A lease purchase might be an option.

They could get some non refundable money up front and then let someone rent it for a year. Maybe at that time the market will have improved and the prospective buyers can buy at that time.

Most lenders treat someone who has been paying rent on the house they want to buy as a refinance so it's easier creditwise.

Jim,

I have that agreement all ready and filled out..I am just waiting for him to decide if he will refinance with his lender or just rent it. Thanks for your opinion.

Sounds like you have opened the door to all the available options. Good luck!

Neal,

Your sellers do not realise how bad of a situation they are in. If I were you I would walk away. If they are not willing to ad cash or try to qualify for a short sale they are not giving you any options.

Gary,

Thanks..very tough situation.

Tina,

I'm not ready to give up...I am still trying to find an alternative.

Neal:  I know how it feels when you are at a loss for answers. I wish you luck in finding a solution!

In this market it is very normal.  What were they thinking with 100% no money down loans.  That seems to have cause a lot of issues in many markets.  There is no guarantee that real estate goes up in value or that it even holds value!  Many years in the Atlanta market homes stayed flat for years.  In the last few years with a lot of the 100% financed homes, I've seen home placed on the market at unbelievable prices.  Sorry folks... It is called being an adult.  There are issues with job losses, illness, financial setbacks that do happen, but that is also part of being an adult and trying to step up an look for solutions.

Since each market is so different it is hard to grasp is the market saturated with inventory, are prices dropping etc?  In the Atlanta Market condos are hardest hit, but single family homes are still rising in price.  Go figure.  I had plenty of closing where the seller had to take cash to closing to get out from underneath it all.  It is very unfortunate.

Ouch--that is a tough situation for those sellers ( as well as yourself.)  I don't see any solution other than to take money to the closing.  Good luck with them.

Neal wish I had a solution for you but I don't. I have several sellers in the same position right now and it really makes it hard for us to be able to help them. One thing is for sure they won't get lucky in this market.

Sally,

I hope there is one ...but I think I really need a miracle.

Jim,

I have the same situation hopefully there will be solution but I am not ready to give up yet.

BB,

It is just an epidemic that might be around for a while..how time flew by when we were in a hot market...well now the time seems to be moving a lot slower.

Neal it is sad but I believe we have not seen the worst of this yet.  I wish I had another suggestion for you.  Never give up. Your clients are looking to for an answer.

Matt,

Very sad.. I wonder what they will do.

Neal, I deal with this EVERYDAY and it is no exageration. It is so difficult for sellers now that

1) did zero down and the market went south

2) Pfizer relocating people and giving their employees 100K loss on sale clauses. I was going to rant on it today but got busy with the " throw your widget's in the lake " thing.

I have no other suggestions other than if their credit is good, they could take back the loss in a personal, non-secured loan. I have a seller doing that now. House appraised at 1.5, offer of 830K, so they are taking it back as personal debt, but he has great credit.

Missy,

I agree the market changed with a combination of things...people over paying for their home and then they can't pay the interest only payments..divorce,hardship,taxes..insurance..they created the monster by approving all those 0 down loans. 

Neal- Do they really understand the ramifications of a short sale or a foreclosure.. I saw so many people in the 90's who refused to deal with reality and just knew something would happen to save them..it didn't and  they lost  everything.  If the clients have the ability to ride this out  by renting the home and using income from rental to defray costs then they are just dumb not to do it.. I know that's harsh but they better realize they are out of options.

That is such a sad reality Neal.  I don't even know what to say.  It sounds like you have mentioned some good options though.  Sorry that I don't have any ideas to add.

I'm sorry, I don't have too much to comment on the blog, but I just HAVE to tell you that that is one of the most interesting Meezes I have ever seen!  Wow!  Is that what you look like ;-)

Neal - what about a deed-in-lieu?  I had seller clients of mine recently work this out with the bank, and it relieved them of their mortgage in exchange for them deeding the house to the bank.

Ann

Man, I just lost a great comment to the HTTP 500 error!  Anyhoo, was mentioning that I've done the same thing that Missy mentions-a non-secured personal note.  It's often about the only option-and local banks are far more likely to go for it than the big boys.

Neal,

They may have some other options depending on their overall situation and if they have a little bit of time.  I cannot guarantee anything as I do not know their overall status, but I could take a look at it if they are willing.

I recommend staying away from anything related to short sale, deed-in-lieu, or foreclosure as all are damaging to their credit ratings and they will need that credit to move on.

Robert - my clients who did a deed-in-lieu were told by the bank that it would not affect their credit at all.  Since you're a mortgage officer, can you tell me how it does affect one's credit?  If they were not told the truth, I'd like to know so I can learn more about this.

