Here’s the dilemma you are representing a property owner who is in receipt of a notice of default. You will find that starting out 90% of loan delinquencies are reinstated before a trustees sale can occur. I also believe you will find that how long the borrowers have owned the property will determine how aggressive they will want to be while trying to hold on to the property especially when there is significant equity to protect.
Borrowers always start out looking for a new loan to get them out trouble, or at least that is the natural way for them to think and in many cases where the amount in default is small that could be a viable option, the problem is that almost always the resulting payment is the same as it was when the default was recorded and at its worst the payment will reflect the pay back requirements for the funds used to reinstate the note. It is important to say that if the borrowers income does not improve to the extent that it will be able to absorb the increased mortgage payments then the future prospects of the borrowers being able to continue living in the house are at risk. As the agent for the owner you will discuss many options with the owners and this may be where the agent will have to decide weather or not to continue in this transaction. during the initial interview with the owners it will be critical for the agent to determine what owners intentions are, because right now the agent does not have a listing to sell and that maybe premature at this stage of the process but you do not have qualified borrower either because they are in receipt of a notice of default. What are you going to do?
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The last year or so I have started getting calls and e-mails about short sales and how they are driving many people involved in them crazy. Buyers who are seeking a great short-sale price often report being seriously frustrated….
This real estate article was posted from Home Front real estate blog
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Sellers, please do not go with the agent that gives you the highest bid on their opinion of your homes value. They are “buying” your listing and the only person that is going to pay is you. Of course you can always lower the price later but as most find out you have already missed the boat when you do that. Many agents are not strong enough to tell you what you need to here (the truth) and not what you want to hear (that your home is the best they have ever seen and worth more than you ever dreamed). I for one am not fond of promising the world and letting you down in the end - what kind of business model is that. Lets look at this.
When you over price your home in any market but especially in this market you are missing a huge market share of potential buyers. This is the time when your home gets the largest amount of exposure to the active, ready, willing, and able buyers (not lookers or investors) and when there is a large inventory like we have now they won’t be checking back on the price of your home.
It is absolutely understandable that you want the most out of the sale of your home but by overpricing a listing it often costs the owner more money in the long run than if they were to price it properly up front. You may know that you are willing to negotiate but most buyers are not thinking of how much they can knock off the price - they are simply comparing what is on the market right now and wondering why one person thinks that their house is worth so much more than comparable properties in the neighborhood. Plus when a home is first listed the seller is usually much less open to negotiations.
When your house gets listed it goes onto the “hotsheet” that most agents review daily to keep an eye out for their clients. Since the vast majority of homes sold in the US are not sold through advertising (believe it or not) buyers agents are very important to the sale of your home and they are there to look out for their clients best interest. Even if your home is perfect for their clients needs they most likely will not show it (if there are others that do) if it is overpriced.
If you lower the price later your home will go into the “price reduced” category which these days is not all that unique and it becomes lost in the shuffle. Now your home has been on the market for some time and the longer it is on the market the harder it becomes to sell because everyone wants to know what is wrong with it and you start to attract a different kind of buyer. Now any offers that are brought to the table are made by people who know that you may be a little desperate and who want everything for nothing. In other words this is when we see the most low ball offers, and often sellers feel obligated to work with these offers because they need to move. When the dust settles a solid majority of the time the seller has sold for less money than they would have made if they had priced their home realistically in the beginning.
There are a number of other factors that can work into play costing you, the seller, more money by not pricing properly up front such as lending rates on the rise, having to pay points to lock your loan for a period, the possibility that you can miss out on the home you want to buy, paying two mortgages (and utility payments), depending on time of year there can be tax implications, and many other situational costs.
The bottom line is that when you plan to sell, price your home realistically. Buyers are smarter and more well informed today than ever before which means that they are less willing than ever to buy emotionally or over pay for anything. If you price your home at a realistic value you can count on less stress and larger bottom line.
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Understand first of all that there IS a difference between price and value. Price is the amount you are asking for the property. Value is buyer perceived, and this perception of value is influenced by many factors such as location, features, condition, comparison to other purchase option, etc. By attending to details that can have a positive impact on the value, sellers can significantly increase their chance of attracting qualified buyers willing to pay the asking price.
Follow these tips to help maximize your home’s value:
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