As a Realtor® one of the most common questions I get asked is "What is my house worth?" In my opinion, there are two reasonable answers to that question. One answer is that based on current knowledge or a market analysis, in your opinion their home is worth an approximate amount. The second answer (which is perhaps more accurate, if somewhat less precise) is that their house is worth what a buyer is willing to pay for it at that moment in time.
I love to be a part of any conversation at a social gathering when the topic of home prices comes up. People love to talk about how much the value of their home has increased since they bought it and how much they think they could sell it for. They go on and on about how high of a price some neighbor who lived next door sold his or her home for a year or two ago. The price, square footage and how rapidly it sold (for above asking price) are burned into their memories, but this is rarely the case for the foreclosure across the street that sold a month ago for significantly less, and they never seem to realize that the house around the corner with a similar floor plan and finish-out to their own home has been sitting unsold for over 6 months and hasn't had a single showing in the past 8 weeks. Bottom line is that in a rapidly changing market, sales prices from a year or two ago do not reflect current market conditions or current home value.
In a Short Sale situation, there are many ways I can assist financially challenged homeowners, but creating equity where none exists is not one of them. Nobody can do that. However, helping clients to move forward from their difficult financial situations to possibilities for brighter futures is something that I can do and delivers lasting value in the lives of my clients.
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