If you are a home seller you may be thinking – I like that idea – not having to payback as much as I owe – well of course it’s not that simple.  Typically several things need to occur before your mortgage holder will consider a short sale:

1)  You are delinquent on your house payments

2)  You have no other assets or ability to cover what you owe

3) Short Sale is the only option to avoid Foreclosure

4) Lender considers short sale necessary and possible

Why would a lender accept less than what you owe? Foreclosures are expensive for the lender – as much as $50,000 or more when all is said and done.  If foreclosure is eminent then accepting a short sale loss may be less of a loss than foreclosure.

Lender’s are not required to allow a short sale – they are 100% in control – and if you have a 2nd loan, like a home equity loan – then both lenders have to approve the short sale.

Impact of a Short Sale to a Home Seller:

1)  Can not receive any money from the sale of the home at closing.

2) Credit will be damaged (typically less than a foreclosure)

3) Lender may file a deficiency judgment against seller for balance of their loss (difference between what they received at closing versus what the seller actually owed)

4) Short Sale may have IRS implications where forgiven debt is considered income – currently there is a moratorium against this – it’s called the Debt Forgiveness Act.

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Impact of Short Sale to a Home Buyer:

1) Offer to Purchase agreement is between buyer and seller, with a contingency that lender must approve

2) Purchase price will probably be less than market value

3) Can take weeks or even months for lender to approve

Bottom Line – Short Sales are anything but ‘Short’- They are complex real estate transactions - if you have any questions about short sales let me know!

Thanks for Reading our Cary Real Estate Blog. Post Authored By: David Williams

David’s a Licensed North Carolina Realtor & The Voice of CaryRealEstate.com

I would do the cool dialogue format back and forth on what he said and what I said, but, ohm, just assume I was nodding and smiling

The gentleman is trying to sell his home – he has it listed with an ‘experienced’ agent but he is not willing to accept that his house is not worth what it was 2-3 years ago – granted it’s a high end subdivision and we are talking about a price swing over $100,000, I feel his pain – but his strategy is to just keep it priced at the old higher value “cause somebody will come along”

REALLY?   Somebody’s going to come along . . .

So even though a stock is trading at $50 a share you think somebody will offer you $75 a share cause that’s what it traded at 2 ½ years ago?   Who is this ‘someone’ and where do ‘they’ come from?  And what about the ‘experienced’ agent that has their sign in the front yard with a non realistic price?  Who is that helping?

As I nodded and smiled I played through the conversation in my head that I would be having with this gentleman if I was at his dining room table instead of an airplane – I know one thing for sure – my sign would not be in the yard of a grossly overpriced listing.

Lot’s of thoughts are dancing through my head on information I could share about fair market value, absorption rates etc – but you probably don’t want to hear about that right now and I’m off to bed – need a good nights sleep for a full day of Convention tomorrow!

Posted via email from David Williams

There are many factors that go into properly pricing a home, this is a simple yet powerful tip!  We all know the age old marketing ploy, price something at $9.99 instead of $10, it just sounds better right? No doubt this approach works it’s magic on our minds when we stroll the aisle of Target but don’t make the mistake of using this strategy with your home.

It can be a HUGE MISTAKE to price your home at $299,999 instead of $300,000!!

Curious Why?  I hope so.  It’s one of those simple things that’s so easy to miss.

Where do buyers start their home search?       Online.

How do the online search parameters work?       By Price.

Figured it out yet?  Online home searches have you select your price range in even increments.

By pricing your home just above or just below a major price point you unknowingly eliminate tons of potential buyers!

If you price your home at $299,000 you have just eliminated the buyers that are looking in the  $300,000 – $350,000 range.

or

If you price your home at $303,000 you have just eliminated the buyers looking in the $250,000 – $300,000 range.

If you have a home that is close to a $25,000 price point consider pricing it exactly at that price point.