained that as a distressed property is was not unusual to see offers much lower than the property’s current market value. Was my response based on fact or fiction? I went to MLS statistics and reviewed first quarter of 2009 residential sales in Manatee County.
It is very apparent that distressed property (residences which are short sales, in foreclosure or bank owned) lists and sells at a much lower price than non-distressed property: $158,117 for the average distressed sale, or 30% less than the average sale price of $224,681 for a non-distressed sale.
The data also shows that the average distressed sale takes 30 days less than the average non distressed sale, a definite indication that distressed properties tend to list at rock bottom pricing to garner and get offers sooner than their counterparts.
What do these facts say about my customer’s property? His offer is lower than the average, but then again, the property’s not average at all. What is consistent is that the offer is certainly lower than it would have been were the property not a short sale. Will the offer fly? Only the banker knows for sure, and that’s in keeping with every distressed sale.