Posted by Confused! on March 18, 2006 at 06:15:39:
Thank you for the response. Yes, we did find out about the possible tax liability. We are in the process of trying to work with the lender. But, we are not interested in keeping the house. First is because the payments would have to be about half of what they are now, and second is because we know there is a relocation coming in the near future. We have tried previously to get the payments lowered, but were not successful. We have also nearly wiped out our 401k (with loans) over this. At this point, we just want out of it before we lose everything! I guess at this point, we are hoping they will work with us while we try and sell it, and/or a short sale deal. Thanks again for the input.
Seller needs short sale help urgently - Posted by Confused!
Posted by Confused! on March 17, 2006 at 21:05:23:
Hello! I hope that someone here can offer some advice. Our situation briefly:- we are the classic short sale story (at least from what I have read). Upside down, have 1st and 2nd. Cannot sell for enough to cover both! 2nd has agreed to let us sell, but then they would write a new unsecured loan for the difference (at 10%). The problem is that we will not be able to afford the payments on the new loan! We just want out!!! Is there anyone that we should/could hire to help us with this? If the 2nd does not work with us, then BK may be our only alternative. If that happens, everyone loses. We estimate the shortage will be around $15k. We have it FSBO right now. Cannot afford the realtor fee either. Location is Michigan.
Also, after reading through this website, I’m assumming that many of the members here are looking for sellers in this situation. If so, would anyone on this forum be interested?
I hope I have given enough information for someone to respond. Thank you very much in advance!
Actually, using a REALTOR can be your best option.
Before I get into that though, understand that if you are paying your loans, the bank has little incentive to work with you. As far as they are concerned you are a perfoming asset.
If your second is with a different bank, you can put the screws to them more easily because they will be wiped out in a foreclosure.
Getting back to using a REALTOR®: Since you already know that you have no equity, your goal is to be able to get to the closing table without also bringing a checkbook to make up the difference between what is owed and what the property sells for.
If you use a REALTOR®, you must use one that knows how to short sale! Very few do. When you do find one, the REALTOR® will normally get a full 6% commission, and it just adds to the bank’s loss.
A novice REALTOR® will just take what’s owed, add his comission, and end up overpricing your house and just wasting time.
One that knows short sales will price the house for what it’s worth and present the best offer to the banks. The banks like to know that a professional has done his level best to market the property at the right price, and has produced the best offer.
Suppose your first and second lien come to 150, and you get an offer for 100. The REALTOR gets 6, and the bank gets 94 for a loss of 56k.
Those are often acceptable numbers to the bank.
The keys will be a hardship letter, documentation of your income, and a significant change in your life that shows your income was damaged since you applied for the loan. Also the threat of bankruptcy.
Would you like a referral to a competent REALTOR® ?
Re: Seller needs short sale help urgently - Posted by River City
Posted by River City on March 18, 2006 at 05:32:03:
One thing to keep in mind, is that with a short sale, you may have to pay income tax on the portion that is written off by the lenders.
Have you spoken with the lender on the 1st mortgage to see what can be done? If you could save your mortgage would you want to? There are several loss mitigation options available, including lowering your payments, IF the lender believes in you.
Of course your offer to give a referral doesn’t include receiving a referral fee does it? Your just doing this out of the kindness of your heart, right?