Recovering from Neighborhood Short Sale?

[Anonymous]

I live in a small townhouse community in close-in Silver Spring. Lay-out for each is the same, so values should be extremely similar. His short sale list price is less than 70% of what he paid 5 years ago and 80% less than any townhouse in the community has sold for in the last 6 years. DH and I are worried that even for a short sale the list price is way too low, the banks won't accept it, and it will sit for a long time and/or go into foreclosure. Not really our place to say, but it also appears like finances for this family aren't otherwise tight (just bought a new car, continue to take vacations, aren't past due on association fees, etc.). This is making us extremely nervous as we were planning to sell within a year. Can anyone share their experience with how long it took their neighborhood to recover from a short sale or what we can expect from here?

[Anonymous]

Do you know if the short sale price has been accepted by the bank? If they are just putting it on the market at the low price in hopes that it will sell and then the bank will accept that price you are right, the bank may not and just listing it won't really hurt you. But if the bank has accepted that price and/or they go into foreclosure yes all of you will be affected. It really hits you (from our experience, not a realtor here) when you sell and try to get an appraisal for your selling price. We have a townhouse in Springfield which we rent out. Twice now we have lost buyers because the appraisal comes in a lot lower than our sales price due to numerous foreclosures. We just don't have enough cash to bring to the table to get out of it so we just continue to rent it out.

[Anonymous]

OP here. Redfin tags the sale as a short sale, but other real estate listings don't specify so. The owners listed last month and have lowered the price each week (started at 70% of what they paid and going down from there). I can't imagine that means there's an agreed upon short sale figure (since I can't picture the bank agreeing to a price drop each week) but I could be wrong.

[Anonymous]

And it still isn't selling? Have others sold around you? I would be worried not only because it may be a short sale but that they can't sell at the low price either.

[Anonymous]

Others have not sold around us lately. It is a small community with maybe 1-3 sales per year. One unit has been on the market a long time but hasn't been updated since the 70s (owner can no longer occupy it because she's too elderly for stairs). Another unit just came on the market (at a much higher price than the other two) and that owner is reporting good foot traffic. There are a handful of us that have been sitting it out waiting for the market to recover a bit. A few units have been rented out and those owners report no trouble finding good renters.

[Anonymous]

Are there other similar THs nearby? A single short sale or foreclosure should not make a huge difference in what you get, but if there are a lot of them then they become your comps and realtors, potential buyers, and appraisers will look at them in valuing your house. OTOH if it is a single short sale/foreclosure, or one of a small # with a lot of regular sales, then it's more of a blip. Anyway, look around and see if there are other THs nearby and look at what is going on there re: short sales/foreclosures, how fast houses are moving and at what price, etc.

We owned a place in an area plagued by short sales and foreclosures and lost a TON of money when we sold. It sucks.

[Anonymous]

If there are only a few sales a year than the short sale/foreclosure will have a bigger impact. Others sitting on the market for a long time will hurt too even if their condition isn't as good. Appraisers and other realtors look not only at condition but days on market and price reductions when trying to figure out the real market value.

[Anonymous]

We had a short sale in our neighborhood and it did not impact our attempt to sell our house at all. We had many people come through our house and got a couple of offers. What stopped us from selling our house was the unreasonableness of the potential buyers -- they made fine monetary offers but their lists of non-negotiable contingencies were ridiculous. We ended up not selling.

[Anonymous]

what kind of unreasonable non-negotiable contingencies?