Just Because the Bank is Willing to Take Less in a Braemar Short Sale…
Toward the end of summer, I was taking a family looking to purchase in Bristow through some Braemar homes. We saw many Yardleys, and as I track the value of Yardley and similar models built by Brookfield in Braemar through my bi-monthly Braemar Property Value Reports, I was shocked when we came across a Yardley priced substantially below the going market value.
A call to the Listing Agent indicated this Braemar Short Sale had been approved by the bank on a previous contract at that price, and that they needed no more than that. Mind you, the difference between what the bank was willing to accept and what they could have easily gotten in the market was at least $50,000-$75,000, if not more since values were increasing. And a quick tour of the home indicated the home was nicely upgraded and had no major issues.
As a Braemar Short Sale Agent myself, I was curious as to WHY another agent would price a Short Sale so low, just because the bank had already said okay to that number? After all, as Braemar Short Sale Agents we represent the best interest of the Sellers, and that means getting the highest payoff for the bank to minimize tax implications that can be associated with the short payoff. The bank doesn’t pay the taxes on the amount of forgiven debt. That falls to the Sellers. And at a very modest 15% tax bracket, with an additional $50,000-$75,000 that wasn’t collected toward the loan payoff, that’s anywhere from $7,500-$11,250 in tax debt that a Seller may have to pay to the IRS, not to mention the state income tax.
Naturally, another side effect of the low sale, because the final sales price was only a smidge higher than the approved list price, is decreased property values for Yardleys in the neighborhood. Again, a Yardley in outstanding condition sold for substantially less than it should have. The bank could have made more money, the Sellers been forgiven less mortgage debt, thus incurring less tax implication, and the neighbors could have seen a higher sale price.
Picking the right Braemar Short Sale Agent goes beyond who can pick up the phone and ask the bank what they will accept. It’s knowing the market values in the neighborhood and the pulse of our Braemar real estate market. If you want to hire someone who knows Short Sales and knows our Braemar marketplace, let’s talk.
Chris Ann Cleland, Associate Broker-Licensed in Virginia, Long & Foster REALTORS®