Listing Soon-To-Be-Distressed Deals
Over the past 6 months or so, I have seen many brokers list deals at values that just save the hides of their owners. What I mean by this is that if the property sells at the listed price, the seller can get out and pay off his debt and maybe even walk away with a little lunch money. The owner is usually dangerously close to losing the property and is most likely in a default situation. These brokers are essentially trying to save the day for the owner. What they are failing to realize is that the property is in its current condition for a reason. Even if you are able to find a buyer willing to pay the hide-saving price, don’t you have a moral obligation to inform the buyer that he is overpaying for the property? Essentially, selling these soon-to-crater properties is the equivalent of selling a car that you know will need a new transmission soon and not disclosing it or adjusting the price accordingly. It just seems like a huge waste of time anyway. Buyers today are much more educated than they were just a couple of years ago. It doesn’t take too much due diligence or market knowledge to know that you are more likely to get a better deal tomorrow than today (of course, there are a few exceptions to this theory mostly existing in irreplaceable real estate or strong single-tenant properties). I wrote about this in the past here but I think the time has come to point the finger squarely at the brokerage community. It is understandable why an owner would want to market a property at what is an unattainable or over-market price – they have no choice in the matter – they can only sell at that price. It is not understandable why a broker would not be truthful as to what reality is and push to market at a truly deliverable price or not agree to market the property at all. Hopefully this trend will taper off in the coming months.
