If you are in a situation where you must sell and the reality of the market in your area means that you will come to the closing table with money, you are not alone.  This is what many people are facing right now…so what do you do if you do not want to sell short or allow the bank to “take the house back”.

Unfortunately, it just depends on your situation.

If you absolutely need to move, you have three options…you can sell the house for what it is worth in today’s market and come to the closing table with money or rent the house out.  Your third option is to stop making payments and ask the bank to allow you to do a short sale, but remember that they can come after you for the difference.  Even if you agree to no deficiency judgement, beginning in 2011, lenders will have 3 years to file a judgement against you and come after you for the money…especially if they can establish that there was no hardship.

Sometimes selling is the better option so that you can move on and you never know what the market is going to do.  You can hold out and rent the home, but it could take years to build the amount of equity you need and for the home prices to raise enough to sell without bringing money to the closing table.  During that time, you are holding the property which can become a burden.  Renting is an option, but there are many times that renting the unit will not cover your mortgage…costing you money every month.  Fortunately you can write this off, but you are now a landlord which comes with its own challenges.  Additionally at the end of renting your unit, you may still not be able to sell at a price that will allow you to break even.

If you can not afford the money it would take to come to sell the home at present market value then renting is many times the best option.

One thing that is not a good idea is listing the home outside of market value to try to recoup your costs This will only end in disappointment.  First you will likely have the home on the market for a long time and then end up renting anyway or settling for the price that the market will bear…all the while making the payments every month while it is on the market.  Whereas if you had priced the home correctly in the first place, it would have moved in a reasonable amount of time.  Additionally, even if you receive a contract for a higher than market price, it will likely not appraise for that amount.  This means you will have to renegotiate the sales price or void the contract.  This is frustrating and disheartening for everyone involved.

If you do not need to move…stay put for a while…you at least have a place to live while you are paying the mortgage.  It may not be where you want to be for the time, but try to work out a plan where you make larger principle payments every month to reduce your principal and gain more equity in the home before putting it on the market.

There are so many facets to this situation and it is certainly a dilemma.  If you are in this situation, consult your lender and possibly a CPA to discuss if you will have any tax benefits to the loss you have realized….also, speak to an experienced agent that can help you create the best plan moving forward whether that is to sell, rent or wait.

Some people say…”I can sell my house on my own”  why should I pay someone when I can do it my self and keep all the proceeds.

Consider this…

If you sell your house on your own, you are missing out on many things, but one of the main things is having your house listed on the Multiple Listing Service.  The MLS is accessible by all agents that are subscribers (which is 99.9% of all agents) and is the #1 way that agents find a home to show buyers.  The MLS also syndicates to many other online sites that buyers use to search for homes directly such as: realtor.com, homes.com, zillow.com and more.   Additionally, even if you advertise your home on FSBO.com, most buyers do not go to this as a source for listings because it does not show up on the first few pages of a search for a certain areas which is how buyers typically search for homes (i.e. “homes for sale in Alexandria VA).

Another thing that an agent can do for you is talk to other agents about your listing…about 20% of homes are sold before ever coming on the market because of office word of mouth.

One overlooked part of working with an agent, is that they will help you price your home within the limits of what the market will bear so that it sells within your timeframe.  They are able to look at your home from the perspective of a selling agent and ultimately a buyer.  They can also look at sales history of homes that have sold and are under contract that are in your specific geographic area and that are most comparable to your home.  We also hold brokers open houses to get agents from offices all over the city to come view the property which will accomplish two things: 1) Allow other agents to see the property and suggest it to their buyers if it meets their criteria and 2) Allow other industry experts to weigh in on the price and features and leave feedback to enhance showings and ultimately get you a faster sale

An agent will often stage your property to make it so that potential buyers can “see themselves living there”…they will also suggest potential upgrades or “fixes” that will make a difference in your sales price and amount of time on the market.  Additionally, we look for things that could potentially be a problem to potential buyers or that could hold up a settlement.

And I will say again…PRICING…any house will sell at the right price.  This also includes not pricing too low either.

We put your home on a lock box so that you do not have to be there for every showing…but only buyers with an agent can access it, so your belongings are safe.

