Had the bank and agent not made mistakes, the two originally interested buyers would have made offers and likely started a bidding war. There is a good chance the two buyers would have driven the price up to the fair market value. Most bank-owned properties are priced below market for a reason. Banks will discount homes they sell because they sit empty for months and are usually in bad shape by then. Foreclosed owners tend to go screaming and kicking and do damage to the property. The bank missed a full-price sale and lost $33,000. The property was acres of raw pasture. There were no problems with it. The buyer had lived down the road from it for years and was very familiar with it. He submitted their below-market asking price, and the bank accepted it. He saved $33,000 because the bank’s agent didn’t perform well and substantially underpriced the property. The bank suffered a significant loss.
ERRORS IN PRICE ADJUSTMENTS ARE COSTLY
There are times when pricing adjustments may need to be considered. For instance, let’s look at Tim and Sue’s situation.
Tim and Sue’s Home Listed @ $345,000 Comparable Listed Home A: $368,000 Comparable Listed Home B: $349,000 Comparable Listed Home C: $345,000 Comparable Listed Home D: $333,000 Comparable Listed Home E: $329,000
Tim and Sue appear to have priced their home competitively for the market but as we discussed in a previous chapter, pricing a home to "Listed Homes" and not actual "Sold Homes" is not a smart strategy.
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