But what can you do to sell your home in the down market?  With many of the state tax credit programs expiring last April, the market has experienced yet another semi-expected plunge, what many are referring to as the “After Tax-Credit Hangover.”

Statistics just came out this July analyzing the numbers of foreclosures nationwide, and it’s no surprise states like California, Arizona, Florida and Nevada topped the list.  Those states have been hit hard by a lack of tourism with the national recession and over-inflated housing markets prior to the industry’s fall.

These four states were subsequently already approved for $1.5 billion in federal funding along with Michigan in an attempt to stop the bleeding of foreclosures flooding the housing market earlier this year. Another Five states were approved a second wave of federal funding this past spring.

That leaves most realty experts recommending homeowners to wait to list their property if they don’t absolutely have to sell.  With lesser urgency from buyers, who have more of a pick-and-choose position in the market due to further expected decreases and a plethora of short sales and foreclosures to browse, sellers who don’t absolutely have to list their homes would likely do better to wait another one to two years.

For those who do have urgency to list, price aggressively.  You’re going to have to compete with homes that are being sold as short sales or bank owned sales.  These properties are priced to move as bankers and lenders have already agreed to take losses on them.

While most sellers may feel they can always come down on their prices, buyers are flooded with short-sale options, and aging listings can really hurt the overall perception of your property.

With that in mind, it may be better to price competitively right away in order to move the place or at least get some offers in your first 30 days. Most listings will drop in price by 10-15 percent when they age, so it may be advantageous to start a bit lower than you feel your home is worth, just to be a bit more competitive in today’s buyer’s market—it may actually win you more money in the sale.

In essence, a short sale is getting a lender to take a loss on their initial inflated terms of mortgage, allowing the homeowner freedom from the initial debt. This can be a very convoluted process, since many lenders may be involved and all will have to agree on the loss.  A buyer is necessary as well, and though short sales typically have a very attractive price tag, most of the time cash is the preferred method of payment since convoluted financing is what caused the unreasonable mortgage to begin with, and cash is much better to cover losses than credit that may not be there in the future.  It’s not uncommon for there to be at least 10 or 20 offers on a home being short sold, and oftentimes the offer with the most cash constitution—not necessarily the highest dollar amount, is the most desirable.

This can be a good thing for investors, as they typically have much greater capital than families or first-time buyers, but the process can be extremely arduous and contain rolls of red tape based on the number of parties involved that have to negotiate and agree on the deal. Many short sale offers ultimately fall through.

This is where the Obama Administration is attempting to step in. With a new standardized short sale plan that is rolling out this year, parties involved are required to use uniform documentation, pre-approved terms and accelerated turn-around times in an attempt to avoid the long drawn out negotiations that sometimes ruin short sale offers. It also offers incentives in the way of homeowner relocation grants, mortgage servicing fees, real estate agent commissions and stipends for secondary lenders and investors.

Though the jury is still out as to whether the streamlining will be effective and encourage more short sales to be initiated and taken to completion, it seems any kind of standardization process will be in favor of investors with cash capital that can benefit from purchasing these homes, as well as homeowners that need to free themselves of over-inflated mortgages.

If you are interested in learning more about the short sell process or want to invest in properties that are offered for short sale  please call me at 818-241-5196.