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We have equity in our home but can't make payments. If it doesn't sell how can we get our equity?

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May 13 2011 - Edgewood
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If you truly have equity and can't make the payments you want to sell as quickly as possible.  Contact 1 or 2 real estate agents who are familiar with your neighborhood and have a conversation with them about how much your home can sell for.  They should be able to tell you what your chances of success are, and that will be dependent upon how well homes are selling in your area and price range, condition of your home, specific location, and other criteria.  My point is that you want to hear from the agent the specific data that supports their estimate of your selling price.

Only after you have that probably price will you know how much equity you actually have.  Equity on paper isn't much help - you need to know how many dollars you can pull out.

If you can't sell you are going to be hard pressed to obtain the equity, if there is any.  Once you list the home for sale there is generally a 6 month waiting period AFTER you take the home back off the market before a lender will consider giving you cash out on a refinance loan.

It sounds like you are in an unfortunate position and you shouldn't have the expectation of being able to access the equity in any other means than a sale.  If you have a lot of equity (say 40% or more) you may find a private investor to loan you the money but the cost would be prohibitive.

You need to focus on getting the home sold.

If you have any other specific questions, post back and we'll get them answered.
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May 13 2011
Make sure you find the right agent who will provide you with documentation on SOLD properties in your neighborhood within the past sixty days, if possible.

Choose an agent who will market aggressively, with You Tube videos, HD photos, exact information on the MLS listing sheet, a Facebook fan page, interactive sign rider with an 8oo number and a URL leading to a website about your home.

The last and most important piece to listing a property that you have established has equity in it, is to reduce the price weekly until it sells.
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May 18 2011
4748,

I'm glad you got started!

The next step is to pay close attention to the feedback from prospective buyers to make sure that your home is extremely competitive... you don't want to be on the market forever.  Do everything you possibly can to stage the home nicely and consider price reductions if necessary. Make sure that the photographs you use are as flattering as possible.

Keep an eye on zillow's "charts and data" section.  While zillow is often inaccurate when it comes to a specific house, it can be a good indicator of the value trends of your area.  

If values are dropping rapidly, you'll want to be very aggressive about doing price reductions if your home doesn't sell quickly... being too tentative will lose you money.  If values are going up then there's no need to consider price reductions if your buyer traffic and feedback are very positive.

Best Wishes!
Kyle   
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May 17 2011
Sorry to hear about the horrible situation...Please make sure you consult with the Realtor and a preferred title / escrow company about all of the potential costs to close including commissions, conveyance taxes etc. and make sure that you consult with a CPA about any tax implications of the transaction.  Best of luck in this process...
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May 16 2011
Equity Share your home with another famiy. You can establish a sales price today --that saves your equity position. You will have to move out of the residence and allow them to move in. You either rent at an affordable price or you find another party just like you that is willing to equity share their home at a price you can afford.
After a 3-5 year term, you either joinly sell or they refinance you out---at the previously established sales price plus 50% of the appreciation.
End result-- you save your equity--sold the home--without a sales commission--and still own 50% of the home.

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May 16 2011
Mike Mullin's answer is correct - sell ASAP so u can keep ur good FICO scores. Other than needing good FICO's to buy a home, this number controls all kinds of credit and also whether a potential landlord will want to rent to u once u DO sell your house. I'm happy to refer u to a solid, knowledgeable realtor in your neighborhood. And please, once u hire an agent to represent u, listen to their advice. They want to help you solve your problem and need your confidence, trust and team-work to get the job done in a timely fashion. Jenna Christensen Keller Williams Realty 310.920.9387 Www.cjenna.com
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May 14 2011
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Roberto, I realized that a reverse mortgage would suck away the equity quickly. The poster said they had to sell because they could not afford the payments. This might be their only option to stay there.

"It is one of the most horrible financial instruments a person can use"
 was said because I have no use for a reverse mortgage. But depending on the desire to keep living in that house it might be an option. 

It could come down to how much equity could be saved after realtor fees compared to rental costs over time. It looks like about $40,000 might be kept after the sale (assuming no capital appreciation tax). Interest on that money in todays lending environment might be $35 a month. If rents are $1,000 a month that  would eat all of that money in 4 to 6 years. It might be an economically viable option depending on taxes, insurance, and repair costs. If rents were $350 a month the reverse mortgage would make zero sense.

Yes, a reverse mortgage would destroy all equity in short time. Would renting cost more or less over a few years?

Is it a bad option? Yes it is. Could the numbers possibly work? Maybe. We have no idea what this persons income is or will be and the cost of rentals where they are. I would rather see the person sell the house and keep the money. In a very small percentage of cases this might be a good idea. in 98% (maybe more) of the cases a reverse mortgage is a horrible idea.

If the house had $100k+ in equity a reverse mortgage should not be considered.
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May 14 2011
Dan, usually you have sensible advice, but in this case you are off your rocker. A reverse mortgage in even its setup fees would instantly suck off a good portion of the equity, and for what? Nothing.

Sell the home at a market price instantly, and escape with the value you can.  
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May 14 2011
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If you wanted to keep the house a reverse mortgage might work. It is one of the most horrible financial instruments a person can use but perhaps in this case it would allow you to keep a house you otherwise could not afford. As far as your equity goes the reverse mortgage would destroy all of it within a few years.
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May 14 2011
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Thank you all for your advice.  A realtor suggested a listing for an attractive price of $240,000 to try to get a quick sale.  We owe $180,000 on our mortgage, so it sounds like the only was to get any of our equity is to try to sell.  If we refinanced we would still have a loan to pay off, and we are retiring so cannot afford one.

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May 14 2011

My suggestion would be to list the home right away, at a very attractive price, so it will sell quickly, and in turn, you will get your equity out of it right away. The longer you wait, and if the market continues to decline, it will lessen the amount of your equity/net proceeds at closing. If my team and I can be of assistance, please let me know. Take care, Karla

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May 13 2011
I have started to tell my clients to Rent in the while that the market turns back around. What goes down, will certainly come back up. Hope this helps!!! --KW--
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May 13 2011

Assuming that you cant  qualify for a new " cash out " refinance  type loan to access your equity ..I think the only option will be to lower the price in a more aggressive effort to sell the property ( which will leave you with less sales proceeds at the end of the day  )

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May 13 2011
 
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