Expert: Connie Wildasinn-Broker,GRI,Realtor® - 2/17/2011

Question
QUESTION: Hi,
My husband and I are trying to sell our studio on Capitol Hill in Washington, DC.  It is in a great location but has been unable to sell.  It is in great condition and was renovated 3 years ago (stainless steel, granite counters, marble bath).  I is not listed at around $257K.  It has been on the market since summer of 2010.  We had two offers but both fell through (not due to the inspection or anything wrong with the property). We need to find a bigger space as our family is growing.  Also, we have not been able to rent it for an amount sufficient to cover the mortgage, taxes etc. I have been approaced by agents but if I am to sell at the current price listed I would need to bring cahsh to closing to pay the realtor and pay off the remainder of the mortgage.  I have listed it on MLS with a commission for a buyer's agent.  Is there something we should be doing that we are not?  What is a good website to find recent sales and market comparables?  Perhaps my pricing is off but I am unsure where to get definitive information about pricing (recent sales, comps).  We need to sell and I do not want to do a short sale.

ANSWER: HI Holly,

I am sorry to hear the property has not sold, you best offers were at the beginning of the listing.  I am not sure of the market trend in Washington DC, but at this point as much as it pains you the price is most likely to high to support the value.  Brining in cash to close is the only way to no end up in a short sale position...

Since you are listed, you should ask your realtor to provide you with current comparables of homes that are similar to yours and have closed in the past 3 months (this is what appraisers look at)

go and look at available homes in the immediate area and price range you are listed for and really ask yourself how  your home compares... and please do what you can to look objectively.. not like people are tearing the arms and legs off your baby...

Perhaps a re-staging of the property, give it a fresh look with slight price reduction... you didn't say if you were compensating your agent? or just the one who brings the buyer... if you are not compensating your agent ... keep in mind you really are a for sale by owner, that agent will not work for you... they will hope to locate a buyer... but they are aggressively looking to get that buyer into any home... not necessarily yours...

With the down turn in market pricing and a possible double dip in process... and the fact that your unit is a Studio... all will make it harder to sell...

You may wish to consider the negative $$ amount as a write off.. seek the help of your CPA.. perhaps renting really is the best thing to do...

Worst case.. seriously consider a short sale...but do get an agent who has closed short sales... they are not easy or anything like a traditional sale, and most agents do not have the patience to work one, since it can take up to a year to close one... We do them here it is 80% of our market place.. if you need a referral I would be glad to assist... I belong to a nationwide networking short sale program...

I hope this helps clarify some.. you have much to consider...

PS.. there are ways to close a short sale and stay current on your mortgage... so your credit doesn't take such a hit... check around

---------- FOLLOW-UP ----------

QUESTION: What do you think about rent to own (seller side)?

Answer
Hi Holly...

Rent to own - bad deal for the buyer right now - if the economy turns down again and I believe it will, most options are 2years out... it will be anyones game as to what the lender world will look like, how the value will fair and if this 'buyer' can really buy in two years when they were not able to purchase today.  That puts the buyer at the bottom of the market, with an option that was set at a higher price you most likely will not be able to get an appraisal for.

Now you will have to decide if you want to lower the price to meet the appraisal or boot the tenant out and retain or return options money received over the two years?   You could find yourself in court with an angry potential buyer... options are a messy business at best... but they are an 'Option'

Flip side the contract is written so tight, that the option money is yours to keep and you find a new renter/ or try for another option buyer and start all over again...

Check with you tax person, see how these affect your tax situation, and make an informed decision on which to do "Rent or Option"... Get you hands on some contracts and review every line and get help to understand any clauses you are uncertain of...

Any time you are not doing a straight sale, in and out.. you will have coincidences good and bad to pay close attention to...

Good luck