Klmorgan, Home Seller in Aldie, VA

My Realtor wants me to short sale my house to make a low ball offer work even though I can afford the payments and my rent where I live now, why?

Asked by Klmorgan, Aldie, VA Tue Mar 23, 2010

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Kimorgan:

Thanks for clarifying. (Hey, I guessed the situation correctly!)

I stand 100% behind my earlier recommendation. (And thanks, Joan, for the kind words.)

And with the information you've provided, I suspect that Dan correctly answered your specific question: "Why?"

I hope we've all given you some advice on which to base your decision.

Best wishes.
0 votes Thank Flag Link Tue Mar 23, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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The realtor wants a commission. By going this route they are more likely to get one. <slaps head>
0 votes Thank Flag Link Tue Mar 23, 2010
Thanks for getting back to us Klmorgan.
It sounds like Don was right on and I have to say, he gave absolutely awesome advice.
If you have to bring the difference to the table, by the way, you are not actually short selling your house but simply having to pay the difference. The bank would still be getting their money. You would be out the money. Admittedly not a cool situation.
I would say if Don's advice sounds feasible, go for it. If you don't have to sell now, or if you can't get the price you need for you house, his advice sounds like a great alternative.
0 votes Thank Flag Link Tue Mar 23, 2010
Hi Everyone,

Sorry my question was confusing here is the deal, I am currently living in a rental in Aldie, VA but I own a home in NC that is vacant and for sale. I owe 196,500 on the house and have an offer for 194,000. After all is said and done I will need to bring about 14,000 to closing and I can't afford to do that, so my Realtor is pushing me to short sale the house just to get rid of it. I feel like she really doesn't have my best interest in mind b/c she knows I can make the payments I just don't have a lot of savings right now to pay closing costs. I guess I just don't understand why this deal is urgent for her when I can still afford the house.
0 votes Thank Flag Link Tue Mar 23, 2010
Your question is somewhat confusing. But I'm guessing you own a home in North Carolina that you want to sell, but right now you're living in Aldie and renting. If that's correct--

As Joan says, the best person to answer that would be your Realtor. However . . .

If you can afford the payments on the North Carolina property and the rent where you live now, then don't sell. At least don't do a short sale. As Joan also says, for you to do a short sale, you have to demonstrate financial hardship. It doesn't sound as if you have that. Further, if you're living in Aldie and the property is in North Carolina, is the North Carolina property rented? If so, lenders tend to be far less flexible on short sales on investment properties than they are on primary residences. That'd make your task even more difficult.

Have your Realtor do a CMA on the property you want to sell. Find out how much it's really worth. Then: How much do you owe on it? If you owe less than what it's worth (let's say maybe 8% or so spread--house is worth $100,000 and you owe $92,000 for example) you can afford to sell, pay a commission, and pretty much break even. If you do owe more than it's worth, then--while a short sale would be the way to sell it--it doesn't appear that you'd have much of a chance getting the short sale approved.

So: Hold onto the house.

One other possibility: Assuming the North Carolina house is a rental, you might be able to get a bit more every month and have a chance to sell for more by offering it as a lease-option. Using the example above, if the house is worth $100,000 today, it might rent for $750. (These are just made-up numbers, but probably not too far off.) You could structure a 3- or 4-year lease option with a $2,000 up-front option fee and monthly payments of $850, with $150 credited every month to the purchase price. Set the purchase price in 4 years at $120,000. So you'd initially receive $2,000. You'd receive $100 every month more than just a regular rental. That's $1,200 a year, or $4,800 over 4 years. At the end of 4 years, if the tenant-buyers bought, you'd credit their option fee of $2,000 and the $150 a month ($7,200) to the purchase price--that's $9,200 in all. So, in 4 years, you'd receive $110,800 ($120,000-$9,200). If they didn't buy, you'd keep the option fee, the extra $100 paid each month, and you'd then be able to sell your property or offer it to someone else on a lease-option.

But: Don't attempt a short sale unless you really have to sell.

Again: Discuss all these factors with your Realtor.

Hope that helps.
0 votes Thank Flag Link Tue Mar 23, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Kimorgan,
I think your realtor would be the best person to answer that question.
I'm a little confused when you mention rent.
If I understand you correctly, you are selling your home but the market value of your home is less than what you owe on the mortgage?
You really can't do a short sale unless you can prove to the bank that you are in a financial hardship since the bank would have to be willing to accept less than they are owed.
It sounds like you are in the unfortunate position of so many homeowners these days with being upside down on your mortgage but I don't think I can answer your question other than to say that you need to go over the comparables with your agent and see what other recent comparables have sold for in your area and what you present competition is on the market for.
Then you will at least know if the offer really is a low ball offer and you can treat it accordingly.
0 votes Thank Flag Link Tue Mar 23, 2010
Why are you selling then? You can rent the place and hold out until the market turns around.

I don't know your circumstances, but that would seem to make sense.
Web Reference: http://fglick.com
0 votes Thank Flag Link Tue Mar 23, 2010
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