Maybe I'm writing this out of frustration. Or maybe as a "plea" to the agents who are involved in listing properties that have upside-down mortgages or little or no equity and don't understand that you can't list the property for what is owed the lender plus closing costs!
As someone who does a lot of short sales either directly for homeowners, or for other agents as a 3rd party short sale negotiator, I too often find sellers whose agent has listed the property for the current loan value plus closing costs.
That's fine if there is enough equity in the property and the market supports the listing price, or for an educated seller that understands they may have to pony up some cash at the closing table for the difference between what the property sells for vs. their payoff and closing costs.
What's not fine is the number of properties we encounter, particularly distressed properties, where the homeowner is behind in payments and heading for foreclosure, and the agent lists the property sometimes $10,000s above market value in the hopes that, somehow, someone is going to ignore what the home is worth and buy this house in order to fully payoff the loan and closing costs.
Not all sellers are educated in real estate. That's why they retain the services of a real estate professional (agent) and place their trust in them to sell their property, particularly when they are facing foreclosure.
Even more frustrating is being ignored by either the homeowner, their agent, or both when the unlikelihood of selling the property at that price is explained. Or, how the only probable way to sell their property is through a short sale.
I am totally amazed that licensed agents, even new agents, do not understand this concept. It's one thing for them to lose the sale because the property does not sell. Its another when these actions forces the homeowner into foreclosure.
Hopef
ully, this scenario will become less of an issue as time goes on. However, with all the information about distressed properties and upside-down loans that have been easily accessible for a long time to both homeowners and agents, we would think this problem would be non-existent.
Sellers. If you need to sell your home and you have an existing mortgage where you owe more than the property is worth, my main advice is to ensure you ask your agent "You want to do what with my upside down listing"?
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