Owe more on house than it's now worth? Short Sell (for sale, real estate)

[Tony1790]

Hi all,

With the recent burst of "I can't sell my home" or "I can't take less than I owe" posts, on the housing market.

If you need to sell your house and it's value has dropped, do a Short Sell. That's a sale where the lender agrees to take less than the loan amount and calls your loan paid in full.

The only down sides were a hit to your credit score and the IRS treated the forgiven debt as income.

Now the Congress and Bush have passed a law forgiving the tax on the forgiven debt. It's almost as though they are begging people to quit paying their mortgage and short sell their homes.

My advice, list your home as a short sell and aggressively market it.

Case in point, my sister could have sold her home in 2005 for $299k in days as it was "valued" at $329k, and even at the lower price she would have made money. But being greedy, they listed at $329k and chased the market all the way to what they owed ($255k). When they got to $268k they quit lowering the price as that was the amount of payoff plus realtor fees, etc

My sister "finally" took my advice on a short sale and sold the house within weeks for $239k, of course that was almost 2 years after putting it on the market and not living in it and having to pay the mortgage on it that whole time.

So, fast forward 6 months, their new home that they built 2 years ago is now unaffordable with the adjustable rates going up and their serial refi's to make the old house payment, and now they are in the same situation as last time, just on a bigger scale.

Their new house is for sale at $499k, they've had no lookers, they owe $432k (give or take) and at a full price offer they might make $30k after paying the realtor, etc.

Full price offer = unrealistic, so in essence they will break even at best, meanwhile their house payments are close to $4k a month. It gets better, my brother in law is a contractor and business is so slow that he's building decks and that's about it.

If they would list the house at $399k as a short sale, I think it would sell quickly, but he's insistent on "making some money" on this house. He's spending his "profit" each month by making a house payment that he will eventually loose. Some people are too stupid to be helped. He's already done a short sale, it turned out good, he can do another and get out from under this debt......but nooooooo he'd rather loose the house and everything else on a monthly payment plan of only $4k.

So, help yourself, if you are at best breaking even, let the bank pay the realtor, sell the house for less than you owe and let that bank eat the loss! So that you can afford to eat later.

Tony

Advice is worth what it cost = free!

[Crazy G]

The short sale theory is fine..."BUT", it begs the question;

How many short sales do you think a bank can absorb???

In the 1980's....many a bank [S&L] went under...finally, the Resolution Trust stepped in to clean-up the mess....It took nearly 10 years....
This ""STATE OF REALITY" may take longer!!!!

[Tony1790]

Originally Posted by Crazy G

The short sale theory is fine..."BUT", it begs the question;

How many short sales do you think a bank can absorb??

You know the answer to that, it is up to the individual to protect themselves right now, get out of debt, how ever you can is all I'm saying.

I was at a meeting yesterday with the top execs of my company (railroad). Business forecast for 2008 is to be very bad. Housing is the biggest drag to our business.

I made a prediction yesterday that Countrywide would be bankrupt or bought out by summer, today on the news Countrywide is being bought by Bank of America, now it looks like JP Morgan may buy WAMU.

Don't have more than $100k in your FDIC insured account is all I can say.

Tony

[LowboyTZ]

I'm in total agreement with you, Tony. I've been in business for over 20 yrs. until Nov. of 2006, and had to become gainfully employed due to the nature of my business and the increasing expenses I was experiencing.(Trucking, transportation business, fuel costs were becoming overwhelming.)
I am now employed and have an above average paying job,(for this area,) with a good small company that has strong financial backing, but in my opinion is growing much too rapidly at the moment.(It also, is a trucking business I am working for now.) They see large gross dollar revenues, and seem to thrive on the excitement of the "gross", not considering the net. Very dangerous way to operate, in my view. But, I shouldn't be concerned about that aspect of the business currently. I'm receiving a check that cashes every 2 weeks, so why worry...for now.

My wife and I are the victims of the sub-prime ARM as well as many others. However, we can hang on for the time being, it's just a little bit tight. Our monthly payment increased by about $500.00/month over the past couple of years, as many have. The good news is, we have tons of equity in our real estate, so if and when (most likely WHEN,) we decide to sell, we'll be in higher cotton than a lot of unfortunate victims.

The new trend nowadays should be simply to "downsize". Unless you're the type of individuals who like to live paycheck to paycheck, there is still hope that you can live comfortably without a hand-to-mouth scenario.

The question we should ask ourselves is; "how much do we actually NEED?" How big a house, how big a car(s), etc. It's really amazing how much you can live WITHOUT, when you decide you no longer need to make the mortgage companies and auto loan sharks, and credit card wolves wealthy anymore.

We cut our credit cards up 10 yrs. ago, and live with a debit card. Haven't had a nasty call from a 22 yr. old necktie wearing wet behind the ears kid since we paid the balances off. Got one paid for car, and 6 more installments on my 2001 F-150 that I plan on driving till it discinegrates. Just took good care of it, so it'll last a bunch more years. I don't have that pride factor either. Lost that with the credit card balances. I'll never talk myself into rationalizing about "deserving" a new 35K dollar pickup ever again.

My goal is to leave this area we live in and move into the western NC region, to enjoy more mild weather, stay around the mountains and woods, and live life like it's meant to be lived. I want to exit the trucking arena indefinitely, and have a solid background in excavation, heavy equipment operation, repairs, transport, etc., so as long as there's companies hiring, I'll have a job anywhere.

Sorry for the long reply and the thread-jacking, but I had to share all that to let people know, it can be a lot easier if and when you decide you had enough of the stress of finances. We've been married 21 yrs., and the lack of a dollar never affected our relationship, ever. That definitely helps.