Q: What do you do when investors purchased in your neighborhood in the early 2000s for $120,000, took in renters who left the homes in shreds, the market crashed, and the investors walked away?

Now the banks are short-selling the homes for $40,000.

Q: What do you do when investors purchased in your neighborhood in the early 2000s for $120,000, took in renters who left the homes in shreds, the market crashed, and the investors walked away?

Now the banks are short-selling the homes for $40,000.

I want to sell my very nicely kept-up house for $80,000, which is what I paid for it back in 1998 as a VA foreclosure. But I’m getting no takers because, as prospective buyers have said, "I’m asking too much … the comps show it’s worth only $60,000."

The numbers are obviously skewed, and I’m screwed. What can I tell people looking at my home to help them buy? (Note: My home’s value in 2006 was $160,000.)

A: I understand your frustration — it is a logical response to a situation that must feel to you like it is completely unfair. While understandable, the way you are thinking about this subject is probably counterproductive to your best interests and objectives. I hate to be the bearer of bad news, but it is ultimately to your advantage to course-correct your thinking and line it up with the facts so that you can make an informed, well-reasoned series of decisions about how to move forward.

1. Understand the determinants of your home’s value. You’ve succinctly summed up the reality of the situation, in terms of your market and the comparable properties. But at the end of your question, you ask what you can do to sell your home for more than the comparables.

What’s happening here is that you are somewhat in denial of the full truth about your home’s worth. Your home is not worth what you paid for it; it’s not worth what you "want to sell it for"; and its worth is not determined relative to what it was valued at in 2006. The only thing that determines what a home (including your home) is worth at any given point in time is what a qualified buyer is willing to pay for it. Period.

And the best indicator of what a qualified buyer will pay for your home is what they have and are currently paying for similar nearby homes, like the foreclosures you’re referencing. Of course, if your home is a regular (i.e., not distressed) sale and is in much greater condition than those homes, you might be able to command a higher price. But to expect double the price is almost certainly an irrational expectation.

Even if a buyer did want to pay you double — which it sounds like they do not, from what they’ve actually told you — they probably couldn’t get your home to appraise at double the value of the nearby comparable sales, for purposes of qualifying for a mortgage.

2. Get clear on your objectives. Of course, it’d be fantastic if you could sell your home at the price you want, lickety-split. But for you to continue holding onto that aim in the face of the facts you’ve presented would be to live in fantasy land and set yourself up for ongoing disappointment and frustration.

So get clear on what your top priority is, understanding the trade-offs each will trigger.

Do you just need to sell, no matter what, and get closure so you can move on with your life? If so, you’ll probably need to bring your price down — that’s the trade-off.

Do you feel that you simply must clear at least the $80,000 you seek? Then you might need to hold onto the home until the market recovers to that level, and if you are still seeing many competitive foreclosure listings in your area, that might be a while.

So, as the owner of this home and the party solely responsible for your finances and your life course, it is your task to make a decision about what your top priority is, understanding the full spectrum of outcomes pursuing that priority will entail.

3. Explore offering seller financing or a lease-option arrangement. All that said, you may have some options for trying to get a premium price for your home. One that comes to mind for me is offering to sell your home on terms that buyers are willing to pay a premium for, and the two most noteworthy are seller financing and lease-option terms.

Buyers who have had foreclosures or other credit challenges but are relatively flush with cash are often willing to pay a premium for a home if they can buy it under a lease option, or if the seller is willing to carry some part of the loan for the property so buyers don’t have to jump through the hoops of getting a traditional bank mortgage.

Obviously, there are many other considerations to factor in if you go either of these routes, like the legal and financial implications of becoming a landlord or mortgage holder — and of not getting the full sale price of the property as cash in hand at closing.

Talk with a local agent and real estate attorney if you want to fully explore either or both of these alternatives.

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