Real Estate Tidbits

Real Estate "Myth-Understanding" #2: Can't Afford Payment? Foreclosure is Best Option

Before we get into this myth-understanding, a quick "bottom line" update on the current market: Sales are UP!  Over the past couple months, we've seen roughly DOUBLE the number of home sales in the Sacramento area as compared to the same period a year ago. Buyers are definitely out in force and taking advantage of the amazing opportunities in the current market. If you've been waiting to jump in to the market, NOW may be the time you've been waiting for.  There's lots to choose from and prices are low!

OK, it's time for the second myth-understanding I hear quite often in today's market.

Myth-Understanding: Homeowners who owe more than their home is worth, and can no longer afford their mortgage payment, have only foreclosure as an option.

Truth: Homeowners who owe too much on their homes, but need to sell or otherwise "get out" of their payment, may certainly have other options such as a loan modification, deed in lieu of foreclosure, selling and paying the difference to the bank, short sale, etc.  Foreclosure is definitely not the only option. One of the more common things we're seeing these days is people selling their home "short" - it's called doing a short sale. A short sale is where you sell your home for less than is owed and negotiate with the bank to accept LESS than what is owed on the loan(s).  Will they really do that?  Well... they may or may not.  But short sales are happening every day and can be a possible option for many people.  Click here for more information on short sales.

If you or someone you know is struggling with their mortgage and doesn't know what do do, please call our office and let's discuss the options.

5 Questions Sellers MUST Ask Before Making a Decision

When considering hiring an agent to sell your home, be sure and ask the following questions. Of course, there are many more questions savvy sellers should ask, but these five are critically-important.

1. What is your listing price to sales price ratio and how does it compare to the market average? (this will tell you what percentage of the listing price the agent usually gets for their sellers)
2. What is your listing "days on market" average and how does it compare to the market average? (this will tell you how fast the agent usually sells homes and how he/she compares with other agents)
3. How often do your listings "expire" and not sell? (this tells you how successful the agent is in getting homes sold at all)
4. How will you market my home and, specifically, how on the internet? (this will tell you how technically-proficient the agent is and whether or not they utilize the appropriate internet-based marketing - you must insist on broad, comprehensive marketing)
5. Do you offer a "Cancel Anytime" Listing Agreement? (you don't want to be tied into a long, binding contract)

As I said above, there are many more questions to ask to ensure you get the best, most professional agent (and, of course, the one who will net you the money for your home). If you'd like the report entitled "Don't Even Think of Listing Your Home Until You've Asked These Questions of Your Agent" then give us a call. We'll be happy to email it or mail it to you right away.

Also see:

• Frequently-Asked Questions
• The BEST Way to Choose a Real Estate Agent to Sell Your Property
• Flexible Real Estate Commissions

The BEST Way to Choose a Real Estate Agent to Sell Your Property

The most important step in selling real estate is choosing the best real estate agent for the job. Choosing the wrong agent can end up costing the seller big bucks in lost profits, not to mention weeks or months of frustration and, in the end, maybe the property doesn't even sell.

As we've discussed in previous articles, some of the WORST REASONS to choose an agent are:

• the agent suggested a high listing price
• the agent offered a low commission
• the agent who is a friend or family member
• the agent is a "discount" agent who offers deeply-discounted fees

(If you haven't yet reviewed How NOT to Choose a Real Estate Agent, part 1 and part 2, I encourage you to do so.)

OK, so if we know the criteria NOT to use when hiring a real estate agent, just what SHOULD a seller consider to ensure they hire the best agent to sell their property. Well, most savvy sellers I've talked with over the years choose their real estate agents based on the following criteria:

• The agent's track record of success (how does the agent's record compare with the market average? does the agent sell more homes than the average agent? does the agent typically net more money for his/her sellers than the market average? does the agent typically sell faster than the average agent? does the agent get listings SOLD or does he/she have a high-rate of "expired" listings?)
• The agent's services and marketing plan (must be comprehensive and focused on getting the property sold fast and for absolute top dollar)
• Does the seller like and trust the agent (selling real estate is a major transaction; it's important to like and trust the person with whom the seller will be working so closely)
• The seller's gut feel (yes, sellers must "feel" good about the agent and know the agent will act in the seller's best interests)

One more thing I'd add to this list is "does the agent utilize current technology" in his/her business. Obviously, technology plays a major role in real estate. The internet is where most buyers and sellers go to research real estate and it's vitally important that the agent is comfortable and proficient with using technology. Sellers must ensure the agent they choose is heavily technology-focused when marketing the seller's property.

