Profile picture for auroradraconis

Should I let my house foreclose?

This entire process of trying to sell my house just keeps going from bad to worse.  I was told on Friday that in order for the buyers to get approval on their FHA that it is our responsibility to replace the missing floor in the living room/dining room (500 sq ft)  The flooring can be anything, just as long as it is secured to the sub floor.  This has to be done by this Thursday, and while I can find cheap flooring, it really just is not in our budget to be able to afford this on such short notice and most of the stores do not have enough in stock for our needs.  The thing that really galls me is that my realtor knew that the buyers were doing an FHA loan and never told me anything until all this came down.  So now here I sit with 2 options.  Find a way to put floor in within the next 2 days or let the deal fall through.  My realtor has told me that if this deal does not go through, the bank will foreclose as they have told him that there will be no more extensions. We would also forfeit the $3000 in HAFA that we qualified for.  As far as the HAFA goes, we do not need it for our deposit and it does not help us now anyway since we do not get it until closing.  To me its almost like money that isn't really there. Add on top of that, we had no time to find a place to live, due to his complete disregard and lack of desire to help us look, and now we are forced to basically take the one and only place our realtor took us to see.  It is nice, but it is very small for four people, less that 1000 sq ft.  I am so frustrated and stressed right now that I can't sleep at night.  So, do we let this all go?  Or do our best to stick it out and get a floor in on a zero dollar budget in 3 days?
  • October 18 2011 - US
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Answers (21)

Profile picture for sunnyview
I am so happy for you and your family! Congratulations on hanging in there and on your great rental. It sounds like everything turned out for the best even though the road there was bumpy and incredibly stressful.

There were promises made of a virtual cake so, here is my best triple brownie fudge cake to celebrate. All the best and thanks for final update! To happier days ahead...
  • November 10 2011
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Profile picture for wetdawgs
Thank you so much for stopping by to provide an update.   Great news!
  • November 10 2011
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Profile picture for auroradraconis
Just one final update...we closed on our house on Nov. 9th after almost 2 years of trying to sell it.  We almost did not close as the night before, our buyer's apartment caught fire and they lost everything they had.  We were very lucky the buyers still wanted the house and closing went off without a hitch.  We found an amazing rental that has every feature we want at a price within our budget (through another realtor who was awesome...even sent us brownies after we signed our lease...:D) with really great owners and could not be happier...:D  Thanks again for all the support.  Glad this is finally over...:)
  • November 10 2011
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Profile picture for SteadyState
Ask both agents to pay for the flooring from their commission else the home gets foreclosed and the bank appoints another broker/agent to make the sale.
  • October 22 2011
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Best of luck with the final closing and it was great luck that you found carpet so inexpensive!
  • October 21 2011
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Profile picture for sunnyview
Oh auroadraconis, you made my morning! Thank you for the update. I hope that when you finally close after all this time that you can finally relax. And look the bright side now you can say "back when I installed carpet..." :)

I hope you come back for a last celebration once you close. I'll bring the virtual cake and you can tell others in your situation that it is possible to sell in this situation even if it is not easy. Finger crossed for you for the final signing. All the best!
  • October 21 2011
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Profile picture for auroradraconis
Just wanted to update...we managed to find some cheap carpet ($0.34 sq ft) and I installed it yesterday (first time ever doing this sort of thing too...lol).  Appraiser came out this morning and will approve the house. So, this means that after almost 2 years...we will FINALLY close...:D  Thanks again for all the advice.  It really helped to ease the stress of this nightmare.
  • October 21 2011
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If you're having difficulty with your Realtor, call their office and ask to speak to the managing broker / owner. While real estate agents are considered self employed, they are supervised by the broker that holds their license. This would be more 'correct' than directly contacting the buyers agent.

As for asking for an extension, I don't think it would hurt for you to contact your lender. Do you have a contact phone number of the person handling your short sale? If there is a way to resolve the problem, the bank should be willing to accept it as they typically don't want to be a property owner. Having said that, banks can be intractable and remarkably difficult in understanding common sense.
  • October 18 2011
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Profile picture for auroradraconis
Thank you all again for the replies.  I have a request in for information to a local real estate lawyer and hopefully will hear something soon.

