The appearance of your home, a buyer's first impression, and other considerations can also affect the sale of your home. Have you considered that home prices in your neighborhood and the value of your property are also factors used for pricing your home? When selling your home, there are no guarantees that a buyer will simply walk through the front door. In many cases you may have to bring your home to the buyer. Effective marketing will help ensure that your property receives maximum exposure to attract a ready, willing and able buyer.
Comparative Market Analysis or CMA
A CMA is a report prepared by a real estate agent providing data comparing your property to similar properties in the marketplace.
The first thing an agent will need to do to provide you with a CMA is to inspect your property. Generally, this inspection won't be overly detailed, nor does the house need to be totally cleaned up and ready for an open house. It should be in such a condition that the agent will be able to make an accurate assessment of its condition and worth. If you plan to make changes before selling, inform the agent at this time.
The next step is for the agent to obtain data on comparable properties. This data is usually available through MLS (Multiple Listing Service), but a qualified agent will also know of properties that are on the market or have sold without being part of the MLS. This will give the agent an idea how much your property is worth in the current market. Please note that the CMA is not an appraisal. An appraisal must be performed by a licensed appraiser.
The CMA process takes place before your home is listed for sale. This is a good assessment of what your house could potentially sell for.
CMAs are not only for prospective sellers. Buyers should consider requesting a CMA for properties they are seriously looking at to determine whether the asking price is a true reflection of the current market. Owners who are upgrading or remodeling can benefit from a CMA when it's used to see if the intended changes will "over-improve" their property compared to others in the neighborhood.
If your property is worth less than what you owe:
The Short Sale Process
Definition: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
If the unpaid balance of a loan is, say $200,000 and the property sells for $120,000 under a short sale the lender might accept $120,000 as payment in full.
Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.
A few examples of a hardship are:
* Reduction of income
* Medical emergency
* Job transfer out of town
The seller will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines. The basic procedure is similar from bank to bank. The seller's short sale package will most likely consist of:
•Letter of authorization, which lets your agent speak to the bank.
•Completed financial statement
•Seller's hardship letter
•2 years of recent tax returns
•2 years of recent W-2s
•2 Recent payroll stubs
•Last 2 months of bank statements
Writing the Short Sale Offer and Submitting to the Bank
Banks are not in the business of giving away a home at rock-bottom pricing. The bank will want to receive somewhat close to market value. The Short Sale Price may have little bearing on market value and may, in fact, be priced below the comparable sales.
After the seller accepts the offer, the listing agent will send the following items to the bank:
•Multiple listing sheet
•HUD settlement statement
•Buyer’s mortgage approval letter
•Seller’s short sale package
If the package is incomplete, the short sale process will be delayed or denied.
The Short Sale Process at the Bank
Below is the typical short sale process at the bank:
•Bank acknowledges receipt of the file.
•A negotiator is assigned.
•A BPO is ordered.
•The file is sent for review or to the PSA.
•The bank may then request that all parties sign an Arm's-Length Affidavit.
•The bank issues a short sale approval letter.
•This process takes 2-6 months, sometimes longer depending on circumstances.