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 . . .

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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