You got some thorough answers, John. Lots of knowhow here at Trulia Voices.

You need to file a hardship claim with your bank and get real - if you remain unsure, after reading what you have just read, then rethink your value proposition.

Nobody cares where your house is located. Short is short. Just get real and deal with the consequences, now before things get even worse.

Life will get better, and if you need a dose of immediate reality, check out Kirk Nace's blog - it's in the web reference.

If you're trying for a short sale, it should be obvious to buyers / agents because you'll have it noted as such in the MLS... Before going that route, however, it would be smart to see if you qualify for a loan modification that would allow you to avoid losing your home with a permanent reduction in your payments. If that's not feasible, and you're resigned to losing your home, then you’d be better off with a deed in lieu of foreclosure. It protects you as the homeowner much better, and lets the lender deal with the hassles of selling the home later, completely on their own... Best of luck to you. Feel free to contact me to discuss this further.

Hello John. I am not clear whether your home is already listed for a price that will result in a short sale or whether you just know that the bank would be willing to accept a short sale, but it's not yet listed at a price that would result in a short sale.

If a sale a the full current list price would already yield less than what you owe to the bank, then you'd have to let the buyer know prior to accepting any offers that the agreement will be subject to bank approval. If you don't include the right short sale language in the contract, you'd be liable to coming up with the extra money to be able to close escrow and pay the full commission. If you are not able or willing to pay the lender out of pocket, you have to make the contract subject to lender approval and make sure the short sale contingency is included in the purchase agreement to protect yourself.

On the other hand, if a full price offer would not result in a short sale, advertising that the bank is willing to accept a short sale would potentially invite buyers to low ball you. Unless you have a written commitment from the lender stating that they'll take a short sale, you would not want to represent that the lender will take a short sale. You could indicate that the bank might entertain a short sale offer. If your home is priced too high now and should be priced at a price that would result in a short sale, I would not keep it at the current price in hopes that someone will come along and pay you the higher price just so it won't end up being a short sale. There's a point where you have to decide whether you are going for a short sale or not. Once you are in short sale range, your agent should disclose in the MLS and other marketing materials that it's a short sale so that buyers will know about it prior to viewing the home.

The fact that the property is located in an upscale neighborhood does not make a difference in my opinion. Short sales happen everywhere, not just in the poor side of town. Good luck to you.

John,

Agents and buyers do shy away from short sales due to the time involved with closing one of these deals. Some can take 4-8 months to close!

See if you can get your agent and bank to go ahead and do the work out package for your short sale. This is where the bank establishes what they will accept as a loss. You can then advertise that this work has been done and it will save you time when you do get an offer. It may attract more buyers and agents knowing that the home could close faster than a typical short sale.

John,
Your listing agent should in fact disclose to all parties.
Best of luck to you!

This fact MUST be disclosed. It is a condition which may affect a buyer's decision.

John,
Most agents will post this information on their local MLS listing.

John, if your house is listed at a price that is below what you owe, it's incumbent upon your agent to disclose that fact in the mls. Because agents owe "fairness" to any potential buyer, it would seem to be a violation of ethics (at the very least) to ignore this important aspect of your property.
Short sales are difficult, but there are buyers that are adamant about seeking out distressed properties, so in addition to integrity offered to potential buyers that might NOT want to go the short sale route by disclosing this issue, you may well find yourself with increased showings from a whole new group of buyers that seek out these properties.
Good luck!

John,

Short Sales can scare away some agents, but on the other hand it may attract others.

Keep in mind your agent has to fully disclose everything or runs the risk of getting burned by the bank. For example, usually the short sale will say, "pending bank approval. Commission to be split equally... " something like that.

This will let most professional agents know it's a short sale anyway.

I suggest advertising it as a short sale with emphasizing how easy it will be to deal with the bank.