Oh, and one more... the agent should be full-time in real estate. Sellers want someone who is dedicated to working real estate and not someone who works part-time in real estate and part- or full-time in another job.

Using the criteria discussed in this article, sellers can ensure they get the best agent for their sale. The bottom line should be a faster sale with a higher net profit and minimal hassle.

Other articles to review:

• What Kind of Marketing Should Sellers Expect from Their Agents? Part 1
• What Kind of Marketing Should Sellers Expect from Their Agents? Part 2
• Frequently-Asked Questions

How NOT to Choose a Real Estate Agent to Sell Your Home, Part 2

In Part 1 of this series, we discussed two of the mistakes some sellers make when choosing an agent and how to ensure they choose the best agent to sell their home.

Even though many sellers do use the following criteria when looking at an agent, they are two of the worst reasons to choose an agent:

The agent who is your friend: Oh... this one costs sellers sooooo much money. I've listed many properties over the years after a "friend" had it listed and it didn't sell. Unfortunately, sellers will often look to a friend who is a Realtor and think the friend will give them a break on the commission and is the best person to sell their property. While some of these situations work out fine, I've been told by many sellers that it's just not worth risking the relationship. Many relationships have been ruined or seriously damaged when trying to mix friendship and business. When "friends" do business together, especially in a Realtor-client relationship, bad decisions are often made that end up costing the seller time and money... and often the home doesn't sell... or it sells for much less than it should have sold for if better decisions were made from the start (like NOT hiring the friend). I strongly recommend that sellers seriously consider the challenges that can develop in this area. Preserve the friendship and hire someone else.

The agent is a "discount" agent (similar to the reason above): This can be the worst reason of all.  Think about it... if you were being sued for several hundred thousand dollars, let's say, would you hire the attorney who is the cheapest? Would you want a "bargain" or "discount" attorney? Of course, not. If you needed heart surgery, would you want the "discount" surgeon? Of course, not! You wouldn't trust heart surgery to someone who discounts their services to get business. So, if you wouldn't hire a discount attorney or a discount surgeon, why in the world would you hire a discount agent?

Keep an eye out for our article on How Best to Choose Your Agent... coming soon.

Previous posts you should check out:

• How NOT to Choose a Real Estate Agent to Sell Your Home, Part 1
• What Kind of Marketing Should Sellers Expect from Their Agents? Part 1
• What Kind of Marketing Should Sellers Expect from Their Agents? Part 2
• When It Comes to Pricing, The Market is Always Right

The Top 8 Reasons to Sell Your Home During the Holidays

A common concern that sellers have this time of year is that the holidays are a bad time to list and sell a home. Actually, contrary to popular belief, this time of year can be one of the best times of year to sell. Here are the top 8 reasons/benefits to list your home for sale during the holidays:

8. You can sell now to ensure you get SOLD and try to negotiate a delayed closing or extended occupancy until early next year!

7. Even though your house will be on the market, you still have the option to restrict showings during the six or seven days around the holidays.

6. January is often the month for employees to begin new jobs.  Since transferees cannot wait until Spring to buy, you need to be on the market during the Holidays to capture that market!

5. Some people must buy before the end of the year for tax reasons!

4. Buyers have more time to look for a home during the Holidays than during the regular work week!

3. Houses show better when decorated for the Holidays!

2. Since the supply of listings will dramatically increase in January, there will be less demand and more competition for your particular home!

And the Number One Reason Sellers Should List During the Holidays...

1. Buyers who look for homes during the holidays are more serious buyers!

How NOT to Choose a Real Estate Agent to Sell Your Home, Part 1

When hiring a Realtor, there are many things to consider to ensure you get the best person for the job. This post will discuss some of the mistakes sellers make when choosing an agent and cover those areas that sellers should NOT use as criteria when deciding on the best agent.

