So let’s make sure we all understand each other. We are in a market where there is a shortage of available homes. And the ones that are available are selling quickly and for top dollar. And there are more buyers looking to buy a home than there are available homes. So why can’t some people sell their home?
Here’s why. They can’t afford to sell.
So, right now you’re scratching your head and wondering what I’m talking about. Let me explain.
Do you remember the housing crash from the early 2000s? Home prices had risen very high and very quickly. Mortgage companies were giving a mortgage to almost anyone. My son, who was waiting tables while going to college was qualified to get a mortgage for $900,000. He didn’t buy one, but he could’ve.
And then reality set in. And the value of homes took a nose dive. And when they took the nose dive all those people who bought at the peak of the market, and put down next to nothing in cash, were left in a negative equity situation. And when 2009 ended, twenty five per cent of homes were in a negative equity situation, which is also called “Under Water”. Now that was only a problem if they needed to sell. Because if they were under water, they needed to bring cash to the closing table. Enough cash to pay the mortgage, even if the property sold for less than the outstanding mortgage balance. And if they didn’t have enough cash, they needed to sell as a short sale.
But short sales are a totally different topic. Let’s get back to why people can’t sell. Here’s why they can’t.
After ten plus years in the housing recovery, there are over five percent of homes in this country that have a mortgage, and the home owner is in a negative equity situation. And as before, if they don’t have enough cash to pay off the mortgage after the sale, they cannot sell. Even if they want to. And unless they have a decent amount of positive equity, they won’t have enough cash to purchase their next home.
So, are you in a positive or negative equity situation? You’ll need to know what you owe on the mortgage, that’s printed right on the monthly statement. And you’ll need to get a good idea of what your home would sell for, and how much of that sale price you would walk away with. A for that you’ll need a good Realtor. Like Bunny and Art Reiman.