For the financial institutions and investors who backed the failed mortgages involved, however, questionable short sale deals literally come at a high price.
Last year, more than 10 percent of Northern Nevada’s 2,096 short sales involved double-ended deals where the same agent or listing entity represented the seller and a prearranged cash buyer. In addition to limiting the listing’s exposure to the open market, the properties also were sold far below fair market value.
A Reno Gazette-Journal investigation of 160 such deals based on Washoe County and Northern Nevada Regional Multiple Listing Service records showed an average appreciation of $48,211 per deal or flip. For banks that approved the deals, they represent more than $7 million in potential lost value had the properties been sold for fair market price.
In defending short sales that offload properties far below market value, agents and investors involved in such deals point out that banks still have final say in approving the pricing.