My New Blog

  A lot of my work lately has been doing appraisals involving situations where people have either lost their homes to foreclosure, or are under the threat of loosing their home to foreclosure.  That is, I have been appraising houses that were either being sold by the lender that foreclosed on the house, or the owners are selling the house as a short sale. 

  A short sale is when a homeowner, who cannot make their monthly mortgage payment, makes a deal with the lender to sell the house for whatever they can get.  The net proceeds from the sale go to the lender to satisfy the mortgage.  If the outstanding mortgage amount is more than the amount owed, the lender may or may not agree to eat the difference.  It's not quite as simple as all that, but that's essentially it. 

  In both cases though, I see the high cost of denial.  Denial is what occurs when people list their homes for what they wish they could sell it for rather than for what it's actually worth.      

  But here's the reality: Whatever you paid for the house, or whatever you owe on it, has nothing to do with its current market value.

  In a declining market, the longer a house sits unsold, the less its worth.  Many people base the list price of their home on what the need to pay off the first mortgage, the second mortgage, the credit cards, the car loan, the boat loan, and leave a little left over to get into something a little smaller maybe.  Six months latter they're wondering why they haven't gotten any offers.  They're in denial.

  If you need to sell a property within a reasonable length of time you need to know what its current market value is and price it accordingly.  If you list your house for it was worth back in 2005 it might sell for that much, but your grandchildren will probably get tired of holding out for that price. 

  Even in this market, a house that is priced correctly will usually sell within about 90 -120 days.  In some market segments the marketing time may be a little  less, and in some it may be a little more.  But rarely is the marketing time, for a home priced correctly, more than 120 days.  If a house has been on the market for longer that 90 days and there has been little interest shown and no offers, it's most likely over priced.

  There are thousands of overpriced houses sitting on the market out there waiting to be sold.  They will not sell until one of two things happen:  the sellers lower their prices to within the affordability range of potential buyers or;  the economy turns around and another housing boom begins.  Which do you think will happen first?