I have a few more questions: 

Should I contact the buyers realtor myself and explain the situation with my realtor, etc?  Or will that make things worse?

Should I contact my lender on my own, explain the situation and see if they will grant an extension based on these circumstances?

Thanks again.
  • October 18 2011
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Profile picture for elechim

Only foreclose if you have talked to a lawyer.  You could do it yourself with the floor or find someone to help you. Pay cash or trade services with this person.  Supplies could cost you a total of $1500 or less.  Dig deep with in yourself to make this happen. Ask your realtor to split the cost with you, she still makes the commison and you sell the house.

  • October 18 2011
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Profile picture for sunnyview
I agree with Shasta's comments. My thought when I read what you posted was that getting the house sold would allow you to move forward without recourse from the bank. In this situation, your agent is a tool to sell the house. That's it. She is not there to advise you financially and you should write down her commission on a piece of paper and put it on your fridge to look at the next time she give financial/legal advice. Think she convinces me to short sale she gets $$,$$$. She doesn't convince me she gets ZERO.

If it is better for you to sell, I do not think that you can let 500sf of floor stand between you and a sale. If you are not sure if it is better, you may want to consult an attorney or even try to get input/things to think about on Avvo.

I hear the stress you are under. You have to do what you can to make the best decision you can to move forward. Do not short sale unless it means that you are ALL done with the obligation to the bank on this house and it gets you where you want to go.
  • October 18 2011
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Profile picture for shasta_steve
Well it looks to me that Illinois is a recourse state no matter what type of loan it is.  Something you may want to check with a lawyer as I am not an expert on Illinois law. 

If your credit is already below 500 a foreclosure is not going to make much difference.  It is doubtful you will be anywhere close to being able to buy a new house for many years anyway. 

The only thing I would worry about now, if I were you, is does the shortsale get rid of any deficiency the bank may have against you later?   If it does, and is written in the contract, then I would try and do anything I could to make the deal work.  If it does not then there is no advantage to a shortsale.  Now it sounds like there are lots of problems in you finances if you are below 500 so if there is a deficiency it may be better to just go ahead and do the bankruptcy route and get a fresh start. 

Again there are lots of things I do not know about your situation.  I would want to talk to a good CPA and maybe an attorney.  Ideally you would have done this many months ago.  The advice most agents give is less than useless in this situation.  It is funny they always say they can not give legal advice but they do it all day long. 
  • October 18 2011
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Profile picture for auroradraconis
Thanks again for the replies.  Unfortunately I have already tried to see if the buyers could contribute, but wanted us to vacate the home entirely so they could to the living room and the master bedroom at the same time.  They do not want to put in flooring while we are still here because they do not want it getting ruined...o.o  I am basically stuck between the proverbial rock and a hard place.

As for my realtor, I have asked him about getting extensions and trying to explain to the lenders what is going on, but he refuses to do so.  He still stands by his position that the lender will not extend any more and that this is the time frame we have to work with.  It makes things all the more frustrating because I feel like my realtor is working against me instead of for me.

Thanks again for the help.
  • October 18 2011
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My Heartgoes out to you. We run into this all the time. AS far as FHA is concerned until the inspector comes to do an appraisal you really don't know. Even though I think if your realtor has some expieriance he or she should have kow this would be an issue.
I agree with Lisa, there are many times we have to help get it done.
I have run into a short sale I am doing right now that, needed pool to be fuctional ( and the buyers went ahead and did it) Talk to your realto, have your realtor speak to the buyers, if they really want the home and feel it is a good deal they might just go ahead and contribute to the floor.  You are so close to finish this and get out from under, try to get it done.
Also ask your realtor to see if they can get a addendum to extend your move out date. This will help you find somewhere and move. It won't be for too long but it might help.

Good luck
  • October 18 2011
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As a Broker/Realtor I run across these situations all the time. I come from the school of though that I need to do what is necessary to get the deal done for the benefit of my clients.  that sometimes includes coming to the table with a contribution such as buying flooring.  I would ask your realtor to get together with the buyers realtor and cover this cost.  It will benefit all involved in the long run.  Ask the lenders on both side for an extension while you work this out.  Obviously you are not in the financial situation to be buying flooring when you are short selling your home.  It sometimes takes all involved in a deal to come together for the benefit of everyone.  The money spent on the part of the realtors is worth it to get the deal done and have you and your recommendation for life.  

