Dear TZ -
When I bought my house five years ago, it cost me $250,000 and I borrowed $210,000. Since then, my wife lost her job so we're having a tough time paying the mortgage. The problem is that we still owe $202,000 but the last realtor that we called said the house is only worth $175,000. What can we do?
- Umberto Underwater
Dear Umberto,
Unfortunately you're not the only one facing this very problem. It's an issue that many homeowners are dealing with. The good thing is not only are you not alone, there is are ways to help you get your home sold and not take a huge financial hit.
You'll want to speak to a REALTOR(R) who has worked with Short Sales. A Short Sale is not (as the name implies) a sale that happens quickly, but is when you sell the home for less than you owe on the property. The best way to do this (in our humble opinion) is to work with REALTOR(R) that is teamed up with a Short Sale Attorney or third party negotiator.
The process involves putting your home on the market at whatever price the REALTOR(R) says is fair based on the comps. You may need to reduce the price if you don't have offers coming in. Once you get an offer you'll sign it (no matter what the price is for) and your realtor will submit it to the attorney. They will then negotiate with the bank to get the offer approved, this could take between 30 and in some cases up to 180 days to get approved. The attorney will work so that you won't (in many cases) have a deficiency judement (the balance) against you. In some cases you may difference between what you owe and what you sell for is deemed income and you may have to pay taxes on that amount.
You'll want to consult with your REALTOR(R) and Accountant to determine how you should proceed.
Good luck!
- TZ
If you have a question about real estate you'd like to ask TZ about, email us at TeamZuhl@gmail.com.
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