House sale could mitigate bankruptcy

Q: I’m filing for bankruptcy and my attorney had me get a market analysis on my house to see what it was worth. It turns out, it’s worth more than I thought and my Realtor says I could sell it and pay off my mortgage without doing a short sale. Should I do that? My attorney says if my house was worth less than it is, I might be able to get to keep it. What should I do?

A: I’m sorry to hear you have to go through a bankruptcy. I know it’s hard to do and there are a lot of decisions to be made, but sometimes it’s the only reasonable option. As far as the house goes, first and foremost, you need to decide if you want to keep the house. The fact that you’re not “under water” – where you owe more than you could get by selling – gives you some options you might not have had otherwise. But it also sounds like having “too much” equity creates challenges from the attorney’s standpoint.

The truth is, your house is worth what it’s worth. There’s always a range, and in this buyer’s market there’s always a chance your house would sell at the bottom of that range, but your Realtor has hopefully given you a realistic idea of how much the house would sell.

If you decide you want to keep the house, talk to your attorney about the next steps and see what she recommends. If you decide you want to sell, then of course you’ll talk to your Realtor, but here’s an idea of what you might want to do.

I’ll assume you don’t really have any funds for repairs or staging that costs money. So, you’ll want to do the things that don’t cost anything and yet can still improve the showability of the house. Decide on a reasonable list price. And please, be realistic here. You don’t want to put your house on the market with the numbers you want to see. You want the numbers you and your Realtor know will work. After that, do a deep cleaning. The cleaner the house the better it will show and the easier to keep it up while it’s on the market. Next step, either de-clutter if you have lots of stuff, or do some staging with whatever furniture you do have. Finally, make it easy to show. If at all possible, just let people leave you a message as to when they’ll be there and then vacate the house for all showings. There’s no point in getting the house in great saleable shape just to make prospective buyers feel uncomfortable.

And finally, be committed to the process. A buyer’s market means your house might be listed for six months before it sells. Be patient, be diligent with the upkeep of the house, and be friendly to buyers and Realtors. If you put the effort into selling, you might just get to walk away from what is most likely a painful time having avoided a foreclosure and maybe even a little nest egg.

Talia Freedman is a Realtor with Signature Southwest Properties.
— This article appeared on page 21 of the Albuquerque Journal