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allIwant
Love my crazy life!
Member since 1/10 9170 total posts
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Short sale questions
Anyone ever do a short sale for their own property?
We own a co-op and a home. Realistically in this market we will not be able to get what we owe on our mortgage 
At this rate it is going to cost us at least 30k just to sell it.
My question is can you do a short sale for one property when you own another?
How does doing a short sale affect your credit etc??
I am so depressed We had a buyer last year and it fell through...now the market is so much lower.
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Posted 12/9/11 6:31 PM  |
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Re: Short sale questions
Are you trying to do a short sale on the co-op or the home (I assume the home is a single family home)? Since you currenty own both, do you rent out one?
Are you up to date on your mortgage payments? Do you have equity in the other property you own? Do you have cash to bring to the closing table if you sell the property you are upside on at a loss? (Feel free to FM me if you don't want to post publicly).
The thing is -- you need to qualify for a short sale. You can't automatically do a short sale just because you owe more than the home is worth in today's market. The bank has to agree to let you do it. You need to show the bank that:
1. You can't afford the home anymore (and it helps if you've sought a loan modification before attempting to do a short sale), and
2. You've suffered a change in circumstance -- basically a hardship -- that makes it impossible for you to afford the home or stay in the home. The big ones are -- death, illness/disability, job loss/job transfer, divorce.
To show you qualify, you will need to provide extensive financial info to the bank (your bank statements, tax returns) and detail your household expenses (utilities, groceries, etc.). You also need to prepare a hardship letter, explaining why a short sale is necessary.
If you have other assets (cars, other homes/real estate, etc.), and are earning good income, such that you can afford to keep the property (or can bring money to the closing table to pay the bank if you sell at a loss), they aren't going to let you off the hook.
Also, if it's a borderline case and the bank allows you to do a short sale, you may not walk away owing nothing. For example, if you owe the bank $350K and you can only sell for $300K, they may not hold you to the $50K difference, but they may ask you to sign a promissory note for $30K (or some other amount that they think you can afford, based on your income, debts, etc.).
It sounds like you may be better off holding onto the property that you are trying to sell and renting it out, if you aren't already.
Generally, for anyone who would qualify, and is debating a short sale v. a foreclosure, a short sale is always the better option for the homeowner (financially, emotionally, etc.). A short sale will negatively impact your credit, but not as severely as not paying your mortgage and eventually having the bank foreclose. If you do a short sale, your credit recovers more quickly. You can usually get loans and even buy a home again in two years (versus more like 7 years with a foreclosure). And it is much quicker and brings a concrete resolution unlike the foreclosure process which can drag on for years. Also, usually people whose homes are foreclosed on have to file bankruptcy because the bank will get a judgment against them for the deficiency (the difference between what the bank is owed and what it was able to get via foreclosure). So it's not as if you just dump the house on the bank and walk away without further obligation, which is a common misperception.
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| Posted 12/9/11 9:23 PM |
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allIwant
Love my crazy life!
Member since 1/10 9170 total posts
Name:
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Re: Short sale questions
Posted by Century 21 Dallow - Christine Braun
Are you trying to do a short sale on the co-op or the home (I assume the home is a single family home)? Since you currenty own both, do you rent out one?
Are you up to date on your mortgage payments? Do you have equity in the other property you own? Do you have cash to bring to the closing table if you sell the property you are upside on at a loss? (Feel free to FM me if you don't want to post publicly).
The thing is -- you need to qualify for a short sale. You can't automatically do a short sale just because you owe more than the home is worth in today's market. The bank has to agree to let you do it. You need to show the bank that:
1. You can't afford the home anymore (and it helps if you've sought a loan modification before attempting to do a short sale), and
2. You've suffered a change in circumstance -- basically a hardship -- that makes it impossible for you to afford the home or stay in the home. The big ones are -- death, illness/disability, job loss/job transfer, divorce.
To show you qualify, you will need to provide extensive financial info to the bank (your bank statements, tax returns) and detail your household expenses (utilities, groceries, etc.). You also need to prepare a hardship letter, explaining why a short sale is necessary.
If you have other assets (cars, other homes/real estate, etc.), and are earning good income, such that you can afford to keep the property (or can bring money to the closing table to pay the bank if you sell at a loss), they aren't going to let you off the hook.
