| To Short Sell or Not to Short Sell |
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heidi_expecting
New Member
Cash: $ 1.25
Posts: 6
Joined: 25 May 2011
Location: Redlands, CA
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| To Short Sell or Not to Short Sell |
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Our challenge lies w/ a mortgage on a town home and we don't know what to do.
We bought the home at the height of the market for $250,000, but it is now valued at only $100,000. (We still owe $200,000). We've been renting the apartment out for the last year as we now live in another town (also paying rent ourselves there.)
Our renters have recently announced that they have to move and we are faced w/ carpet cleaning, painting & other small repairs to make it appropriate for new renters.
We are wondering how long we can continue to pour $ in to this townhome as we ourselves are about to become a single income family w/ a baby. We don't know if we should hang on to the property in hopes it will soon recover value, and in the meantime continue renting for however many years as our credit is all tied up. OR, we wonder if we should just cut our losses and go through w/ a short sale as the ding to our credit will then only last 2-3 years.
Your wisdom on this matter would be GREATLY appreciated.
Sincerely,
Heidi
HMJ
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Wed May 25, 2011 4:20 am |
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coaster
Senior Advisor
Cash: $ 1357.80
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Location: Wisconsin
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Heidi, as a general principle of investing, you don't hang on to a losing investment, hoping that its price will recover to a point you can sell it without a loss. Either it still has some other sound reason to hold on to it, regardless of the loss, or it doesn't, in which case it's best to dump it and find something better for your working money. Applying that principle to your decision-making may help you make your decision. Hope never has a legitimate place in that decision matrix.
Best wishes and good luck. 
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Wed May 25, 2011 4:37 pm |
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oldguy
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How far away is the 'another town' that you now live in? Ie, is it possible that when you become a one-income family you could move back into the condo and dh could commute?
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Wed May 25, 2011 6:09 pm |
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Jducey1234
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Joined: 25 May 2011
Location: Callicoon NY
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| Short Sale |
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If it is not possible to move back into the home, then I think a short sale is your best option. It will "ding" your credit for a bit, but if an appraised value has it coming in at 40% below what you owe, the bank will work with you.
Sullivan County NY Real Estate
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Wed May 25, 2011 8:21 pm |
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heidi_expecting
New Member
Cash: $ 1.25
Posts: 6
Joined: 25 May 2011
Location: Redlands, CA
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I truly appreciate your responses. No, it's not possible for us to move back into the condo as we are actually soon looking to move even further from it (out of state). It does seem short sale is quite possibly our best option.
In the meantime, do any of you have any experience w/ renting out a property during the sale process? Is this even possible? If so, what should our rental contract say?
Thanks again,
Heidi
HMJ
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Thu May 26, 2011 1:13 am |
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coaster
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Cash: $ 1357.80
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It's possible, but your offer will probably only attract short-term renters, since you can't offer a fixed-term lease, and the lease will have to be month-to-month. In other words, maybe not the best tenants, and you might want to weigh that negative against the other negative of having the property sit vacant with no rental income.
But that decision might be moot if the home-owners association won't allow it.
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Thu May 26, 2011 3:27 am |
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heidi_expecting
New Member
Cash: $ 1.25
Posts: 6
Joined: 25 May 2011
Location: Redlands, CA
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Good points, about the month to month contract. I will discuss w/ my husband.
Here's a couple other questions: (And I can't thank-you enough for taking the time to council me!)
1. How does one go about enlisting for a short sale?
2. If we do not do the short sale (My husband is struggling w/ it feeling like a failure of integrity to walk & not hold up to the commitment he has made in this area.).. Ok, so if we do not do the short sale and continue renting it out, would a bank ever give us another loan for a home (in the area we'll be moving to) while we still owe $200,000? Would we be backed into continuing to rent until we finally get this property off our hands?
Thanks again,
Heidi
HMJ
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Thu May 26, 2011 4:29 am |
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coaster
Senior Advisor
Cash: $ 1357.80
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Location: Wisconsin
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1. you propose it to the lender (the mortgage holder). Your proposal should stress how it will benefit them. I'm sure you can google sample or template proposals.
2. this situation is due to circumstances beyond his control, it's not due to any failure on his part. His desire to honor a committment made in a better time is commendable, but after you've done all you can do, then you've done all you can do.
Getting another loan: could you get a loan? probably not now because lending is tight. But the more important question is whether or that would be financially prudent .... which course of action will be most beneficial to your financial future?
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Thu May 26, 2011 3:39 pm |
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heidi_expecting
New Member
Cash: $ 1.25
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Location: Redlands, CA
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Thank-you again. I shared all of your insights w/ my husband and we will certainly take this all into consideration, along w/ a lot of prayer.
These things can be so stressful at a time when so many other things are in transition.
If you have any additional thoughts in this area in the future, I'd value hearing. You seem to be very well acquainted in this area. What is your background?
Thank-you so much,
Heidi
HMJ
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Fri May 27, 2011 5:11 am |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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Technical professional, air transportation industry; early retired due to health; financial advisor/insurance & securities a couple years; lousy closer -- didn't work out but learned a lot from that and a whole lot more just being on here every day. 
Yes, don't forget the prayer.........
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Fri May 27, 2011 6:28 am |
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heidi_expecting
New Member
Cash: $ 1.25
Posts: 6
Joined: 25 May 2011
Location: Redlands, CA
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Excellent. Well, thanks again.
One more thing you might be able to clear up for me---what does the "cash" amount in the left hand column on this site refer too? Am I being billed for this somehow?
HMJ
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Fri May 27, 2011 2:58 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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quote:
Originally posted by heidi_expecting
Am I being billed for this somehow?
No.....no.....and how would we collect??
No, it's "pretend money" members earn for posting, and which they can then "buy" threads in the Market Forums that promote/advertise whatever it is they want. There's an announcement in each of those forums that explains it.
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Fri May 27, 2011 3:27 pm |
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heidi_expecting
New Member
Cash: $ 1.25
Posts: 6
Joined: 25 May 2011
Location: Redlands, CA
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Ha! I just wanted to be sure
HMJ
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Sat May 28, 2011 5:03 am |
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