The best way to sell a property in Dallas TX, that is more than 20-30% under water, without having to pay off the shortage, is to negotiate a short sale. This is also one of the most common ways to sell a property in which the owner is already many months behind in payments, has little or no equity, and wishes to avoid a foreclosure.
A Short Sale involves an investor or buyer and a Realtor, working with the property owner to negotiate with the property owner’s lender. The goal of the negotiations is to postpone (and prevent) a foreclosure auction and negotiate a discounted payoff on the loan (or loans). Using this method, the property can be purchased at a reduced price (less than what’s owed) and a foreclosure can be avoided.
Short Sale Example
Let’s look at a Standard Sales Scenario…
– Current Property Value: $185,000
– Existing loan(s) payoff: $210,000
– Sales price needed to break even: $231,000 (assumes ~10% closing costs and commissions, etc.)
This property would have to be sold for approximately $231,000 to cover all loans, taxes, closing costs, commissions, etc. Unfortunately, the property is only worth $185,000 in the current market, so the property owner would have to come up with $46,000 to cover the difference.
Now, let’s look at a Short Sale Scenario…
– Property Value: $185,000
– Negotiated loan(s) payoff: $165,000
– Sales price needed to break even: $181,500
In this scenario, after the loan is negotiated, the property can be sold for anywhere from $181,500 to $185,000 with no foreclosure and no additional cost to the property owner.