Foreclosure in Memphis>Question Details

Jamie Lee, Home Seller in Memphi, TN

Have done all of the above. House has everything new including a roof. It is vacant with no flooring and

Asked by Jamie Lee, Memphi, TN Sat Dec 29, 2007

kitchen. It ibacks
up to a 6 lane highway and feel this is the main deterent.

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Sylvia Barry, MAS, CIPS, SRES’s answer
I agree with you, Jamie, a 6 lane highway can be a huge deterrent for buyers when offering the house for sale. You have to price the home extra aggressive to generate interest - in the buyers market with a lot of homes for sale, buyers are very picky, sometimes they won't even get out of cars if they see how close the house is to the highway.

So, price aggressively in this situation.

1 vote Thank Flag Link Sat Dec 29, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
A few thoughts: In addition to its location near the highway, some people might consider the lack of flooring and kitchen to be drawbacks, too. It might cost a rehabber as little as $6,000-$10,000 to finish that off, but most retail buyers are going to guess a lot higher: $30,000-$40,000.

As for deed in lieu, that's not as easy as it sounds. For a variety of reasons, most lenders don't like doing a deed in lieu--they'd rather foreclose. You send them the need, and they may very well foreclose anyhow. And without the deed, you won't be able to do a short sale (you won't own the house any longer), a subject-to (can't do a subject-to without the deed), or much else.

With your house in the (poor) condition it's in--no flooring, no kitchen--a short sale is an option. That's when you sell the property to someone else for less than is owed on the mortgage. Your lender has to approve the short sale, which they sometimes will and sometimes won't do.

You might also consider a subject-to, ideally with an equity share arrangement, with an investor. In a subject-to, you give someone else the deed. They own the house. However, the mortgage remains in your name, and you're responsible if the purchaser defaults. You're placing a lot of trust in the investor; if the investor defaults, the lender will forclose on you. However, if the option is the lender foreclosing anyhow, you'd be no worse off. And if the buyer performs as promised (bringing the mortgage current, paying the mortgage as it's due, then ultimately selling the house and taking his profit), then your credit is in much better shape than if you'd gone to foreclosure.

Note: I'm not a lawyer, so this isn't legal advice. Check with a lawyer.

One other potential advantage to a subject-to: In a short sale, you're not allowed to walk away with any money. That's always a lender-imposed condition. On the other hand, in a subject-to, the buyer can give you money for the deed. Maybe just moving expenses. Maybe more. And if you do an equity share arrangement, in which the buyer agrees to give you a portion of any profits when he sells the property, you might actually make a few dollars on the deal.

One additional caution, though: Subject-tos violate the "due on sales" clause. So, technically, a lender can call the mortgage due and payable if it finds out that the deed (the lender's security) has been transferred. Sometimes they find out, and sometimes, when they find out, they do invoke the due on sales clause. Frankly, though, in today's market, with all the foreclosures, not too many lenders are eager to call a mortgage if someone (your buyer) has brought the loan current and is paying on time. So the risk may not be great, but it is there.

Hope that helps.
0 votes Thank Flag Link Thu Jan 17, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
Thanks, Suzanne. We put up an 8 foot fence and there are trees in place. It cannot be seen, just heard.
Am considering a deed in lieu of foreclosure as has been on the market 10 months
Thank you
0 votes Thank Flag Link Thu Jan 17, 2008
There will be some price point that the buyers will no longer be able to see the highway (or utility poles/lines in this particular area as well). The challenge will be finding that price. Another suggestion is to hire a landscaping consultant to give a bid and provide a drawing for landscaping that will serve as a noise and sound barrier. You will not need to pay for the actual landscaping but perhaps provide a visual for the potential buyer to see how this problem could be remedied if the house is desirable.
0 votes Thank Flag Link Thu Jan 17, 2008
You can do everything to improve your market edge, but you can't change the location. Pricing is the key. The question is-how badly do you need to sell the property? Do you have equity in the property or are you upside down in your mortgage? Do you have cash to bring to the table if necessary?
0 votes Thank Flag Link Sat Dec 29, 2007
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