Anyone else trapped? (Detroit, Ypsilanti: real estate, house, rent)

[tcb]

I was thinking of moving out of state where I can get a job that doesn't rely on the auto industry. I made an appointment with an real estate agent. It doesn't look like I'm going anywhere for a while since I would owe somewhere around $13,000 in closing. Anyone else trapped? My house value just keeps dropping, I'm scared it's not going to bounce back. I don't know if I should get another job and work until I can get the money and get rid of the house and the $1500/month payment (with taxes and insurance in escrow) or try to stick it out. I paid $150k for the house about a year ago.

[rutha1105]

I think there are a whole lot of people in the same trap. I'm trying to decide what to do. Stay and train for another job, cut my losses and leave(the classifieds nearly anywhere else show that I am employable, just not here) or stay and keep trying to find another job. We are scraping by, the house takes half the money each month, now that I need employment, our savings are draining and the taxes are going up!

Oh yeah, and I am going to think positive and that job will just "appear", even though it hasn't for the last 10 months...

[mpaquette]

I moved out of Michigan last November and I feel trapped by the house I own there that I cannot sell. I've had 1 lowball offer in 10 months. I'm not on the verge of going broke or anything, but paying for and taking care of house that I don't live in is getting old.

[Adieoz]

I am a realtor so these conversations are interesting to me as I have to tell someone new every week that they owe more on their house than it is worth. The reality is that home prices in the Detroit area have depreciated 11% since last year. This of course does not include the costs to sell your home, which are typically around another 7.5% of the sales price. (title insurance, transfer tax, discharges, commissions, etc.)

If you are in the situation as many are that you owe more than your home is worth, you might try talking to your real estate agent about a short sale. The bank may consider releasing the lien on your property and taking less than they are owed if you will carry a note back for the balance of the loan. For instance, lets say you bought your home for $150,000 is 2006 and today it is worth $133,500. With the cost of sale you would have to bring about $27,000 or so to close the deal. The bank would release the lien and get you out of the house if you hold a note back to pay back the difference. It gets you out of the house and since the banks do not want these properties back in foreclosure I have seen them negotiate great rates on these notes, sometimes even 0%.

This may be one option if you want to preserve your credit so that you can buy a new home in your new location. Hope this helps someone.

[Dr.Jim]

Yup. I can relate to this.

I am maintaining 2 homes,...1 in Mi, which is for sale.
I am already going to bring 15K to closing,...and I am sure IF I get an offer I will end up bringing much more.

I think I have heard a general consensus on various forums that if you do not HAVE to sell right now, dont. The inventory is very high. It will take some time for everything to equalize, and at least if you (we) have to take a hit on our house, it might sell in a reasonable timeframe!

[mpaquette]

Interesting. So typically the listing agent would work with the lender(s) to make this type of an arrangement? I'm not living in fantasy land, I came to the conclusion about 8 months ago that I would owe more than my home was worth. The problem is that I figured I would end up having to bring about $12k to closing and now it appears that number is going to be closer to $30k based on the recent offer I received. At $12 I just figured I would clean out my savings and cover the difference, but at $30k I'm basically up the creek w/o a paddle or a stinking boat. Feel free to direct message me if you prefer not to discuss this on the board. Thanks a ton!

Originally Posted by Adieoz

I am a realtor so these conversations are interesting to me as I have to tell someone new every week that they owe more on their house than it is worth. The reality is that home prices in the Detroit area have depreciated 11% since last year. This of course does not include the costs to sell your home, which are typically around another 7.5% of the sales price. (title insurance, transfer tax, discharges, commissions, etc.)

If you are in the situation as many are that you owe more than your home is worth, you might try talking to your real estate agent about a short sale. The bank may consider releasing the lien on your property and taking less than they are owed if you will carry a note back for the balance of the loan. For instance, lets say you bought your home for $150,000 is 2006 and today it is worth $133,500. With the cost of sale you would have to bring about $27,000 or so to close the deal. The bank would release the lien and get you out of the house if you hold a note back to pay back the difference. It gets you out of the house and since the banks do not want these properties back in foreclosure I have seen them negotiate great rates on these notes, sometimes even 0%.

This may be one option if you want to preserve your credit so that you can buy a new home in your new location. Hope this helps someone.

[Adieoz]

Sorry mpaquette, I'm not exactly sure how to direct message.

Your listing agent would be a good resource. Just a few heads-up, however. Very few agents have actually completed a short sale as until recently the banks would not consider them very often. Therefore, you may want to ask around for an agent who specializes in this type of sale. Also, just so you are aware, involving the bank often adds a new layer of complexity...meaning that the bank also has to approve any offers and they typically take 2 to 6 weeks or more to respond. They will ask for lots of detailed information about you personally as well. But, in the end if you hope to buy a new house in the next 5 years avoided foreclosure is advisable and this may be a good option.

[trmaoy]

Originally Posted by Adieoz

Sorry mpaquette, I'm not exactly sure how to direct message.

Your listing agent would be a good resource. Just a few heads-up, however. Very few agents have actually completed a short sale as until recently the banks would not consider them very often. Therefore, you may want to ask around for an agent who specializes in this type of sale. Also, just so you are aware, involving the bank often adds a new layer of complexity...meaning that the bank also has to approve any offers and they typically take 2 to 6 weeks or more to respond. They will ask for lots of detailed information about you personally as well. But, in the end if you hope to buy a new house in the next 5 years avoided foreclosure is advisable and this may be a good option.

Have you worked with any actual situation where a short sale was done? How did it work out? Also, is this just for situations where there is a buyer for the home but the sales price doesn't cover what is owed? Or, can you also do this without a buyer for the home by basically just giving the bank the house for the fair market value?

[breathe365]

I am planning to move to Ypsilanti,to rent and go to school. Can anyone say some good of the area,or am I on the wish wagon????

[Adieoz]

To "give the house back" to the bank is called a deed in lieu of foreclosure. And these can be very tricky to do. The bank often does not want to take the deed back without doing the foreclosure because there may be junior liens on the property that are only cleared by completing the entire foreclosure process. Either way your credit will suffer. They only way to save your credit is to pay the money that you owe.

As far as you question to "do you have to have a buyer to negotiate a short sale" The answer is yes. You need a patient buyer and a written purchase agreement. These banks are very much overwhelmed with the amount of property they are trying to handle right now.