Released: April 20, 2007

Home sellers end up owing in ‘upside down’ sales

Source: Nancy Trejos, Washington Post (Free Registration)

Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.

The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.

“Five months later, I lose $100,000,” Taylor, a high school teacher, said. “I don’t think I can take $100,000 into the stock market and lose it faster.”

Such a scenario, known as a short sale, was unthinkable during the real estate boom of recent years. In the course of five months, a person could buy and sell a property and walk away with tens of thousands of dollars. Now, instead of receiving large checks at the settlement table, many sellers are writing them.

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