How Can We Sell Upside Down Homes and Have Buyers and Sellers Happy

If they bought  and the market goes down, That isn't a reason for them to go into foreclosure. The payment doesn't change depending on the value of the home. It only means that they need to stay in the home until the value comes back. If someone is willing to pay more than  it is worth,sell it. But, don't expect the lender to take the riskfor the money above the appraisal. 

I wouldn't cut my commission. Would you ask the buyer to pay you above the reasonsble rate for your area for selling it. What are people thnking? Values can decrease just like the increase.

Melissa- I don't mind a bit. I think is crazy that someone would risk buying a home at a high ltv and then they would be upset because they lost value. They haven't lost any money yet , They haven't sold it.

Shaun Wren

Centric Mortgage.

Shaun,

I think what Melissa is trying to say is that a lot of people, especially here in Florida, are seeing drastic increases in taxes and insurance.  If the homeowner has these items escrowed, then yes their payments will go up.  Then throw in the fact that some of them may have been put in ARMs that are coming up on adjusting, this would cause the payments to go up again.

In some areas of Florida, people who bought their home 2-3 years ago are seeing the property values drop back to what they purchased the home for.  This would put them back to almost the LTV that they had when they purchased minus what little went to principle from their payments.

If they can no longer afford the payments because of the taxes, insurance, and rate adjustments (and heaven forbid they were put in an Option ARM that have forced them into fully amortized payments), then their only option may be to sell to avoid foreclosure.

But what you say is also true.  A loss is only a loss when the property is sold, just like with stocks.

Melissa,

You do pose an interesting issue that will become more and more evident.  I have been asked this very question by some of my realtors.  How can they sell something when the seller owes more than what it is worth?  My answer to them is find a buyer that is willing to pay enough to payoff the seller's mortgages or tell the seller that they have to come up with the money to pay the difference.  As harsh as these sound, there is really not much more one can do.  If neither option is available, then the seller needs to find a way to come up with the extra monthly income to cover the increase(s).  As soon as they let themselves go 30 days late, they have made it that much more difficult to buy a new home after selling.  Hope this answers your question.

Never drop your fees, especially in this market.  If anything, increase them.  Reason... it is a tough market to sell in right now.  Tell your sellers that you have to spend extra time and money to market their home and make people want to buy their home over the thousands of others that are on the market.  You will do everything you can to get their home sold and remind them that you do not get paid until the home sells.  If it does not sell, you are out the money, not them.  The only time I can see an exeption to dropping the fee is at the closing table because one of the parties is just shy of money.  I know I have dropped my fee a little because the borrower was short a couple hundred dollars.  If I did not drop the fee, then the deal would have died.

For what it is worth I am getting consistently higher fees in an area where a discounted fee is quite common. I have also eliminated almost all newspaper advertising. Remember, in any business it is not just what goes in at the top... what is important is what is left at the bottom...or as an old Greek gentleman used to say... "da guzintas gotta be bigger den da guzouttas"

In a market where prices are stable or perhaps declining, where there is commission pressure it is not possible to operate without strict control of the expense side. An additional expense cannot be buried by escalating prices giving higher commissions. (By the way the same is true for builders... they cannot bury errors or overruns with price increases... for some a new concept).

Ok , I have read enough to open my mouth again.

Look, buying a house is the biggest Investmentthat most people will make in their lives. The key here is that it is an INVESTMENT. Not all investments are moneymakers. There is some degree of risk. As a Realtor is it you fault that the values has drooped? No.  Will you feel sorry for the seller yes.

Let me put it into perspective:

If you buy a car- over time it will decrease in value. You take your car to have a part put on.

It doesn't matter what the parts cost or what the car is worth. It could be a Kia or a Mercedes. It doesn't matter. you are paying for a service.

As a Realtor you are providing a service.  How can you go to your next customer and say I have to charge you the going rate because you are not in a financial hardship?

Perrin- if you put money into a home wouldn't that be an investment? Are you not hoping  the purchase that you are making would go up in value and someday you might pay it off an leave it for a relative or keep it as an asset?. An investment property is something completely different. It has higher interest and even Moe Risk to the Lender.

The point that i am trying to get across is this. If you bought the house and the property value drops, you should still expect to pay full price for the service of a Realtor that will provide you with full service.. 

If you are not Buying a home as an investment, You would be better off to rent. No upkeep, no taxes and no risk.

A home is a HOME FIRST. The investment aspect, though perhaps significant is not why you buy. It may be a reason but should not be the main one...you buy a home to live in, because of what you can do with it, you buy it for security...both financial and personal. you buy it to enhance your family. ONe of the problems with the market earlier is people started looking at a home first as an investment then as a home.You paint a house not because it is going to give you money back (because it won't pay for itself...usually) or you remodel a kitchen (again you wont get most of that back either) because of what the do to the home/house. Investments are stocks, businesses and income property. The average person is a poor investor. You buy a home to live in and the long haul will usually make it a wise financial decision. Close but not the same thing...