Like It Or Not, You Do Compete…
…with short sales and bank owned properties.
I meet with sellers all the time who want to tell me why their house is not like the one around the corner that is getting ready to be foreclosed on. 
They feel like they shouldn’t be compared to that “dump” across the street that has gone back to the bank. Their home is nicer, prettier, cleaner and better kept. Usually, all of those things are true.
However, buyers initially are looking for a basic set of things. Almost every buyer I meet identifies a minimum number of bedrooms, bathrooms, square footage and location. Then they start going into all the little details that would be the “ideal” things they want. But up front, it is the basic four plus a price range. I’ve not had a buyer ask me to sort out the bank owned/short sale houses from the rest of them. Buyers don’t think that way. They want to look at all the houses that meet their criteria in any given area.
Let me say that again… Buyers don’t think that way. They want to look at ALL the houses that meet their criteria in any given area.
Certainly a home in superior condition vs a similar sized home in run down condition will draw a higher sale price and also sell quicker. But not radically higher in price. Buyers do shop around and compare everything. They won’t spend $30,000 more for your 1,300 square foot home that has clean carpets and fresh paint over the similar house the bank has that needs those things. That kind of money goes a long way toward fixing a place up.
I don’t like having to compete against the short sales and foreclosures any more than you do but it is the reality of the marketplace. If you choose to ignore this, then you’ll likely sit on the market with no showings and no offers. It’s up to you.
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Dale Chumbley
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Very true. The only caveat is that many buyers won't wait for the process of the short sale to be completed, even when they think they will at first, as I have seen with my short sale listings. But homes competing against short sales won't see a huge bump
Yes Mike, I've experienced the same thing. Almost every buyer I've worked with has clearly stated they want nothing to do with short sales. But, they still use them when comparing "the rest of the houses" on the market. Thanks for stopping by.
Dale – it really hurts when you have a home priced well and start getting showings to have a property come on the market around the corner for $75k less – it is what it is though and some of these sellers may have to wait or get really aggressive.
Yes Thesa, there is nothing worse than pricing a home properly only to have a short sale or bank owned home come along and be significantly below yours. It really forces the decision of get aggressive or wait. Thanks for your thoughts.