Home Buying in San Martin>Question Details

T Chambers, Home Buyer in San Jose, CA

How hard is to sell a reverse mortgage house in an area that has not depreciated and buy a foreclosure for?

Asked by T Chambers, San Jose, CA Wed Mar 18, 2009

cash in a depreciated area? a place where the house prices went down due to the economy

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7
Leonette Stafford & Tony Stafford’s answer
Reverse mortgages are like any other mortgages in that you can sell the home but you need to understand what equity you have left in the reverse mortgage agreement. Having said that, reverse mortgages are designed to be long term agreements and should not be gotten into or out of lightly. If you have a reverse mortgage presently, you have no worries no matter what happens in the real estate market. If you get out of the present mortgage, sell the home and buy a new home, you may not be able to qualify for a new reverse mortgage on the new home. If there is a good reason for exiting the reverse mortgage, make sure you consult with a tax and financial advisory to validate the financial viability of your plan.
0 votes Thank Flag Link Wed Jul 22, 2009
I've seen cash offers to be worth about 10 to 15 percent and sometimes even 20 to 25 percent of the list price. So on a $520,000 list price, I had a cash offer allowed at $450,000. Cash offers are particularly worthy with homes that have some non-permitted areas or damaged areas (bad kitchens, furnaces, etc) where the buyer may have challenges getting a traditional loan approved or the seller may alternatively have to do something prior to close to make the home safe or habitable.

I know of several homes like this on the market now, where I have suggested a 75% cash offer and have been turned down but allowed at about 80 to 85%. Please let me know if you'd like help locating the most "hungry" sellers. I am aware of three particularly strong opportunities presently -- one in North Valley, one in Willow Glen, and one in Santa Clara with Cupe schools.

And selling your home with any mortgage is more about the differential between the amount owed and the market value. Then you take about 6-7 percent for closing costs in Santa Clara County (seller pays the bulk of closing costs here) and you can discern your potential net gain.

Good luck!

Erica Nelson
http://www.EricaNelsonEstates.com
EricaNelsonEstates@gmail.com
408-416-7090
Read my weekly "Insider Info" in Saturday's Real Estate Section of the San Jose Mercury News
0 votes Thank Flag Link Thu Mar 19, 2009
A reverse mortgage is no different to any other mortgage when it comes to selling the property. It must be paid off in full.
As to buying a foreclosure with cash (no loan), the bank may will probably take a cash offer over one that requires a loan if both are about the same price. This would simply be due to the fact that the cash offer can close quicker. However, they are probably not going to accept a cash offer lower tthan one hat on requiring a loan. The bank is going to recieve cash in both cases so why should they take less from you?
0 votes Thank Flag Link Thu Mar 19, 2009
Your reverse mortgage will have nothing to do with the sale of the home. It doesn't affect it in any way. I deal with clients with reverse mortgages quite often, as I specialize in working with seniors. The only thing you need to be concerned with is pricing it properly to sell. Even if the home was worth less than is owed on the reverse mortgage, they are a "non-recourse" loan, and you would never be liable for more than the value of the home.

So, assuming, since you said that the area where your home is in has not depreciated, you probably still have some equity after paying off the reverse. That would be great! You sell the home and buy a foreclosure-in a more depressed area! What a win-win for you!

Did you know that they even have PURCHASE reverse mortgages now? How's that for crazy? Although I am not in your area, if I might be of help talking you through any of the process or answering questions, please give me a call! I know a lot of agents aren't well versed in reverse mortgages and how they work.

Good luck! It sounds like you are in a great position!

Patti Phillips
Seniors Real Estate Specialist
"Advice You Need, Attention You Deserve"
800-680-9133
0 votes Thank Flag Link Wed Mar 18, 2009
Hi T:

Basically, a Reverse Mortgage loan is not due and payable until the borrower no longer occupies the home as a principal residence (i.e. the borrower sells, moves out permanently or passes away). At that time, the balance of borrowed funds is due and payable, all additional equity in the property belongs to the owners or their beneficiaries. At that point, you are free to do what you want with those proceeds, including buying a foreclosure.

I would be happy to help you with your plans!

Best, Steve

MBA, GRI, ABR, e-PRO, CMPS, RE Masters
REALTOR® / Mortgage Banker-Broker / Certified Mortgage Planning Specialist
0 votes Thank Flag Link Wed Mar 18, 2009
That question should be answered by a loan officer that specializes in Reverse Mortgages. Also, you could check with a Real Estate Attorney. Personally, I do not think that there any conditions that you have to clear in order to sell a home with a Reverse Mortgage, providing that you pay your full debt at closing.
0 votes Thank Flag Link Wed Mar 18, 2009
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