Imagined Equity…..Popular in “Divorcing” Real Estate
Everyone wants to believe that the down payment, the remodeling, updating, room addition, new carpet, granite counters….finished lower level, etc. etc. has created a unique sales proposition in the real estate market. Unique to sellers who have purchased homes in the last five years or who have now got a home equity line , (second mortgage) that financed the improvements that they are sure outweigh the investment and bring instant appreciation.
The decline of the market has not likely caught up to the purchase price or the cost of updating….and that makes the house was to have divided equity with “start over” money…. uʍop ǝpısdn.
The market says….the house is not worth the amount of the mortgages. No amount of wishing, hoping, changing realtors, neutral painting and staging is going to make a five figure disparity between the list price and the indebtedness, disappear. We see this very frequently…..meeting the divorcing, or now divorced couple who has had three or more realtors, hoping against hope that the realtor was wrong…the market would “come back”. No economic forecast or housing Guru is predicting that the market will return to an equity rate of 6% a year., Imagining it did….it would still be starting from a point below the amount of the ….usually combined, mortgages.
At some point, one member of the couple….or the attorney for one the other, or both, decide it is time to deal with the jointly held real estate. Economic reality has won and it is time to sell the former family homestead. Sell….when you cannot get what is owed in today’s market. The buyer for the home will have their lender send an appraiser….the appraiser will help the bank decide if the price the buyers have agreed to pay, is in line with the prices of similar homes sold in the market. If every similar home sold for less than the sellers own, they have no “start over “money.
The choices for what to do with an upside down home could have many blogs of their own…they include and are not limited to ….loan modification, deed in lieu of foreclosure, foreclosure and short sale.
If the passing of the holiday season has meant the end of a relationship and the beginning of divorce proceedings, having Realtors experienced in divorce is a great asset as you begin the next chapter in your life. Call us, no matter where you live and we will be happy to recommend a Realtor best suited to help you during this difficult time.
Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS
Good morning Sally & David,
With the divorce rate at 50% we are seeing the disposable of a house in most cases a necessity. I went on a listing appointment yesterday and they will definitely have to selll but it won't be a pretty picture :).
Sally & David, this is an excellent post for these unsettled times. I was talking yesterday with an agent in my office who is getting two new listings owned by a couple that are involved in a divorce. One is the big home they live in and the other a rental. BTW - I hit the suggest button on this one,
It seems that this "is the season".....you were supposed to enjoy the holidays....and you didn't ....and have decided that divorce is the solution....and neither can afford to stay in the house alone....thanks Ladies....all the best to you in 2012 !
Working with professionals like you that know the "ins and outs" of short sales is the way to go! Best to you in 2012.
Good morning Sally and David! So glad you can help these people through what is considered one of the most stressful times in one's life. Since the new year is refreshing, I would imagine divorces go up in numbers as people evaluate their personal lives.
Great post guys. This selling while underwater is a serious problem, whether divorcing or not. But divorce has to complicate things enormously.
Yes, I agree w/ Jay, it's hard enough selling a house, and even worse when it's under water, but to add in divorce, that's a lot of complication. Best to work w/ the experts here. I also suggested.
Well written, as usual....I am sure you short sale king and queens will have another great year!
It has gotten to be that we think of short sales and divorce sales as our "norm" ....Hey Kristin....aren't you a date behind at our bar ? Have a happy everyone !
Good Afternoon Sally and David, i tend to see divorces come in waves. I tend to agree that after the holidays is a busy time to list homes and help those going through divorce sell their home.
Perfectly timed and informative post, Sally and David. You expressed the frustrations and heartaches that are typically attached to the selling of a home during a divorce. So many emotions conflicting at once! Working with a knowledgeable and experienced agent and mortgage lender during these times is of the utmost importance ... and will most certainly soften the extreme emotions that accompany these transactions. I hope all that read this post contact you, as it is obvious you understand what is necessary to navigate these challenging waters ...
Gene
Thank you Gene and you are right Scott.....there seems to be a season.....and we are ready for the onslaught that comes this time of year.
LOVE the title Sally, it made me laugh out loud.
The issue however is sad in many ways. Thankfully sellers get to hire the best Real Estate professionals without payment upfront unlike the divorce attorney.
I like the ones who think that their equity line that paid for the new car should now be paid for by selling the home.