Even though many sellers do use the following criteria when looking at an agent, they are the worst sole reasons to choose your agent:

The agent who tells you the highest listing price for your home: Often, agents who really want to get your listing will tell you a high estimated value for your home just so you'll hire them. The agent takes the listing at that high price, knowing it won't sell. Then, a few weeks later, they tell you that a price reduction is required... maybe several price reductions end up being needed.  This mistake can end up costing the seller big bucks. The longer a home sits on the market at too high a price, the less the seller will probably get for it, since buyers tend to pay less for a home that's been on the market a long time. SOLUTION: the seller should choose the agent who can best justify the price they are recommending, not the agent who just offers to list at the highest price. Sellers should be very cautious of the "highest listing price" agent - especially in the current real estate market. Sellers who price their homes too high in this market, pay dearly in lost profits. Of course, eventual price reductions may indeed be necessary, but based on a market-appropriate starting price.

The agent who charges the lowest commission to sell your home: This can be a touchy subject with sellers. Of course, we all want to get the "best deal" but, in real estate, paying a lower commission can often lead to making less profit. Why? It's simple, the lower-commission agents often charge less for a reason... and that reason may end up costing the seller thousands, or tens of thousands, in lost profits. Think of it this way: Let's say you're shopping for a new car that typically sells for around $35,000. You find one that's priced at only $20,000 - what a deal, right? Would you automatically buy it just because it's so cheap? Or, would you wonder WHY it's so cheap? Why the drastic discount from the norm? Wouldn't you be suspicious of the low price tag and wonder if something's wrong with it? I know I would. And, most people I know think the same way. The best agents usually don't discount their services. Why? Because they're worth it... in service, support, experience, knowledge and results. They often end up increasing the net profits for their sellers in spite of not discounting their fees. SOLUTION: Don't choose an agent based on a cheap commission. It may cost a seller dearly in the end. Do look, however, for an agent with a flexible-rate commission structure. If the agent doesn't offer a flexible commission structure, based on HOW the property sells, then look for another agent.

Of course, the bottom line here is to choose an agent based on his/her track record, marketing plan and their ability to get your property sold in today's changing marketplace. Also, you'll need to feel good about the agent. That "gut feeling" will certainly help you in choosing the best agent for you and your property.

Also, see Part 2 of this series.

What Kind of Marketing Should Sellers Expect from Their Agents? Part 2

In Part 1, I discussed how sellers must ensure they hire an agent who utilizes multiple forms of marketing to ensure the seller's property gets exposed to the largest market possible. What worked yesterday doesn't necessarily work today - just planting a sign in the ground and sticking the listing in MLS won't expose the seller's listing to everyone who needs to see it.

Sellers must demand their agents "overwhelm" the marketplace to ensure the widest possible exposure. The more buyers who see a property will increase the likelihood of the "right" buyer seeing it - thus the increased potential that an acceptable offer will be received and a closed transaction will be the result.

In addition to the listing of marketing tools and techniques discussed in Part 1, here are additional marketing methods that a seller should require from his/her agent:

• 24-hour IVR (interactive voice response) hotline (a toll-free phone number with a dedicated "talking-ad" for the seller's property, usually advertised on the flyers and websites)
• "Just Listed" postcard marketing (sent to area homes and potential buyers)
• Email marketing to local agents (the buyers usually are represented by agents, so the agents must be marketed to)
• Custom home book (a customized property binder available at the property that details area demographics, schools, community information, etc.)
• Realtor networking (Realtors know other Realtors who have buyers who may be interested in the seller's listing)
• Active buyer search (agents need to get on the phone and search for buyers)
• Real estate Blog marketing (like the blog you are currently reading, blogging is becoming more and more popular - your listing should be marketed on a blog, too)
• TV marketing (it's becoming more popular to advertise "on demand" on cable)

Notice than open houses and newspaper advertising weren't covered here. I did that on purpose. Studies show that newspaper ads don't sell homes like they used to. People are heading to the classifieds section of the paper less and less and heading to the internet more and more. The internet is where a strong presence is needed.

