Home owners who are upside down in their mortgage and need to sell as a short sale are like any other home seller… they still need to make sure their home is in good-enough condition to pass a buyer’s lender’s appraisal process plus, the house is still competing against other homes for sale on the market and must still “show well.”
The most common issues I run across where sellers need to pay for repairs upfront are: broken or inoperative A/C & heating systems, water-damaged or rotten exterior wood such as window sills or fascia boards, broken glass in a window, or very dirty and/or cracked chimney. If a home has rotten exterior wood or damaged roof, it will never pass a buyer’s appraisal and therefore, it will never sell. It won’t sell to an investor either because investors are looking to buy at such a discount that your lender will never agree to sell for such a low price.
So why would you still want to pay to have repairs performed to a house you are selling as a short sale? Because your bank will likely agree to let you walk away from the deficiency, and that can be anywhere from $20,000 to $120,000, or even higher. And this will often include 2nd liens or equity lines of credit too! And in addition, your bank will agree to pay for your Realtor fees, closing attorney fees, stamps taxes and unpaid property taxes, and anywhere from 1% to 3% of a buyer’s closing costs, and some type of mortgage actually pay the seller real “cash at closing” that can range from $750 to $1,500, or more! All of these fees combined can run upwards to $15,000 to $25,000 and are always paid by every home seller yet in a short sale, the fees are paid by your lender!
One of the main reasons people decide to sell as a short sale is they don’t have the money to keep paying the mortgage and therefore, they do not have the money to pay for any repairs. But the situation is similar to filing bankruptcy… it can cost someone anywhere from $500 to $2,500 to legally file for bankruptcy yet, the main reason someone files bankruptcy is because they don’t have any money! It is a Catch-22 but do not despair. Please call me for a free, no-obligation consultation to meet with you and allow me to help you determine the difference between cosmetic issues or a major repair job. Quite often, the repairs are quite simple and something any handy-person or homeowner can correct themselves.
But you should always try selling as a short sale first… it costs you nothing, and my services to you are free-of-charge!
Frank Biganski, Realtor