Also, if it's a borderline case and the bank allows you to do a short sale, you may not walk away owing nothing. For example, if you owe the bank $350K and you can only sell for $300K, they may not hold you to the $50K difference, but they may ask you to sign a promissory note for $30K (or some other amount that they think you can afford, based on your income, debts, etc.).
It sounds like you may be better off holding onto the property that you are trying to sell and renting it out, if you aren't already.
Generally, for anyone who would qualify, and is debating a short sale v. a foreclosure, a short sale is always the better option for the homeowner (financially, emotionally, etc.). A short sale will negatively impact your credit, but not as severely as not paying your mortgage and eventually having the bank foreclose. If you do a short sale, your credit recovers more quickly. You can usually get loans and even buy a home again in two years (versus more like 7 years with a foreclosure). And it is much quicker and brings a concrete resolution unlike the foreclosure process which can drag on for years. Also, usually people whose homes are foreclosed on have to file bankruptcy because the bank will get a judgment against them for the deficiency (the difference between what the bank is owed and what it was able to get via foreclosure). So it's not as if you just dump the house on the bank and walk away without further obligation, which is a common misperception.
Wow thank you for your response. I have been doing some research since I intially posted and I have gathered alot of the information you provided. I guess we are not candidates. Although my co op will only allow me to rent for one more year and then we would have to leave it empty or sell. I am afraid the market will be even worse next year when we attempt to sell.
We have savings but I don't want to use all my savings just to get rid of the co op. We have some decisions to make and they are not easy.
Thank you again for your response.
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| Posted 12/9/11 9:32 PM |
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Re: Short sale questions
No problem! I love talking about real estate, and am happy to provide info.
Feel free to contact me if you have questions on how to proceed - - or just want to talk generally about your strategy moving forward.
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| Posted 12/9/11 10:26 PM |
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MrsS1976
LIF Adolescent
Member since 5/11 534 total posts
Name:
M
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Re: Short sale questions
Allwant: I am in the same boat. I own a condo thats underwater by about 50k, and my husband and I live in his home (which also has a mortgage but DH has a lot of equity in it). I am renting the condo now but the rent doesnt cover the mortgage and I am out at least $800 each month with taxes and maintenance fees.
I dont qualify for a short sale because my income is too high and I have no trouble making my payments, but I found out a few weeks ago that HARP 2 removes the 125% LTV cap and that means I can FINALLY refinance...
So I hope to save $200/month after I close next month and plan to pay down as much of thr principal over the next 5 years because DH and I plan to buy another home soon (if we have kids, we need a 3 bedroom house and so far, DHs tiny house wont cut it). Maybe you can try to refinance to lower the mortgage payments..?
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| Posted 12/10/11 12:08 AM |
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LotsaLuv
Us
Member since 6/10 4094 total posts
Name:
F
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Re: Short sale questions
Posted by Century 21 Dallow - Christine Braun
Are you trying to do a short sale on the co-op or the home (I assume the home is a single family home)? Since you currenty own both, do you rent out one?
Are you up to date on your mortgage payments? Do you have equity in the other property you own? Do you have cash to bring to the closing table if you sell the property you are upside on at a loss? (Feel free to FM me if you don't want to post publicly).
The thing is -- you need to qualify for a short sale. You can't automatically do a short sale just because you owe more than the home is worth in today's market. The bank has to agree to let you do it. You need to show the bank that:
1. You can't afford the home anymore (and it helps if you've sought a loan modification before attempting to do a short sale), and
2. You've suffered a change in circumstance -- basically a hardship -- that makes it impossible for you to afford the home or stay in the home. The big ones are -- death, illness/disability, job loss/job transfer, divorce.
To show you qualify, you will need to provide extensive financial info to the bank (your bank statements, tax returns) and detail your household expenses (utilities, groceries, etc.). You also need to prepare a hardship letter, explaining why a short sale is necessary.
If you have other assets (cars, other homes/real estate, etc.), and are earning good income, such that you can afford to keep the property (or can bring money to the closing table to pay the bank if you sell at a loss), they aren't going to let you off the hook.
Also, if it's a borderline case and the bank allows you to do a short sale, you may not walk away owing nothing. For example, if you owe the bank $350K and you can only sell for $300K, they may not hold you to the $50K difference, but they may ask you to sign a promissory note for $30K (or some other amount that they think you can afford, based on your income, debts, etc.).
It sounds like you may be better off holding onto the property that you are trying to sell and renting it out, if you aren't already.