As for open houses, they have their place and can work. However, usually a home doesn't sell because of an open house. If your agent does them, that's great; if not, you're not losing out.

In reviewing parts 1 and 2 of this topic, you'll notice many of the marketing tools involve the internet. That is by design. The internet is where the majority of buyers begin their property search. It's vitally important that you hire a Realtor with strong experience in marketing online and with a strong track record of closed sales.

If you have any comments about this article or any other on our real estate blog, or if you have an idea for other information you'd like to see discussed, please contact us directly or leave a comment on our blog.

What Kind of Marketing Should Sellers Expect from Their Agents? Part 1

In today's competitive real estate marketplace, or in any market for that matter, sellers must ensure they choose a Realtor who has a strong marketing plan for exposing the seller's property to the market. In the past, with limited marketing avenues, many Realtors got lazy and did the absolute minimum to expose their seller's homes. In the hot seller market of 2000-2005, Realtors really didn't have to do much to get homes sold. Often, an MLS listing was all that was necessary to find a buyer willing to pay top dollar for a property.

Today, in a buyers market, an MLS listing is usually not enough. Sellers need much more broad exposure to the marketplace to find the right buyers. And, with the internet intersecting into the real estate market, it's important that Realtors use the most current internet technologies to maximize property exposure when selling homes and other properties.

In this post, I will provide a few of the necessary marketing tools that sellers must demand of their agents to ensure their properties get the most exposure possible in today's changing market.

In my mind, these are not optional avenues of marketing, but necessities:

• Multiple Listing Service (MLS)
• For Sale sign
• Property flyers (full color, quality flyers - not the cheesy black & white photocopies)
• Customized dedicated property website (ie. www.propertyaddress.com so buyers can get plenty of information about the property. Sample of our sites: www.2504StratfordCircle.com)
• Virtual tours (buyers want to see more than just static photos - video and music enhance the experience and attract more buyers)
• Advertising on Realtor.com and on MANY, MANY other websites (buyers are everywhere, so your property should be advertised where those buyers are looking - and they're looking at lots of websites)

Of course, there are more marketing techniques and tools that I'll cover in Part 2 of this topic.

The bottom line here, of course, is for sellers to ensure prospective agents utilize MULTIPLE MARKETING TOOLS when listing and selling their homes. Ensure your agent is technologically-savvy and experienced in multiple marketing disciplines.

In our business, our sellers benefit from all the above marketing tools and much more, and ultimately we achieve the goal of getting our sellers top dollar and a timely sale.

Click here for What Kind of Marketing Should Sellers Expect from Their Agents? Part 2

When It Comes to Pricing, The Market is Always Right

I was speaking to a potential seller client today and we were discussing the price that the market says his home is currently worth. I had met with him a few weeks ago and showed him what the comparable home prices were in the area. Well, our conversation was about how concerned he was that the price we discussed was lower than what he thought his home was worth.

Actually, the concerns over price are very common in today's marketplace - a buyer's market. It was just one year ago that I sold my home and moved up the hill to Cameron Park. Even though I'm a Realtor - someone who works in real estate every day - the "market" doesn't seem to care. My home can't get any higher a sales price than any other home like mine in the area. So, even real estate agents are not immune to the "changing" market. My home ended up selling for over $60,000 less than I could have sold it for just a year before.

The bottom line is this: no matter what we, as sellers, think our homes are worth, it just doesn't matter. The market doesn't care what we think (the market, of course, is "all the buyers in the marketplace"). Our home is worth, and will probably sell for, what other homes comparable to ours have sold for. It's that simple - our home is worth what buyers will pay for it... PERIOD.

If we "argue" with the with market, the market will always win. The market is the market... and whatever the market will pay for our home... is all we'll get for it... whether we like it or not. And, if we argue with the market for too long, in other words we refuse to lower our price when we should, the market can "punish" us by paying less for our home, than if we had lowered the price sooner. As you may know, the longer a home is on the market, the less a seller will typically get for it. Heck, if you were a buyer and a home was on the market for a long time, what would you wonder? You'd think "It's been on the market a while; I wonder what's WRONG with it?' Then, if you were to even make an offer, you'd offer MUCH less than the seller was asking... right? Of course!

