Wednesday, May 30, 2012

Upside Down On Your Home? You Are Not Alone. So What Do I Do If I Need To Sell It Quickly?

I am asked this question over and over again. What do I do If I'm upside down (means you owe more than its worth) on my house and I need to sell it quickly?

There are a few options open to you.

* You can sell it at a loss and try and make agreement with the bank to pay off the difference of what you owe and sell it for.
* You can do a short sale. A short sale will not totally ruin your credit and each case is approved by the Banks on a case by case basis.
* You can try and find investors who will buy you house for exactly what is owed, but they are getting harder and harder to find.
* If you can't afford the payments than foreclosure may be inevitable.

Certain decisions have to be made. Is this your primary home? Or is it an investment home? Banks are not going to like this answer too much, but If it's an investment home and you are over-leveraged by significant amounts, I advise clients even if they have the ability to borrow money not to borrow money to chase money. What I mean by this is you are just putting yourself in more debt with the hopes that the property will appreciate to the level of break even. At this point expert economists won't predict when this market will turn around. Some have said 1st quarter 2010 but there only speculating.

If it was your personal home can you afford to sell it at a loss,and afford to make payments to the bank for the difference of what you owe and ultimately sell it for? If the answer is yes, than this is the best way to maintain your credit rating.

If you don't think that is an option your next best solution is to sell it as a short sale. This is a very long and drawn out process. It requires multiple documents to be filed with the bank and a hardship letter stating why you cant pay the loan. Banks approve these on a case by case basis. Try and get the bank to waive the difference of what is owed and what property sells for so you don't get a judgement against you.

If your not to leveraged Investors might be able to bring the loan up to date and buy it at what ever is owed to the bank. Usually investors will only do this if they believe a particular market is significantly sold below market value. They usually have experts and appraisers who throughly research statistics and are pointed in certain areas or price ranges to target. The investors are getting harder and harder to find.

Lastly is foreclosure. There are many good honest people who have had excellent credit their entire life and are faced with foreclosing. They think its embarrassing. Well its not. Many different and unique circumstances make up for reasons of having to go this route. Most don't know this but while foreclosures do have a negative impact on your credit, it does not mean you can never buy another home. In the old days it was unheard of but in certain instances in 6 months, others up to 24 months you might be able to get another mortgage for a home.

Keep your head up! You are not alone if this situation pertains to you. I would like to hear how you have dealt with similar situations.

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