Profile picture for marielad

Selling when you're upside down

I need to sell my SF 1b/1b condo but Im 100k upside down based on a recent appraisal. I live at Candlestick Point, the Cove. Is it possible to short-sale if I'm current on payments?

Everyone says to wait it out, but realistically, how long can I expect to wait to recoup 100k on an 800sq ft 1bed condo in SF? I'm 29 and getting married this year, and cannot afford daycare AND my current mortgage, nor can I house a child in this tiny space. Therefore, I'm not willing to wait more than 2-3 years because I only have a limited window of time to start a family, and keeping this house makes that impossible.
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January 14 2010 - Bayview
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Answers (13)

Profile picture for wetdawgs
Mr Anderton:

Welcome to Zillow.   There are a couple of hints for getting along in this community.

1.   Putting hot links in your posts (as done in every post) is a violation of Zillow policy. Learning the rules is recommended. You've been reported again, and again, and again!

2.   Pulling up ancient threads just because they are in your area is a waste of everyone's time, and speaks loudly about your professionalism.

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August 21 2010
Profile picture for DavidPlush
Short Sale is great. Be sure to have a follow up plan to make your credit good again. I can help you with both and without judgment.

Best,
David Anderton
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August 21 2010
Profile picture for shasta_steve
I know this is an old post and hopfully the OP has found a solution by now.  Jeff gave some execellent advice.  Talking to an attorney and CPA is a very good place start and talking to an agent or loan officer is the last place you should go.  Now if you original loan is "purchase money" and you have not refinanced then you could walk and the bank will have no recourse other than to take the house.   This is how the law works in California but all states have their own laws.  You can try a short sale but you have to make sure they do not try and make you pay extra.  Now if you did refinance but took no money out you are protected from any taxes too but the bank could technically come after you for the difference.  In practice this is almost never done, if there is only one loan, because the bank would have to do a judicial foreclosure.  If they do a non-judicial foreclosure they are not allowed to pursue you for more money.  If you have a second loan then that is a whole other can of worms.  Again a good RE attorney is cheap insurance. 

A short sale is easier on your credit but still affects it.  You will have to wait a minimum of two years to buy another house verses three to five with a foreclosure.  Agents push short sales because they make money on them.   For many a better option is to simply stay in your condo, rent free, for 7-12 months until they kick you out.  You have to decide what your credit is worth and how soon you may want to buy another home.  Lots to think about but in the end do what is in your best interest. 
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May 30 2010
I don't have to tell you that $100,000 is a lot of money. The short sale process does NOT guarantee you forgiveness of that debt. You need to speak with a real estate attorney to FULLY understand your options and their consequences. Staying in your condo for a short while and renting the condo afterward, while you rent something else, may prove a more acceptable strategy after you take the time to better understand your situation and possible consequences of your actions. My best advice is that you invest in a consultation with a recommended real estate attorney and possibly a CPA. This will likely be the best money that you can spend. The advice you are seeking is specific to you and is not best given by real estate agents and is not best sought on the internet.
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May 30 2010
It is best to sell when you are not in a negative position with your home value. It's kind of like selling a car when you are upside down, you loose unless you can offset your losses some other ways such as a rebate or a huge discount on buying a new home to offset your losses. Or be patient if possible to allow home prices to rebound. get tips at http://www.mortgagecrisistips.com .
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May 29 2010
A short sale may be the solution when your mortgage is causing you a hardship.  When the short sale payoff offer is accepted by the bank it's time to start looking for a rental...which may well be more affordable at 1/2 your current mortgage payment!  Just make sure you're not renting from someone facing foreclosure, which could be anyone who has pulled equity out during the highs or purchased in 2005 - 2007.  The real estate market is not expected to come back anytime soon to the inflated highs except by 2-3% increases annually once the markets stabilize in 2010-2011.   
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February 11 2010
I've had a couple of lenders tell me if you are current on your home.  You can purchase another...............as long as your current.  And yes that is via a short sale.  I would call my lenders.
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February 10 2010
Profile picture for wilfredtr
Everyone says wait it out? You need to get more every's.  You start your email with "I need" and end it with "that impossible". Don't let this one bedroom piece-of-real-estate determine your life, your wife's wedding day or your childs birth date.  Put it up for sale, TODAY.
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February 09 2010

That's great that you've been current on your payments. It is possible to do a short sale and not have it affect your credit! Just keep making your payments until your home sells.

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January 22 2010
Marie,

Sunnyview has given good advice and links, always does, read those links.

You may want to contact HopeNow.com, 889-995-4673 - for free qualified counsel for folk with distressed mortgages.

If, after pursuing options, short sale seems best read this, especially the links about working with real estate agents - from the same online real estate primer Sunnyview referenced.
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January 14 2010
Profile picture for sunnyview
I am so sorry. You can get a short sale if you are not behind on payments, but it can be much harder to get the bank's attention if you are not at least 30 days behind. You do need to be able to show hardship, but short sale is far better than foreclosure if you can swing it. There is an article here that explains both foreclosure and short sale. You will need to write a good hardship letter and get it to your bank. Let them know why you cannot pay. There are some sample hardship letters here. There is a step by step outline of getting a short sale for owners plus tips on writing a letter here. You will have to prove to the bank that you cannot pay or paying presents a hardship and that the property is upsidedown and worth less than you can sell for without a short sale. A realtor experienced with short sales can help you, but research all you can before you decide what to do and then choose your Realtor carefully. 

This is not your fault and you can make it better. Do some reading, get a plan together and start moving toward a better place. 

PS The bank cannot demand you to use retirement money to pay them. Retirement accounts are even safe in bankruptcy court unless there is fraud involved. Please do not mortgage your future to pay bank in the in borrowing retirement money to pay them. The bank cannot touch that money unless you give it to them.
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January 14 2010
Profile picture for marielad
Thanks for the advice. I suppose it's fortunate I don't have many assets/money besides this house, so there isn't much for the bank to go after. I do understand the impact to my credit and am willing to accept it.

Is it best to consult with an attorney or will an experienced agent be able to guide me through all the implications of a short-sale?
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January 14 2010
Marie:

I am sorry to hear about your situation.  I just met with a couple on Saturday in your same situation.  You can apply for a short sale even though you are current, but you must understand that their are consequences for selling short.  My advice would be to talk to a local attorney who specializes in short sales and talk to your cpa and financial adviser.  The biggest concern is that sometimes the bank may ask you to use your retirement monies to pay some of the difference.  You want to make sure you do not forfeit your future. 

Best of luck.
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January 14 2010
 
Related Questions
Selling when you're upside down
Profile picture for wetdawgs
Latest answer by wetdawgs
August 21 2010 | 13 answers
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