Generally, for anyone who would qualify, and is debating a short sale v. a foreclosure, a short sale is always the better option for the homeowner (financially, emotionally, etc.). A short sale will negatively impact your credit, but not as severely as not paying your mortgage and eventually having the bank foreclose. If you do a short sale, your credit recovers more quickly. You can usually get loans and even buy a home again in two years (versus more like 7 years with a foreclosure). And it is much quicker and brings a concrete resolution unlike the foreclosure process which can drag on for years. Also, usually people whose homes are foreclosed on have to file bankruptcy because the bank will get a judgment against them for the deficiency (the difference between what the bank is owed and what it was able to get via foreclosure). So it's not as if you just dump the house on the bank and walk away without further obligation, which is a common misperception.
Is this the case in all states, or just NY? We are going through the same thing with a condo we own in SC, it has depreciated by about 60% so we have an offer on it but only if it short sales. The bank hasn't asked us for anthing as of yet, we have just presented the offer to them.. ....
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| Posted 12/10/11 8:28 AM |
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allIwant
Love my crazy life!
Member since 1/10 9170 total posts
Name:
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Re: Short sale questions
Posted by MrsS1976
Allwant: I am in the same boat. I own a condo thats underwater by about 50k, and my husband and I live in his home (which also has a mortgage but DH has a lot of equity in it). I am renting the condo now but the rent doesnt cover the mortgage and I am out at least $800 each month with taxes and maintenance fees.
I dont qualify for a short sale because my income is too high and I have no trouble making my payments, but I found out a few weeks ago that HARP 2 removes the 125% LTV cap and that means I can FINALLY refinance...
So I hope to save $200/month after I close next month and plan to pay down as much of thr principal over the next 5 years because DH and I plan to buy another home soon (if we have kids, we need a 3 bedroom house and so far, DHs tiny house wont cut it). Maybe you can try to refinance to lower the mortgage payments..?
The biggest issue for us is we can only rent it out for 5 years as per the co op. So we can only rent it out one more year. So I don't think it will pay for us to put more money into it to refinance as we are going to have to bite the bullet and sell this year or next . Paying both mortgages and childcare is going to be next to impossible.
We are trying to predict will the market be better this year or next year???
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| Posted 12/10/11 9:15 AM |
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Re: Short sale questions
Posted by PennyJ923
Is this the case in all states, or just NY? We are going through the same thing with a condo we own in SC, it has depreciated by about 60% so we have an offer on it but only if it short sales. The bank hasn't asked us for anthing as of yet, we have just presented the offer to them.. ....
Yes, this is the general process everywhere, because the banks are located everywhere (a lot of banks are out west, actually).
But each bank is a little different in terms of what they require, how fast they move, etc.
I don't know if you have a realtor who you gave authority to speak with the bank, or are speaking to the bank yourself, but generally when you are trying to initiate a short sale, you call the loss mitigation department of the bank,. They will tell you what they want you to send it (a lot of banks have a "short sale package"). Then, once you have an offer on a property, the bank will assign a negotiator to handle the file.
I am sure the bank will get back to you with what they need you, as the seller, to send in, but I would start gathering the information. Also, it really helps to be proactive and stay on top of it, so you or your realtor should be calling to find out the status, what to send in, etc.
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| Posted 12/11/11 1:42 PM |
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Re: Short sale questions
Posted by allIwant
Posted by MrsS1976
Allwant: I am in the same boat. I own a condo thats underwater by about 50k, and my husband and I live in his home (which also has a mortgage but DH has a lot of equity in it). I am renting the condo now but the rent doesnt cover the mortgage and I am out at least $800 each month with taxes and maintenance fees.
I dont qualify for a short sale because my income is too high and I have no trouble making my payments, but I found out a few weeks ago that HARP 2 removes the 125% LTV cap and that means I can FINALLY refinance...
So I hope to save $200/month after I close next month and plan to pay down as much of thr principal over the next 5 years because DH and I plan to buy another home soon (if we have kids, we need a 3 bedroom house and so far, DHs tiny house wont cut it). Maybe you can try to refinance to lower the mortgage payments..?
The biggest issue for us is we can only rent it out for 5 years as per the co op. So we can only rent it out one more year. So I don't think it will pay for us to put more money into it to refinance as we are going to have to bite the bullet and sell this year or next . Paying both mortgages and childcare is going to be next to impossible.
We are trying to predict will the market be better this year or next year???