Thanks,
Ann

I was going to also recommend the deed-in-lieu - which we have been doing some of recently and thought it was to preserve credit... so I am curious about Robert's comments.  I see you have exhausted other avenues... I am afraid we will be seeing much more of this.

 Not only will a deed-in-lieu affect their credit but they will probably have to pay money to IRS on the forgiven debt.. this is stuff an agent really needs to know about before giving advice.. I suggest they consult with  their CPA or a tax attorney first.. ramifications can be major

Wow, this is a doozy, huh? I hear stories like this all the time unfortunately...

It sucks when you do all you can and your client needs an impossible miracle - I feel your pain

Kaye,

Yes...they know all the ramifications...unfortunately they bought this home when homes were flying off the counter the other problem was they bought this home from a Realtor who was the owner and there was that clause in the listing "not contingent on appraisal and they told me that the house appraised for what they paid..I believe it was overblown and the Realtor also gave them the wrong square footage as I have sold this model many times and it was about 200 sqft smaller then advertised..she was a terrible Realtor and that is why she moved away.

Stephanie,

Thanks for reading and stopping by..I was not expecting a easy solution to this.

Janie,

That is how I show up to meet my clients. just kidding..my other photo is the real me and if you ask Ann she would probably say that I have a little of that meez in me as she already met me in person.

Ann,

I might make that suggestion but would expect them to ask an accountant or attorney..anything is possible but I have to believe there would be some problem with their credit after any of these solutions other than just renting it and hoping the market picks up next year.

Leigh,

Don't laugh but I would lend him the money at 5% lol! but my money is tied up in one of my properties that cannot seem to get someone to close on.

Robert,

They already have a family member who is handling their possible refinance but I am reluctant to have them lose their trust of that member...I will let you know if they are interested.... Thanks for the offer.

Beth,

Anything is possible but I have to believe that there will still be IRS tax ramification's or some sort of penalty.

Gwendolin,

Thanks for your thoughts.

Thesa,

I just do not want to abandon them and it is not really costing me much to keep it..but they have the option to take it off the market.

I know absolutely Zilch about this but would this home be prime for an Auction sale?

Danny,

The problem with auctions is there is a lot of money to be laid out up front for the advertising and you have to pay much higher fees to the auctioneers and in this case the seller would probably be better off doing a short sale or just lowering the price and coming to closing with the 35-40K.Thanks for your concern.

Your clients are indeed in a difficult situation, particularly considering that they are going through a divorce. If they don't refinance and want to save their credit from damage,I believe that Jim's idea of a lease with the option to buy could work out for them. This kind of arrangement could buy them some time to get the money they may need to close, and it's also a good way to entice a prospective buyers who otherwise may not have enough money for a down-payment. 

Neal:  I think you have done all that you can do.  I feel bad for sellers in this situation.  Our market is still so slow and you are right, prices have fallen.

Griselda,

Well that was offered to them but it still does not solve the problem of the price so I am not sure about that option.

Dianne,

How are you? You following me again? LOL!

I feel bad too...but they are relying on me to come up with something. The problem is if we go with Ann's option and the bank says yes...then I am basically out with nothing to show and I do not work for free..but I was willing to offer that to them.

It's always tough when they have many options and none of them are good.  Best of luck!

Thanks for stopping by Terry and thanks for your comment.

Neil

We're seeing a lot of "investors" up here in Ocala who bought houses at pre construction prices thinking of selling them for a profit as soon as they were completed who are now in a similar situation. What I wonder is how any one could have recommended such as investment in 2006?

Regarding the deed-in-lieu I mentioned above, we did, in fact, have an attorney involved in every step of the way, and my sellers' credit was not affected at all.  They will receive a 1099 at the end of the year, and will have to pay taxes on the forgiven debt, but that was FAR better than the alternative of being foreclosed on or declaring bankruptcy, which they had been considering.

The bank assured them that their credit would not be harmed and the attorney confirmed that, and so far on their credit reports, that has been confirmed as well.

I would never take it upon myself to offer legal or financial advice and strongly urge my clients to seek legal and/or financial advice in any kind of situation such as this.

Ann

Joe,

That was spreading all over Florida.

Ann,

The only problem is the bank has to accept it and he might not  I might be totally out of the deal in that case.

Hi Neal - if they do choose that route, you would be out of the deal.   For my clients, it was best for them, and that's what really counted in this case.  I was out of it, but they ended up being able to get out of a bad situation and sang my praises all over the place.  They had also, over time, given me several referrals and nice references.  It was what was best for those clients.

Hi Ann,

I know what you mean..do I give them an out and I end up with only praise or possible referrals..we shall see..thanks.