Pricing homes in 2003 and 2004 was easy - just add 5% to the price the last home sold for in your subdivision and you had it. That is not the current situation; it was a seller’s market then, it is a buyer’s market now and a weird one at that. First, understand that the market determines what your home is worth. Not me, not you, not the neighbor, not how much you owe. What is further controlling the market value of your home? The internet and lenders.

The Internet has leveled the playing field for buyers. Today buyers can sort through thousands of listings and find the best values from the comfort of their home. And, Internet buyers are generally very well prepared. They have done their homework and know what the $/SqFt for a given property in a given area should be. And, if a property is over priced, they will not even take the time to see it; there are too may well priced properties on the market to waste time on ones that are not. So, the concept of pricing high so you have room to negotiate is no longer valid. You need to price the home just a little above the market value or it will never be seen.

What lenders can lend is limited by appraisals. And, appraisers care more about square feet than condition. So, if there is a bank repo down the street which sold for $200,000 and is similar in size to your home, the appraiser is not going to appraise your home for $300,000. Even if you found someone willing to pay $300,000, they could not get a loan.

So, you have to be (painfully) realistic on the pricing if you want to sell. What if you owe more than the market value? Four options:

• Price your home to market and pay the difference between the sales price and what you owe. Depending on your situation this could be a lot of money
• Don't sell; just wait.
• Rent you home for a couple of years until prices are back to the point where you can sell without loosing money. If this is a consideration, call me for a referral. I can referral you to a very good property manager.
• Walk from the property (deed in lieu, foreclosure, etc.) This is hard but it might be your best option.

Did you notice that I did not include short sale in the above? Before I continue, a short sale is when the bank agrees to accept a discounted payoff for the debt. Note that a short sale approval process can take 4 to 6 months after all the documents are submitted until you have a realistic chance of selling your home. While short sales are touted as a great option, in my opinion they are not for most people. Here is my reasoning.

In order to qualify for a short sale you have to have and keep the mortgage current until the home sells. However, in order to get approval for a short sale from the lender you have to provide the bank extensive financial records proving you do not have the funds to continue paying the mortgage. However, (this is where the logic fails) If you could prove that you can not afford to pay the mortgage then you really don't have the money to pay the mortgage for 6+ months. If it sounds like a catch 22, I think you are correct. But, you might say, "A lot of people are selling their homes via short sales." The answer is no.

For example, in the last 90 days 7,870 single family homes were sold but only 78 of this number were marked ONLY as short sales; the rest might have been marked as short sales but they were also marked as bank repo's or foreclosures. And, by definition, a property can not simultaneously be a short sale and a foreclosure or a repo. So the number of short sales that actually complete is very small.

The net of all this is that unless you absolutely need to sell your home now, don't. If you have to sell and you purchased your home before 2005, chances are you can still sell your home for a profit. If you can't afford to pay the mortgage, look to some of the new programs currently under consideration in congress. Also, there are people who will actively work with you to have your loan re-amotized, lowered or evan a portion forgiven. Call me for a referral; do not deal with the con artists advertising on TV and on road side signs.

If you would like to know the market value of your home, call me for a free, no-obligation, no-hassle analysis.

Eric Fernwood
702-358-8884
EricFernwood@Gmail.com