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So if one has the mortgage paid off, and wants to sell the home...is it good or bad for the buyers to know they owe nothing?
Bad perhaps that theybuyer will think they can drop the price to nothing, yet having the home paid off would allow the seller to to hold the home indefinately or simply keep it as a second home.
Is it better if the buyer thinks the homeowner is stuck in a loan and could not lower selling price due to not being able to pay off the mortgage?
So what say thee buyers.....do you feel more power knowing the homeowner owes nothing on their home, or the homeowner is stuck in a huge mortgage?
I'd say you are totally in the driver's seat. You hold all the cards (not to mix metaphors). You can wait out any buyer and accept the offer that YOU want. Bottom line, you have all the negotiating power you want. Just don't be a rush to sell of course.
The only time I care what a seller's mortgage is, is if the price I think the house is worth is under what a seller owes. It will dissuade me a little knowing they will either have to sell to me bringing cash to closing, or be in a short sale situation.
An educated buyer (which is the buyer you are looking for) will know just because you don't owe anything doesn't mean a house is worth less. You may get a few bottom feeders if you put it out there your "desperate" to sell or something like that. But that isn't something to stress about.
All that being said, Why would a buyer even know what you owe on a property? 99% of people don't know how to look that kind of information up, and those that do won't care. Why advertise your net worth anyway, don't mention to anyone what you owe on the property unless you need to short sale.
I've started looking up what people owe on their houses. It's one clue to me on whether the price will likely drop or is negotiable. People who bought at the peak don't have much-- if any-- wiggle room. And, since I'm decidedly NOT buying at the peak, I don't want to pay their peak prices.
That said, I'm not checking out the mortgage info looking for a "deal." If it's a nice house and I want it, I'd offer the same amount I'd offer on house that still has a mortgage.
My observation is that homes that are paid off are priced more realistically to begin with. Or they drop to that level fairly quickly rather than hovering in the 2005 stratosphere.
The poster who said you hold all the cards is right. Screw what the buyers know. You know your selling price.
The only time I care what a seller's mortgage is, is if the price I think the house is worth is under what a seller owes. It will dissuade me a little knowing they will either have to sell to me bringing cash to closing, or be in a short sale situation.
As a Realtor, I want to know the debt on the house for the reasons you stated. It's all a part of knowing the buyer's motivation.
Knowing if the seller has enough money to close is critical to the outcome.
I'd rather buy from somebody without a mortgage. They aren't locked into a certain selling price, and have wiggle room if they're truly motivated to sell. They also aren't in a panicked state of mind, which makes them a little more rational to deal with.
As a buyer, I will avoid any upside down house (balance higher than market value). I had a purchase contract but it turned out to be a upside down house. The seller didn't have $100k to close and defaulted 1 week prior to the closing. We had to live in a hotel for 1 month to find another property. It was extremely painful. Will never make the same mistake.
As a seller, it shouldn't matter, if the buyer's agent is diligent.
How does it feel to own a house without any debt? Is it worth paying off the debt? Just curious.
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