Profile picture for Ohallik

How do I quickly get rid of an underwater house I no longer live in?

My girlfriend bought a house in The Dalles, Oregon about 3 years ago (worst time possible) for 162k.  Her mortgage is 1165 a month at 5.9% and just a few days ago found out that the house is now worth 119k. 

We currently live in the Seattle area and she has no intention of going back to The Dalles.  The problem is, the house is being rented for 800 a month so she is losing almost 400 a month not counting random landlord costs.  She tried selling the house 2 years ago when she moved and not surprisingly no one wanted to buy it.

What would be the best option for how to get rid of the house?  We would like to buy our own house (after getting married) in a few years so would prefer not to take a huge credit hit.
  • December 29 2010 - US
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Answers (7)

Who told you that the house is now worth 119k?
If you got a verbal or a cma from a broker that is only an opinion of value. What sells homes today is price. If you told your broker about your eagerness to sell, it may have some bearring on the value quoted.
You are looking at about a 30% depreciation. I would look at sold comparables in the area and see if a 30% drop is average. I'm in Portland Maine and we have experienced an average of around 20%. Another way to find value is by looking at your assessment. Call your local town assessors office and ask them if the value is 100%
Who established the rent to be $800.00 per mth?
Can you increase the rent by $100 or more?
What figure did she have on the house last time she tried to sell it?
What is the exact number monthly that is going out.
Does your payment include taxes?
162k @ 5.9% for 30 yrs = $960.00 pr mth
150k @ 4.5% for 30 yrs = $760.00 pr.mth.
My reason for asking this is for you to get completely organized Then get proffesional advice from an accountant and a lawyer? Then talk to your lender. Explain the situation and present options.  I would avoid forclosure at least for another year if possible. But it's going to take years for prices to come back up and we will not see 30% growth again until our unemployment rate changes so no matter what you do your going to suffer some loss even if you do wait. Also take into consideration that the montly loss might be tax deductable along with the interest and taxes. So figuring that into her yearly taxes this year you may not be losing the $400.00 per month. Like I said that will take an accountant to figure that out. Good Luck. Happy New Year!!

  • December 31 2010
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Profile picture for scubacuda
Speaking from the perspective of a total n00b, I would suggest making sure that you (a) take the initiative for taking pictures, (b) note all of the good selling points (near major freeways, parking, etc), and (c) give this mofo as much exposure as possible.

I'm not an expert on this "7 day sale" thing, but if done right, I could see how it might be a moderately reasonable risk.
  • December 30 2010
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Do not worry about the credit hit, when you are in a sinking boat. Getting off the boat should be your main objective, so what if you get wet in the process. option one is to do a deed in lieu of foreclosure to the lender, depending on who your lender is and what stage you are in this is the fastest way of getting rid of it. The other solution is a short sale by a local agent, Which is not as fast but if done right could hurt your credit the least. 
  • December 29 2010
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Profile picture for SoCal Engr
"We would like to buy our own house (after getting married) in a few years so would prefer not to take a huge credit hit."

Short of a miracle rebound in the RE market, you're going to need to bring cash to the table (i.e., make up the delta between sale price and loan balance) or attempt a short sale.

Given that you're looking at a few years before you buy, it might be worthwhile to game out how long it would take to recover from a short sale. That may be your most realistic course of action...short sale, take the credit hit (vice missing payments and foreclosure), and then work to repair the credit before buying.
  • December 29 2010
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Maybe you could try a lease purchase with a potential buyer.  This might help you not be in the hole every month.  And with any luck they could get a loan in a  year.



 
  • December 29 2010
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Profile picture for odrog2000

Try a 7 Day Sale.  They create a lot of buzz and you can top end of fair market value for your property.

  • December 29 2010
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Profile picture for wetdawgs

In order to get rid of it with  no credit hit, sell it and bring the $$$$  difference to closing between selling price and what is owed.

In order to qualify for a short sale, she'll have to demonstrate hardship (loss of income, medical issues etc), and even with qualification she'll have a credit hit and several years until she can buy again.

Foreclosures are even bigger impact on credit score as well as number of years until she can buy.

Sorry she's in such a difficult position.

  • December 29 2010
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