The moral this story? Price your home based on what the market "says" your home is worth. Then, if it doesn't sell, lower your price meet the market. Your Realtor can certainly assist you in this area. Remember... the longer you wait to "respond" to the market, the less you'll eventually get. That's how the real estate market works.

The market may not be kind, but it's never wrong.

Try Your Best to Avoid Foreclosure

I found a great article on MSNBC about avoiding foreclosure. Also, be sure and read the other posts on this blog about foreclosures and short sales by clicking on the appropriate category on the right side of this page.

MSNBC article: Facing foreclosure? Fight is better than flight.

Sell Now or Wait for the Market to Improve?

Many homeowners who considering selling in today's market are wondering whether they should sell now or wait until the market "improves." Most think that the market is "bad" and that now is not the time to sell.

Well, while the market has changed, it is still a good time, maybe the BEST time, to sell... "IF" you really want or need to sell. What do I mean? The experts are predicting that the market here locally will probably continue to decline for another 18-24 months. The average decline in many parts of Northern California is a drop in value of about 1% per month - OUCH! Remember, this is an average, so it's better in some areas and not so great in others.

So, if home prices are expected to continue to decline for another 18-24 months, if a seller REALLY wants or needs to sell, then NOW IS THE BEST TIME to ensure they maximize their equity and capitalize on their potential profits. In other words, for every month a seller delays selling, they could be losing a few thousand dollars in value.

My advice to my clients right now is this: if you want or need to sell within the next year or two, then selling "sooner" rather than "later" is the prudent thing to do. If you are in no hurry to sell, and you can either rent your property or stay put for a while, then do so.

How long should you expect to stay put or rent it out? Well, while nobody knows for sure, it looks like it may be another five to six years, or more, before the market comes back (may come back) to where it was in 2004 and 2005. Even if the decline reverses in 18-24 months, then property values will take another few years to appreciate back to where they were a couple years ago. Remember, however, that nobody really knows for sure what will happen in the future. In the 1990's, it took about 10 years for prices to "come back". Nobody really expects this time to be as bad as then, but we never know for sure. Time will tell.

Of course, every situation is different. So, if you'd like to discuss your situation and your options, please give us a call. We'd be happy to discuss the possibilities.

Other posts to review:

Understanding "The Market"

Sellers Market or Buyers Market?

"Value" is Key in Today's Market

Price High, Lose Money

Can You Really Sell for LESS Than You Owe?

What does the Magic 8 Ball say when you ask it if you can sell a house for LESS than you owe? Well... it will say "MAYBE". Of course, as you can probably imagine, selling for less than a person owes on a property is not a simple task. If you are wondering about this, then you probably understand why a lender wouldn't be too thrilled at the prospect of getting less money than they have into the property.

By the way, selling a property, and getting the lender(s) to accept LESS than you owe is called a SHORT SALE.

So, why is the answer "maybe" and not Yes or No? Well, because MAYBE the lender(s) will be willing to accept a reduced amount when you sell. Why would they agree to that? They might agree if you, as the owner of the property, can prove a "hardship" that is so bad, the lender will be willing to settle for less than the current loan amount.

Many people do short sales when they can no longer afford to make their mortgage payments and don't want to face foreclosure. They may have purchased the home within the last few years, when the market was hot and prices were higher and, most of the time, they got an adjustable rate mortgage (ARM). Now, a couple years later, the ARM has "adjusted" and the payment went up... sometimes way up! Or, the homeowner has refinanced a time or two and the combined loan amounts are now higher than the value of the home. The bottom line is that the owner can no longer afford the payment(s).

Unfortunately, because real estate prices have come down, the property can't be sold for enough money to pay off the loan(s), so the homeowner is stuck between a rock and a hard place. They don't want to go through a foreclosure and have their credit ruined, too, but they still can't afford the payment(s). Introducing the SHORT SALE.

As I mentioned above, this is not an easy process. You must have a legitimate hardship. Maybe you've experienced major medical problems, a divorce, a job loss, maybe a death in the family, or major financial problems; there are many situations that may qualify as a hardship.

