I'm moving to DFW for my job and its time to sell the house here in SoCal. But its the wrong time to sell with the market crashed. I owe about $50,000 in mortgages(1st and a 2nd) more than the house is worth(according to zillow.com). I'm current with all my payments, its just that I have to move. So some choices that I know about so far;
1)Rent the house. I've pretty much elminated that option as I can not come close to renting it for what the mortgages cost per month. Additionally, I risk the house being vacant with no income, renters trashing the place and I'd have to pay additional money to a mangement company. Its true that the house's value could go up again(market) and I could make a profit. But with the research I've done, the market isn't likely to "significantly" go up for a few years. And every year that passes, the difference between rent and mortgage rises the amount that the house would have to sell for to break even. Say $20,000 a year with rent/mortgage difference, means if the market returned to what I owe on my loans in 6 years, I'd still lose $120,000 just from rent/mortgage difference. It would be a gamble, the same as going to Vegas and playing craps. So I'm out, too risky.
2)Shortsale with a standard realtor and my bank's current offer. Which is they will release the lien so the house can be sold and change the home loan into an unsecured loan. So I take about a $50,000 loss plus the seller's costs, the interest rate stays the same(its a fixed rate 6%), monthly payment stays the same($998) BUT no negative hit to my credit. So I lose money, but my credit stays excellent. Risk is I can't find a buyer who wants the house and can qualify for a loan.
3)Shortsale with a shortsale specific realtor lawyer combination(Webuyuglyhouses.com type). They use tactics and agressive negoiation so that I do not take a loss at all. The bank takes the loss because it'll save them money over a foreclosure. While I walk away without a loss, it does hit my credit. Not as bad as a foreclosure, but it is negative. I think he called it a "re-negoiated loan". He said with a credit fixing company, it would take 2-3 years to completely clean my credit again. Risk is the bank won't come to an agreement, its completely dependant upon the realtor/lawyer combo convincing the bank this is its best option. Which may be tough since I will keep making full payments on time. Someone who is 2 months behind would put more fear into them.
4)Bankruptcy. No sense foreclosing without going backrupt since the bank will come after me for the difference of the auction price and my loan balance. Obviously, this would be the last choice. But if I can't sell the house and the market keeps going down, why would I shortsell with say a $100,000 loss. That's a lot of money, better to ruin credit than pay a ton of money.
So that's where I'm at now. Realtor is coming over tomorrow and we're going to list the house and see if anybody bites.
Any advice? Suggestions? This market took the wrong time to take a dump on me.
1)Rent the house. I've pretty much elminated that option as I can not come close to renting it for what the mortgages cost per month. Additionally, I risk the house being vacant with no income, renters trashing the place and I'd have to pay additional money to a mangement company. Its true that the house's value could go up again(market) and I could make a profit. But with the research I've done, the market isn't likely to "significantly" go up for a few years. And every year that passes, the difference between rent and mortgage rises the amount that the house would have to sell for to break even. Say $20,000 a year with rent/mortgage difference, means if the market returned to what I owe on my loans in 6 years, I'd still lose $120,000 just from rent/mortgage difference. It would be a gamble, the same as going to Vegas and playing craps. So I'm out, too risky.
2)Shortsale with a standard realtor and my bank's current offer. Which is they will release the lien so the house can be sold and change the home loan into an unsecured loan. So I take about a $50,000 loss plus the seller's costs, the interest rate stays the same(its a fixed rate 6%), monthly payment stays the same($998) BUT no negative hit to my credit. So I lose money, but my credit stays excellent. Risk is I can't find a buyer who wants the house and can qualify for a loan.
3)Shortsale with a shortsale specific realtor lawyer combination(Webuyuglyhouses.com type). They use tactics and agressive negoiation so that I do not take a loss at all. The bank takes the loss because it'll save them money over a foreclosure. While I walk away without a loss, it does hit my credit. Not as bad as a foreclosure, but it is negative. I think he called it a "re-negoiated loan". He said with a credit fixing company, it would take 2-3 years to completely clean my credit again. Risk is the bank won't come to an agreement, its completely dependant upon the realtor/lawyer combo convincing the bank this is its best option. Which may be tough since I will keep making full payments on time. Someone who is 2 months behind would put more fear into them.
4)Bankruptcy. No sense foreclosing without going backrupt since the bank will come after me for the difference of the auction price and my loan balance. Obviously, this would be the last choice. But if I can't sell the house and the market keeps going down, why would I shortsell with say a $100,000 loss. That's a lot of money, better to ruin credit than pay a ton of money.
So that's where I'm at now. Realtor is coming over tomorrow and we're going to list the house and see if anybody bites.
Any advice? Suggestions? This market took the wrong time to take a dump on me.
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