I owe more than I can sell for!

by admin on November 19, 2013

In this real estate climate, especially over the past few years, it is not uncommon for people to owe a little, or even a lot more than their home is worth. I recently had the opportunity to discuss this with a potential seller a few days ago who had questions about their options and had another comment that she could not list her home without raising the price (which the market would not substantiate) over her FSBO (For Sale By Owner) pricing.

The good news is that there are options.

Short Sale

This is when the bank negotiates to take less than what is owed on the property in an effort to get the house sold in lieu of foreclosure. There has to be a hardship (unable to afford, job loss, moving to another state with good reason, etc). The reason of the hardship often dictates how willing the bank is to work with you.

The general process of a short sale is to contact the bank for a short sale packet. This can generally be received through a loss mitigation department. Fill out the packet and send in with your hardship letter. Go ahead and list the property if it is not listed. Be sure to put “subject to short sale” or “subject to approval of short sale from lender”.

Know that choosing the right agent to represent you is crucial. Not any agent can handle short sales effectively.

Most of the process will play out as a usual sale. Where it gets time consuming is that there will be additional documents you will be required to submit to the lender and the buyer will need to understand that in some cases, it can take months to get a final approval to sell and close a short sale.

Short sales may come with credit consequences and potential tax liability. Feel free to contact me and discuss as every situation is different and regulations change frequently.

Owner Finance

You owe more than the house is worth and can’t sell it and don’t want to do a short sale for one reason or another. You could rent the house but that would more than likely be at a loss and you would be responsible for fixing things that tenants break.

Why not owner finance? Take a little money down and finance directly to buyer. A buyer who cannot easily get a loan through conventional means may be willing to pay more for a home if you will finance it to them. In an owner finance situation, it is often the buyer’s responsibility to fix things when they break.

Contact me for more information as I can list your property and market it to buyers that need this type of financing.

Other Options

Depending on your unique needs, the property, and other variables, there may be other options. Talking to a knowledgeable broker can be the difference between finding a solution and ending up in foreclosure.

Contact me to discuss.


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