AllIwant, do you know how "short" you are? Have you had a current market evaluation done on the co-op to see what you could sell it for today? I think the market is going to remain relatively flat for the next couple of years, but you may not be as under water as you think.
But I sell a lot of co-ops and they are tough sells in today's market -- largely because they used to be the most affordable option, but now someone can buy a single-family home (with prices and interest rates being so low) and only put 3.5% down. But co-ops are still selling if priced right.
Have you thought about talking to your co-op board/management company to see if you could get an extension on the 5 year rental limit? Is it a rule that is firmly enforced, or do they make exceptions? Also, I don't know who you've had renting it, but have you thought about renting for one more year, but doing a rental with option to buy?
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| Posted 12/11/11 1:46 PM |
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julz33
i run for bacon
Member since 5/05 20584 total posts
Name:
julz
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Re: Short sale questions
I would try to get an extension on being allowed to rent. A forclosure or short sale would not be good for the coop so maybe they will extend the rental period for you. Good luck!
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| Posted 12/11/11 4:42 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Short sale questions
Posted by julz33
I would try to get an extension on being allowed to rent. A forclosure or short sale would not be good for the coop so maybe they will extend the rental period for you. Good luck!
I agree with this. I would literally go into the coop office and tell them you are going to stop making your payments on your mortgage because you can't afford to sell right now.
Of course they will probably be stubborn and not give a crap, but it doesn't hurt to ask.
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| Posted 12/11/11 4:48 PM |
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allIwant
Love my crazy life!
Member since 1/10 9170 total posts
Name:
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Re: Short sale questions
Posted by Century 21 Dallow - Christine Braun
Posted by allIwant
Posted by MrsS1976
Allwant: I am in the same boat. I own a condo thats underwater by about 50k, and my husband and I live in his home (which also has a mortgage but DH has a lot of equity in it). I am renting the condo now but the rent doesnt cover the mortgage and I am out at least $800 each month with taxes and maintenance fees.
I dont qualify for a short sale because my income is too high and I have no trouble making my payments, but I found out a few weeks ago that HARP 2 removes the 125% LTV cap and that means I can FINALLY refinance...
So I hope to save $200/month after I close next month and plan to pay down as much of thr principal over the next 5 years because DH and I plan to buy another home soon (if we have kids, we need a 3 bedroom house and so far, DHs tiny house wont cut it). Maybe you can try to refinance to lower the mortgage payments..?
The biggest issue for us is we can only rent it out for 5 years as per the co op. So we can only rent it out one more year. So I don't think it will pay for us to put more money into it to refinance as we are going to have to bite the bullet and sell this year or next . Paying both mortgages and childcare is going to be next to impossible.
We are trying to predict will the market be better this year or next year???
AllIwant, do you know how "short" you are? Have you had a current market evaluation done on the co-op to see what you could sell it for today? I think the market is going to remain relatively flat for the next couple of years, but you may not be as under water as you think.
But I sell a lot of co-ops and they are tough sells in today's market -- largely because they used to be the most affordable option, but now someone can buy a single-family home (with prices and interest rates being so low) and only put 3.5% down. But co-ops are still selling if priced right.
Have you thought about talking to your co-op board/management company to see if you could get an extension on the 5 year rental limit? Is it a rule that is firmly enforced, or do they make exceptions? Also, I don't know who you've had renting it, but have you thought about renting for one more year, but doing a rental with option to buy?
Thanks Christine,
I did just get a market eval with comps in the area in comparable buildings. It would probably sell 75k under what I bought it for. About 15k under what my mortgage is. We also just put abou 12k into the mortgage to get PMI off.
Asking for a rental extension is a great idea I will call the management company and email the board and see if this could be a possibility. It does cost us about $500 a month even with a renter but with the tax right off it isn't too bad.
thanks again!
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| Posted 12/11/11 8:10 PM |
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allIwant
Love my crazy life!
Member since 1/10 9170 total posts
Name:
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Re: Short sale questions
Posted by ave1024
Posted by julz33
I would try to get an extension on being allowed to rent. A forclosure or short sale would not be good for the coop so maybe they will extend the rental period for you. Good luck!
I agree with this. I would literally go into the coop office and tell them you are going to stop making your payments on your mortgage because you can't afford to sell right now.
Of course they will probably be stubborn and not give a crap, but it doesn't hurt to ask.
Great idea girls...going to look into it!
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| Posted 12/11/11 8:10 PM |
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