What is a Short Sale?
Short Sales are an option to consider if your home will probably NOT sell for the Amount You OWE on the Loan after you have paid all the costs associated with selling your home.
A Short Sale is a negotiated Solution with the owners of your note (s) which requires patience and persistence. It’s not a simple negotiation. It will require your real estate agent negotiating with a potential buyer, jumping through the hurdles to get an acceptable offer to all parties AND THEN Negotiating with the bank & perhaps their subsidiaries including the Investor who may suddenly seem to appear out of “nowhere” with a monetary interest in your property.
The Investor is your Ultimate Money Man & makes the final decision in most cases. You and/or your agent may or may not deal with him/her directly in the process but be assured that their influence is substantial.
While it is true that the bank does not really want your home back…they are bankers, not real estate agents…they DO want as much money as they can possibly get for the loan. After all…you did agree to pay them the amount you signed for.
Now, in situations similar to what many residents of the State of Michigan have faced recently, there are a number of neighborhoods for which the Value of the homes have dropped considerably. First of all: KNOW YOUR CURRENT VALUE.
How Can I Determine the Value of my Home?
It is wise to invest in an appraisal or accurately prepared Comparative Market Analysis. If you would like a referral to an honest, competent appraiser, you can contact our office. Our team at Audu Real Estate can also provide a thoroughly researched Comparative Market Analysis.
This is NOT the time for games. In-fact, if you choose to utilize a Comparative Market Analysis, ask the Realtor ® to create the analysis using ONLY Sold Comparables and Expireds. This will give you the most realistic picture of what the market in your area is currently doing. The fact is that many homes currently on the market will NOT sell, so why use a Non Starter to determine how to price your home. Focus on the Success Stories…the homes that have SOLD to increase your chances of Success!
Having arrived at a price that will SELL your home, Reduce that amount by 1-5%! Then…Put it on the market. Jump into the game like you really mean it. Time is not your friend in this process.
Many times homeowners think that because they are not going to be getting much out of their home, they are giving the house away and therefore don’t really put effort into presenting the home properly. There is also a temptation to be uncooperative about showing your home because you are resentful about having to sell it. This is a big Mistake.
However, there are some things which you can do to enable a more efficient process if you have to sell your home for less than what you owe on the mortgage aka as a Short Sale. Here they are:
Document your financial hardship…
You will be required to give a fairly detailed accounting of your financial condition which will include statements from all bank accounts, investment accounts, tax records, a credit report, and a letter documenting your situation. Be prepared to submit this documentation in an organized fashion and include a letter/statement which authorizes the bank to speak to the appropriate professionals such as your real estate broker if your home is listed.
Set the Stage…
Just because your home is being sold under less than ideal circumstances does not mean that it should be portrayed this way in your marketing efforts. The goal of a short sale should be to sell your home. Remember that your home will be competing with potentially hundreds or thousands of homes.
Unless a home buyer falls in love with your home, you won’t even have the chance of negotiating a short sale. You may also inadvertently attract even lower offers from buyers who smell desperation within the mess. It should also be noted that home buyers are often wary of the long drawn out process that the negotiation of a short sale requires so make it worth their while to wait!
Price to Compete!
One of the most interesting points during my listing presentation is when I show home owners a map of just how many homes are listed or have sold within their community within the past year. Most people are more than a little surprised.
There’s a lot of activity happening in the real estate market right now and you owe it to yourself to have an accurate understanding of your neighborhood market. Run the other way if an agent shows up at your door to take your listing in hand without documenting in detail WHY and HOW he/she has arrived at a pricing strategy and listing price.
Detach the Sentiment…
Proper pricing and subsequent adjustments are critical if you are to succeed. A market rife with foreclosures sometimes makes for a ‘moving target’ when it comes to determining the right price. Be prepared to make adjustments quickly to reflect market realities which will include banks unloading more of their extensive foreclosure inventory in 2009. Emotional attachment about why this ‘awful situation’ should not apply to your particular home will not serve you well when you’re dealing with buyers who are primarily looking at the bottom line.
On the other hand…a good deal cannot be hidden! We’re seeing homes priced competitively getting several bids and sometimes selling above the listing price. These homeowners took the time to understand their market and to respond accordingly. My counsel if you’re determined to Sell Your Home…is to take note.