We will holdpublic open houses and market the open house to get more prospective buyers through and give the home more visibility.

Last but not least and certainly the most important…negotiate on your behalf and protect your interests in the deal.  We make sure that you get not only the best priced contract with the most favorable terms, but also make sure that you accept a contract that will ultimately get to settlement.  We determine this based on the buyer’s contract terms and financing terms.  We also want to make sure the house appraises…cuz if it doesn’t, it can kill a deal…

This is all stuff that we work very hard at and are experienced at.  This is our job!  You wouldn’t try to perform surgery on yourself, you would go to an experienced surgeon to do it, regardless of the cost…so why would you trust your most costly asset (in most cases) to a non-professional (yourself)?

Think about what it would cost you to have your home on the market for a year instead of 2 months.  That is 10 additional months of a mortgage payment for a home that you need to get out of or do not want to be in anymore.  Consider the opportunity cost of missing out on a home that you want to purchase because you can not unload the one you have.  These things are much greater than the fee you will pay to someone to sell your property for you.

There is so much to gain from having an agent that it doesn’t make sense not to have one.

Think about it…

Yes, I am a real estate agent, and of course as an agent, I think that you should use an agent to buy your home…but let’s look at some of the advantages to using an agent, and you make the call.

1) A buyer’s agent can get you into houses before they come on the market.  If we are doing our job, we are “in the know” with what is coming on the market in our offices…if a property meets your criteria, it is likely we can get you in before anyone else sees it.

2) A buyer’s agent get’s you into houses period…most homes are on lockbox and unless you have a lock box key, you aren’t getting in.  The agent schedules times to go see all the homes on your list (that meet your criteria) and get’s you into them.  We can often save you from wasting time on seeing a particular property if we have seen it before an know it does not meet your criteria.

3) Working with one agent takes the leg work away from you.  If you do not work with an agent, you have to call on every house you drive by that you are interested in for sale and have the listing agent let you in.  The house may not be what you are looking for at all and have been a waste of time.  If you decide you like that home, the listing agent (who represents the seller as a part of their listing agreement) will not negotiate on your behalf because they don’t represent you….but they will write-up a contract for you.  Additionally…you may be looking online and searching that way (along with the other 90% of buyers out there), but the same holds true for just calling every listing agent whose house they have listed. Which brings me to number 3

3) A buyers agent is representing YOU, not the seller.  Having your own representation protects you in the deal and does not cost you any more money.  You will not pay less for a home by using the sellers agent and you will also not get true representation.  And P.S.  if you are working with an agent and have not signed a “Buyers Agency Agreement” in the state of Virginia, that agent has not done their job and by default is representing the seller when they show you homes.  If your agent has not had you sign a buyers agreement, you may want to ask them why they have not asked to represent you.

4) As I mentioned in #3, a buyers agent is free (except for a flat commission charged by all companies at closing which is usually around $300…but you only pay this IF you buy a house).  In no other profession do people do work and ONLY get paid if you get what you want.  Real Estate agents do not get a salary, so unless we find you a home, we never get a dime.  A buyer’s agent’s is paid by the listing company, not by you.  The seller has worked out compensation with the listing company (the company who has their house on the market) and the listing company has offered a portion of that negotiated compensation to the selling company (or the buyer’s agent) for finding a buyer for the house.  No one gets paid unless you go to settlement.

5) A buyer’s agent will negotiate on your behalf for the best terms and will counsel you on your offer…they will also bring up things that you may not have thought of that will ultimately be for your protection.  A buyers agent will often save you money…they will never cost you more.

6)  A buyer’s agent will schedule and be present for things like the home inspection, radon testing, termite inspection, closing, etc.  He/she will also keep you on schedule with the terms and contingency dates outlined in the contract.

7) A buyer’s agent continues to negotiate for you while under contract because if things are found on the inspection report or something else unsatisfactory occurs, the buyer’s agent will work to get it corrected in your favor.

Gone are the days when buyers and sellers sit down and decide to trade money for a house.  There are contractual obligations now and title does not pass unless they are met.  Realtors have experience in dealing with these contracts and have partners in the industry that will save you time and money.  There is no reason not to use one.

Hope this helps!