A Short Brief Short Sale Q&A
Question #1: When doesn’t a homeowner care what their home sells for?
Answer: When they’re not receiving the proceeds.
Question #2: When does a homeowner not care what the Realtor’s commission is?
Answer: When they’re not paying it.
Question #3: When do both of the above apply?
Answer: In a short sale, where the owner owes more than the home’s fair market value, and walks away with nothing (save perhaps debt relief — see below).
If anything, the underwater homeowner wants the sales price to be set as low as possible, subject to two considerations: a) if the price is too low, the bank’s incentive to accept a short sale goes away, and instead it is likely to simply foreclose; and b) if the homeowner has other assets and lives in a state where the bank(s) may pursue them for any deficiency, the lower the sales price the higher the shortfall — and the larger their residual debt.
Welcome to the perverse, “through-the-looking-glass” world of short sales . . .