In short ask for an extension of time to remedy this situation and have the realtors come together to get it done.

Best of Luck.
Lisa 

  • October 18 2011
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Profile picture for auroradraconis
Thanks for all your replies everyone.

shasta_steve~ to answer your questions, I am in Illinois first of all, far west Chicago suburbs.  The reason my realtor is saying that the bank will foreclose is that we have been trying to sell this house for almost 2 years now and have had 3 buyer back outs already.  He said that they have told him there will be no more extensions given (even though the primary lender is BoA and I thought they still had a moratorium on foreclosures?) It might be possible that he is saying this so we do go through with the sale since obviously he wants to be paid for 1.5 years of work (though I cannot say he has done a great job to begin with).   I have no idea if the loan is in recourse or no recourse status and we are way upside down in the property to sell through a traditional sale in this market.  As for a loan modification, we tried that as well but with property taxes, our payments were still way more than we could afford ($2000+ a month) 

I do know as well that we are already approved for a rental since we are using my husband's credit (even though my realtor told me we were kidding ourselves in trying to rent a house with my husband's credit, I just don't think he is completely aware that we are stil in a recession and a majority of renters have credit the same or worse than us).  Though his credit is not great, it has not been affected by the house since the house is in my name.  My credit is below 500 so I am not sure if a foreclosure would make it worse than that.

Anyway, thanks again for all the advice and I hope I can get this resolved soon.
  • October 18 2011
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Profile picture for shasta_steve
Well I do not know your situation but there is not usually a huge difference between a foreclosure and a short sale as far as consequences.   You never said what state you are in or if your loan is "recourse" or "non-recourse".  Don't just take your realtors advice as he/she has a huge conflict of interest to push you to go through with the sale.  If you don't he just did a lot of work and is not going to get paid.  I also have no idea just how underwater you are. 

Since I don't have nearly enough information to tell you what I would do I will only give some general ideas here as far as just letting it foreclose.  If you just let it foreclose you will most likely get 3 or more months rent free to help you save more money and find a new place.  Most banks will then offer you money to move out if you leave the place "broom" clean.  I don't know your area but around here having a foreclosure causes almost zero problems finding a rental if you have otherwise paid your other bills. 

The only real advantage to a short sale over a foreclosure is if you are are able to do the short sale without going late on your payments.  As your realtor told you the bank is going to go ahead and foreclose I would guess you are already late on your payments.  You can buy sooner with a short sale but only if you put 20% down on your new house.  Otherwise you could use a FHA loan to purchase a new house after 3 years, the same as a shortsale. 

Good luck on what you decide to do but don't just accept what your realtor tells you and in the end do what is best for your bottom line and sanity. 
  • October 18 2011
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Profile picture for sunnyview
You have to get out of this situation. That means your only choice is to buy the floor and get it installed. If that does not close the house, then you may have to consider other options.

I know it is tough, but you can close that house and use HAFA to move on. Do not quit now. Stick it out. Get the floor done. If that means peel and stick flooring as long as it passes FHA, then start sticking those .99 per square tiles down yourself or do the installation on the cheapest piece of flat lay vinyl yourself for even less per square. It does not have to be a good installation job, just a basic job to satisfy FHA.

You can see the end of the tunnel just move toward the light. In three days, you will be able to sleep again.
  • October 18 2011
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You are in the same spot as a lot of other homeowners. I agree with the other two answers you have received ... you should really try to avoid foreclosure.  Do you have any friends that can help you lay some new  flooring? What kind of sub floor is there?  If it's concrete, will the bank be satisfied with stained or painted concrete floors?
  • October 18 2011
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Profile picture for wetdawgs
Sorry you are in such a difficult situation.

I'd do what it takes to avoid foreclosure if I were in your shoes.

  • October 18 2011
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You have to decide what you need to do.  However, if I were in your shoes, I would do whatever it takes to avoid foreclosure.
  • October 18 2011
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