Marketing property in the face of foreclosure means marketing on a short timeline that ends with the client losing control of the property. Since the property is in foreclosure, the seller’s distress is public. These factors argue in favor of below market pricing. Such pricing should be carefully documented so that it is clear the decision was an informed one made by the seller. That means a good CMA/BPO and written documentation of how the listing price was established. Written documentation, whether in the form of emails or client letters or more formal pre-printed documents, showing how pricing was determined is the first step in disclosure for risk management purposes.
Pricing documentation may raise the issue of a “short sale” if the listing price is near or below the seller’s payoff. If a short sale is a possibility, short sale disclosures should be made as soon as the listing is taken. Click here for a detailed discussion of short sales and short sale disclosures. Property priced to move quickly to avoid foreclosure can also raise multiple offer issues, even in a down market. Therefore, it is a good idea to have talked to the seller about multiple offers and have a plan for how they will be handled already agreed upon. It is absolutely critical that the buyer’s agent explain multiple offer issues to their client, and document having done so, as soon as multiple offers become likely. Click here for a detailed discussion of multiple offers.
Risk management disclosures are really just the documents an agent uses to show the client was fully informed about the situation and the agent’s actions. A client faced with foreclosure is looking for someone to save them. If that proves impossible, they may turn on the savior. Residential buyers in the pre-foreclosure market are looking for a deal. Getting that deal may prove a lot more difficult than expected. The potential for dashed expectations is high on both sides. The wise agent will control expectations by disclosing early and disclosing often.
Back to Top