In addition, if the lender(s) do accept your hardship and allow you to do a short sale, there can be tax consequences. Of course, everyone's financial situation is different, so I would strongly advise you to consult with your CPA, attorney and/or tax adviser.

Typically, when someone does a short sale and the lender(s) accept less than is owed, that's considered "debt relief" (the difference between the loan amount and what the home sells for, plus selling expenses) and the seller will probably receive a 1099 from the lender(s) for the amount of debt relief. That debt relief is considered "income" for tax purposes. Again, I advise you to consult with the appropriate financial professional for how a short sale may affect you personally.

One more thing to note: when you do a short sale, the seller pays none of the selling expenses. The lender pays all the expenses like Realtor commissions other selling-related costs.

If you'd like to discuss how a short sale might be possible and how, specifically, it works, please call me and let's discuss it. It may or may not be your best option, but we can discuss the possibilities.

Also, see my previous post What is a Short Sale?.  And, see the IRS webpage regarding Forclosures and Cancellation of Debt (Short Sales).

Why Didn't Your Home Sell, Part 2

This is Part 2 discussing the reasons why some homes don't sell. These are called Expired, Withdrawn, or Cancelled listings; the result was the same, these listings did not sell.

As we discussed before, when homes don't sell, sellers become frustrated and often they are mystified as to why their home didn't sell. It's not uncommon for sellers to look to the agent as the reason the home didn't sell. While this is not always the case, unfortunately, it is the reason sometimes.

In Part 1 of this discussion, I outlined two of the reasons homes don't sell: 1) Ineffective Marketing and 2) Poor Packaging. In this post, I'll discuss two of the other reasons:

Reason #3: Ineffective Pricing Strategy: A property priced incorrectly in today's market simply will not sell, and if it does, it will usually sell for much less, maybe tens of thousands of dollars less, than it would have sold for if it was price right from the start. While sellers are often the ones who set their price, the seller's agent also bears responsibility the the price is too high. We, as Realtors, owe it to our sellers to be brutally honest when it comes to pricing in today's very competitive market. If a home is priced too high, it sits on the market and doesn't sell. Since the first 3-4 weeks of a new listing are the most critical because when the listing is new and fresh and attracts the most attention, then it must be priced right from the start. Even if it's priced "right", it still may not sell right away, so it's imperative that the price gets adjusted to meet the demands of the marketplace. Typically, the longer a home is on the market, the less it will sell for. Buyers tend to offer less money the longer the home has been for sale. That doesn't mean the seller has to take the offer, but if not, the home may sit even longer and eventually sell for even less... or not sell at all. SOLUTION: Hire a Realtor who knows how to evaluate your home's value in the marketplace. Don't automatically hire the agent who gives you the highest listing price; often that's the wrong agent to choose.

Reason #4: Wrong Real Estate Agent: Sometimes a home doesn't sell simply because the wrong agent was hired in the first place. Sometimes that agent was hired for the reason stated above - that he/she suggested a high listing price. Sometimes the agent is hired because they charge the lowest commission. Both of these reasons (high price and/or low commission) are the worst reasons to hire an agent. The agent could have been the wrong agent due to his/her inexperience, poor understanding of the market, inability to price a home, lack of appropriate knowledge, inability to connect with the right buyers, poor company support, poor work ethic, or lack of commitment. It's unfortunate, but there are agents are don't have the experience or knowledge to work in today's changing market. When selling, hire an agent who understands the market and knows how to price homes, who has a great marketing plan and track record, and an agent with whom you get along and feel good about.

Overall, the best way to get a property sold, any property, is to hire the right agent and ask a lot of questions so you understand exactly what they will do to get your home sold. And, of course, it's important for a seller to listen to their agent and take their advice when it comes to positioning their home in the market and pricing it. If you do, your home will be sold in a reasonable amount of time, at a price that works for you, and with minimal, if any, hassle.

By the way, if you had a property that didn't sell, I'd love to hear about it. Please comment on this post and tell me why you think your property didn't sell or what experiences you've had. I really want to know. Click on "Comments" below.

