Nancy Philbrick, a Prudential Verani Realty Agent was quoted in the article “Gov’t unveils rules to speed up ‘short sales‘” posted by WAFB.com, a Louisiana news channel, on Tuesday, December 1, 2009.

The article highlights the Treasury Department’s new rules to help homeowners who need to sell their homes, but can’t get a price high enough to pay off their mortgages.

Last night I met with yet another homeowner who needs to sell, but who owes more than his house is worth. This is VERY common these days — I now speak to people in this situation several times per week.

But there IS good news — lots of it. Perhaps one bit of good news for people in this situation is simply this: You are not alone. Not at all! But even better news is this: There is a way out.

The short sale is an alternative to foreclosure.  When a piece of property is sold, the lender accepts a discounted payoff, less money than is actually owed. It’s less embarassing for the seller, and a chance to buy property at bargain prices for the purchaser.  The chief requirements for both?  Patience — and paperwork.

Is your house upside down? Do you owe more than it’s worth? It’s a tough time for many of us, but the New Hampshire Real Estate market is slowly is steadily improving. Hang onto your home, there’s a bright light at the end of the tunnel.

But what if you’re upside down and can no longer afford your home? What to do then?

Well here’s what not to do: Don’t wait until it’s too late. Don’t wait for the inevitable foreclosure. Why put yourself through all that pain?

When buyers decide to include bank-owned properties in their search for a property, that decision is sometimes based on inaccurate information from many sources.  It can be from newspaper or internet articles, television or radio, friends, co-workers or family. Sometimes they have even paid for lists of foreclosed properties or taken a class from one of the TV Real Estate Gurus. These buyers have unrealistic expectations and often even their real estate agents are unable to convince them that that is the case.

Here are some of the things that buyers believe.

True or False:

The listing price of the property is related to the amount that the former owners owed. FALSE.

This is a favorite question from buyers. However once the foreclosure sale occurs, that amount is not considered when listing the property.  The list price is based on market value adjusted for the condition of the property.

The banks are in a hurry to unload their inventory.      FALSE.

Most prices are set with a 90 – 120 day market time. Large lending institutions have an interest in supporting real estate values.

Banks are willing to sell at big discounts to get rid of their inventory. FALSE.

Banks are not in a hurry and have no incentive to devalue the other assets they have as collateral on other loans.

Banks will offer a bigger discount to CASH buyers. FALSE

With or without financing, all sales end up as CASH to the seller.  The removal of contingencies such as financing, appraisal, inspections, etc. may make an offer more appealing but not a “DEAL”.  Cash may be the only way to purchase some properties due to the condition.

Banks are moved by a quick closing. FALSE

Banks are large institutions and move like big boats that turn slowly. They might like to close quickly but it is highly unlikely.

Banks  have to pay the closing costs allowed for the buyers financing program. FALSE

Most seller banks have their own guidelines. Regardless of the % or amount allowed under the buyers’ financing, the seller’s limit may be lower. For example, if the lender says 6%, the seller bank may have a 3% limit. That can affect the ability to put the sale together if the buyer has to have that assistance for closing.

Bank-owned properties are BARGAINS. FALSE

If a property looks like a bargain, there is probably a reason. Condition is the driving factor in pricing.

If there are multiple offers, the bank has to take one of them.

FALSE

The seller will select only one of the offers to negotiate or accept. Multiple offers notices are important so buyers know they may never get a second chance to change their offer. But if all the offers are unacceptable, the seller may reject them all.

Bank owned properties can be a good opportunity for a purchase if it qualifies for the financing program the buyer will be using. There are some good investment properties as well but the allowance for a profit margin for “flippers” is not usually a pricing consideration when the properties are first listed. As time goes by and prices may be reduced, these properties may become more appealing.  Working with an experienced REALTOR is a way to keep track of these properties and price changes.