Determining Value for a Short Sale-What does the Listing price mean?


Let’s start off with; a Short Sale transaction is very different than a traditional real estate transaction.  PRICE is the biggest confusion amongst agents and consumers. I cannot even begin to count the hundreds of calls we get a week from agents and buyers who do not understand this process. They are always asking us why we listed a house at a certain price but the bank countered at another. Hopefully in this article I can clear up some of the confusion.

Short Sale Price NOT Approved by the Bank:

If the short sale agent is doing the short sale right, they are listing the home right away in their Multiple Listing System (MLS).  This is the beginning of the short sale process and most likely they have just submitted the short sale package and they are waiting.  Now, the agent needs an offer to start the next step of the short sale process.  The offer will eventually result in the bank stating what price they are going to accept.

Before the agent lists the property in MLS, she has done a comparative market analysis to determine what the value is (in her opinion). Factoring in any repairs and the condition of the house is a key component of the analysis.  This is where the confusing part comes into play. This price that the agent has chosen is NOT approved by the bank. What does this mean? The agent could list a home based on what they see is a correct value of let’s say $200,000. The bank’s determination of price (done later) could be $230,000.  Once the bank gives their value, the agent must use this new value of $230,000 and you as a buyer will have to come close to that value in order to purchase the property.  The originally $200,000 value no longer applies.  So it does not matter what the agent originally listed in MLS if the short sale price is not approved by the bank.

If your agent is experienced in Short Sales they will know this process and know that everything is subject to the lenders approval. If it is your first short sale as an agent or buyer, this is where you need to understand that the bank dictates everything just like a foreclosure.  However, a banks opinion can be changed!  I can’t speak for other listing agents but we fight very hard with the banks – especially if there are unaccounted repairs or the bank’s price is wrong (occasionally this gets really ugly, but we don’t ever give up).  We always advocate for our clients because we know that it will not sell if it is priced wrong. So it is VERY important to ASK the listing agent a lot of questions as she does NOT dictate what the bank is asking if they have no approved price.

Short Sale WITH an Approved Price:

If a short sale has been approved by the bank this means the bank has told the agent what amount  they will accept for the short sale.  When agent knows an approved price they SHOULD advertise the price that is approved.  Now some agents will not do this, this is when you need to ask the listing agent those questions from our previous post “What to ask when buying a short sale”. 

If you are making an offer on a short sale and you believe the price is too high due to repairs, get bids for the repairs. You can submit these bids with your offer and ask the agent to fight the price.  If the repairs were missed when the bank made there price evaluation, it is definitely worth submitting bids to get the price you want.


If the house is already priced aggressively it is not worth your time to lowball the bank and see what happens.  Most likely, the agent has already submitted an offer that was lower and the bank has set the lowest amount they will take.  Once you submit your offer at the approved price it should only take 1-2 weeks to get that approval letter.


Stay informed with the process and work with your clients to get them the best deal, run your own comps to make sure that it is a good deal. If you’re a buyer, ask your agent to run comparables to the property you are wanting so you know if this is a good deal or not.  If you have any questions about this post feel free to give us a call. If you are here locally in the DFW area and want to know more about a short sale buying or selling our number is 972-342-0011 and our website is


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