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Q & A: Sellers who can’t reduce their price because they have no equity in their home

By
Real Estate Agent

 I ran into a seller last week that owed $230,000 on her home. She had bought it in 2005. Guess what it is worth today? $200,000? $175,000? $100,000? Nope.

 $65,000! I was a little shocked to say the least. That is a 75% loss in value. No wonder Wall Street is hurting so bad. I’m sure people have seen bigger value declines, but that is the biggest I’ve seen so far. What do you do with these sellers? Theses upside down sellers have three choices.

Number one: Keep the home.

Number two: Sell and bring money to the closing table. Number three: Do a short sale.

 That is one of the reasons that more and more agents are doing short sales. Over half of the expireds in my MLS are classified as short sales. Some of the rest are short sales, but just don’t know it yet. However, there are still some good expireds with equity in the mix. Last week I closed a former expired that had been with 3-4 different agents for the last 2.5 years.

 The sellers didn’t owe anything on the home and had finally had enough. The home had been vacant for 2 years and wouldn’t rent in proportion to the value. That was the key in my getting them to reduce the price. I showed them how they could put their equity in 2-3 smaller rental homes and get way more rental income. On the expireds without equity, you have to see if they are willing to do a short sale. If they will great! If not, there’s not much you can do.

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Sometimes owners have a very hard time accepting the fact that their once valuable asset now is just paying taxes and maintenance. 

My heart goes out to them.  All of them.

Feb 03, 2010 12:35 AM
Jody Lautenbach
Century 21 Premier Associates - Pella, IA

It' tough reality and lots of it to go around these days.  All we can do as agents is help them move along and let them know what the options are.  They are not the only ones in that situation.

Feb 03, 2010 01:00 AM