If you have considered putting your home on the market, you would not be alone if you did some quick math in your head to determine your potential profit. After all, everyone hopes that their home can be an investment in the future. Sometimes, however, things don't work out that way. Read on to learn more about cases where the seller of the home ends up having to bring some cash to the table to sell their home.
Why would I need to pay to sell my home?
1. You haven't owned your home long enough. Depending on your financing and how long you've owned your home, you may not have enough equity built up in it yet. Some mortgage loans only require you pay a very low (or no) down payment and are financed at 90% or more. Closing costs and real estate commissions can eat up quite a bit, so you may well need some cash at the closing to sell that home.
2. The market in your area has declined. Real estate prices are cyclical, which means they can rise and fall based on a number of factors. While most homes do rise in value, that is not always the case. What effects sales prices?
- Nearby homes in foreclosure
- Too many homes in the same neighborhood for sale at the same time
- New subdivisions nearby with brand new homes offered at lower prices
- Commercial developments nearby that can change traffic, noise, views and more
3. Your home inspection turned up big problems. Some major repairs to make your home buyer-ready could run into the thousands of dollars, such as roofs, foundation repairs, and other major system problems. In some cases, you may have no choice but to bite the bullet and get the issues fixed before it will sell.
How would I come up with the money to sell my home?
- Tap into investment savings or retirement accounts
- Borrow from family
- Sell other assets
What about a short sale?
A short sale is when you persuade the lender to agree to accept less than the amount of the loan balance. While it can be difficult to accomplish, in some cases the lender will agree, particularly if the alternative is to foreclose on the property. Foreclosures are never good for either party, and lenders will attempt to work with sellers if they cannot bring in enough money on a sale to satisfy the mortgage due. You should be aware that you may owe taxes on the portion of the loan that was "forgiven", so be prepared when tax time rolls around to fork over the short sale taxes.
If you need to sell your home and you know you owe more money that it's worth, speak to your lender and be sure and secure the services of a good real estate agent to help you get the most possible from your home. Contact a company like Keller Williams Realty-Felicia F. Long for more information and assistance.