Everybody knows the basics of getting a home sold. Of course, everybody used to know that the Earth was flat and that the Universe rotated all around us. There have been many other examples in history where rock-solid beliefs were changed, and now I suggest you consider the short sale paradigm as a way to end your current real estate dilemma.
The image on the right was used by Thomas Kuhn when he coined the term “paradigm” as a way to illustrate the concept of how our perception of something can change when we look at it with different information. For example, what do you see when you look at the picture? Is it a rabbit, or is it a duck?
Most people who want to sell a home right now cannot figure out what to do. Perhaps they owe more money on it than it is worth, or maybe they’ve lost more money than they can stomach right now. I understand, as I speak with homeowners all the time and I myself have been there too.
But these homeowners are trapped in a paradigm, where they see selling their home as a means to gain enough money to buy another one, or to pay off its mortgage, or to accomplish a certain goal. And this is where the short sale paradigm can help.
How To Use The Short Sale Paradigm
When you first looked at the image on the right, perhaps you only saw a duck. After I questioned if you saw a rabbit, you were able to see the rabbit in the image as well. Maybe it was the other way around.
Take a lesson from Kuhns’s illustration and apply it to your current housing situation. I recommend that you take a fresh look at your situation and choose the least painful solution. There is no magic trick, no silver bullet that will help you recover the 30+% loss of value that has occurred since 2006. But there is a solution to your housing problem.
The first step is to determine if you really have a problem. If you plan on being in your home for ten or more years, you do not have a problem. Values went up, values went down, values will go up again. Why am I so confident that real estate values will go up again?
Supply and demand dynamics, coupled with the rising cost of production over time all but guarantee historic real estate appreciation levels. Remember, home values rose faster than normal from 2000 to 2006, so we are just seeing a return to levels consistent with the appreciation rate seen for the past 50 years. Tallahassee still has too many homes for sale (as do most US housing markets), but this too will pass. Our population is growing, thus our need for housing is growing. We will again see times when supply and demand are in balance.
But if you know you will be moving in the next five years, I suggest you consider the short sale paradigm.
Right now, most homeowners see a large mortgage balance or a huge amount of money that has been lost. Sadly, this vision is stopping them from moving on with their lives. But what decision would they make if these were not an issue? If the answer is “sell right away,” then that is what they really should be doing.
Short Sale Paradigm Will Set You Free
For those that have too large of a mortgage, the short sale is the right answer. As we discussed in our last blog about short sales, banks are making deals with homeowners right now that are almost too good to be true. We do not expect these great deals to last forever, so don’t miss the train because your vision is blurred by a pre-existing paradigm.
For our readers who have lost more money than they feel they can stomach, I would suggest a paradigm shift as well. Right now, perhaps you believe that if you sell your home, you will lose a lot of money. The change in paradigm suggests that you have already lost the money (the market has already dropped), so the real question is should you hold on to the home so that you do not realize the loss, or sell it now to accomplish the goals that you have.
My best recommendation for both paradigms is to educate yourself on all the options the market is willing to provide. For this purpose, we have prepared a FREE 86 page short sale resource that you can download from our Tallahassee real estate website. It provides a lot of information that most homeowners do not know, and it might help you understand why a good solution already exists for your problem.
Of course, if you would like to sit down and discuss your situation, I can help you sort through your options. There is no need to be trapped into owning a home because you think it is the best financial solution to your problem. You most likely are trapped in a paradigm that is not letting you properly evaluate all other choices, so please move now to consider the short sale paradigm.