Why Didn't Your Home Sell? Part 1

In the current market, there are more and more homes that come off the market every day. These listings either expire (the listing contract expires) or they are withdrawn (taken off the market) by the seller.

Of course, when homes don't sell, sellers become frustrated and often they are puzzled as to why their home didn't sell. Usually the reasons (and solutions) are very simple.

Over the next couple weeks, I will provide a few posts/articles on why homes sometimes don't sell and offer suggestions on what sellers can do to actually attract more buyers and get their homes SOLD so they can move on to their next destination. Of course, each home may not sell due to different reasons or circumstances, but I will provide the most common reasons most properties end up coming off the market and not selling.

Reason #1: Ineffective Marketing: Exposure to the marketplace is vital and an ineffective marketing plan will reduce the pool of buyers to which the home is exposed. Without the proper exposure—proper marketing and promotion—the home may simply not sell. SOLUTION: Hire an agent with a powerful, all-encompassing market plan so your home is marketed to the most buyers, and their agents, in the shortest possible time frame. In addition, ensure that agent has a strong internet presence and marketing plan. Today it isn't enough to do the standard marketing techniques that worked in the past. Today's buyers are mort tech-savvy and use the internet much more during the home search. Your agent must be strong when it comes to internet marketing... along with all the other marketing that must be done to get you top dollar in today's market.

Reason #2: Poor Packaging: A home for sale is a product and proper “packaging and presentation” is crucial. Often, the home is not "packaged and presented" in its best possible light. The overall condition of the property may actually turn buyers away. SOLUTION: The seller must find an agent who knows how to package a home to attract the most potential buyers… and,of course, the "right" buyer.

In Part 2 of this series, I'll discuss two more reasons why homes sometimes don't sell.

By the way, if you had a property that didn't sell, I'd love to hear about it. Please comment on this post and tell me why you think your property didn't sell or what experiences you've had. I really want to know. Click on "comments" below.

What is a Short Sale?

We are hearing a lot more these days about "short sales" and a common question is just exactly "What is a Short Sale?" Ever since the market began to adjust  downward in the Summer of 2005, short sales have become more common.

So what exactly is a short sale? It's actually quite simple: it's the sale of a property where the value of the property is LESS than what is owed on it. In other words, the price obtained from selling the property is NOT enough to pay off the loan(s). However, with a short sale, the lender(s) do, indeed, take less just to ensure they don't lose even more money later, or end up having to foreclose of the property. Two of the most common reasons homeowners get into this situation, where they owe more than the property is worth, is 1) they bought the property at the peak of the market with very little money down; and 2) they refinanced and "max'd" out their equity to buy other things. In both of these situations, when the market softens as it has over the past two years, and the value of their property drops, they end up owing more than it's worth.

So, if an owner needs to sell (and keeping the property is not an option), and they don't have enough equity to cover the selling costs and pay off the loan(s), they have only a few choices: 1) pay the difference out of their own pocket (the ideal option); 2) let the bank take the property back through foreclosure (the worst option); or 3) do a short sale (still not the greatest option, and a serious ding on the seller's credit report). For a bank to allow a short sale and take less than they are owed, an owner must demonstrate they have a true hardship (serious financial problems that prevent them from keeping the property and paying the difference at the time of sale). If they can't show a legitimate hardship, banks often won't consider a short sale.

In addition, although most people are unaware, there are tax consequences when you do a short sale. If a bank allows the seller the debt relief (took less than was owed), the IRS looks at the amount of relief the same as income, and taxes would be due on the amount of relief. For example, if a seller owes $400,000 to the lender and the home sold for $350,000 (selling costs are not included in this example to keep it simple), then the seller got $50,000 of debt relief. The seller would then owe taxes on the $50,000, not to mention the serious repercussions on their credit rating. Of course, my best recommendation for anyone considering a short sale is to consult with their CPA and/or tax advisor.

The best way to avoid a short sale, of course, is to keep the property until values head back up, And, historically, they eventually always do.

Also see:

• Can You Really Sell for LESS Than You Owe?
• Buying a "Short Sale" Home

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