Home Selling in Marana>Question Details

Mario, Both Buyer and Seller in Marana, AZ

Best option for selling house worth less than owe...help!

Asked by Mario, Marana, AZ Sat Sep 17, 2011

We are relocating back to MI and want to sell our home that is worth less than we owe. We want to know what are the best options since we will be looking to buy a home in MI at the same time. The house is in Tangerine Crossing.

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Kim Boulter’s answer

The best option for selling when you are upside down on your mortgage is to go through the HAFA program. This is a federal program designed to do less damage to your credit than a traditional short sale. To qualify for the program you must have a high debt-to-income ratio, meaning your income barely covers or doesn't cover your monthly expenses, you must prove financial hardship, and you must submit various documents such as your tax returns for the past 2 years, and some other application forms. If you are accepted, you are guaranteed not to have a deficiency judgement placed against you, which is when the bank makes you pay back the difference between what you owed on the property and what it sold for over many years. Often people don't realize they are going to have a deficiency judgement placed against them until the short sale process is coming to a close, they've gone through the whole process, and there is no turning back. That could happen if you do a traditional short sale. That is why I recommend the HAFA program. No matter what anyone says, though, do NOT stop paying your mortgage and go into default. This will really destroy your credit. Go through the HAFA program, or rent your home out and hire a property management company to manage your rental for you. Good luck!

Kim Boulter
Healthy Realty
1 vote Thank Flag Link Sat Sep 17, 2011
Give me a call and I can direct you to one of the best short sale agents in the valley. She will be able to give you a lot of information in order to make an educated decision.

Susan Lehmkuhl
Associate Broker
The KUHL Team
Buy and Sell Smart Realty
0 votes Thank Flag Link Mon Jan 2, 2012
You may have to rent your home but be carefull who you rent to. I sugest you use a profesional property manager so you do not run into major problems with your tenant after you move to Michigan
0 votes Thank Flag Link Fri Dec 30, 2011
The situation which you describe would apply to a large segment of homeowners today. The solution to your issue depends on your situation.
1. Is a hardship present or inevitable?
2. Do you have savings of any kind?
3. Approximately how underwater are you?
4. Income to debt ratio.
5. If relocation is required by employer, they may have options that have not been discussed with you.

Assessing your situation will reveal what your best options are.
1. Sell home and come to closing table with a pile of cash to satisfy mortgage balance. This leaves your credit in tact but has significant ramifications on any down payment available for new home as well as financial stability on your new location. There is always the option to rent in your new location from another underwater homeowner who can not sell.
2. Based on #3 you may consider owner financed sale.
3. Rent existing home (this may influence mortgage qualification in new location)
4. Short sale

Consult with your accountant, financial planner or attorney regarding the plan most beneficial for you. Listen very skillfully what is shared with you behind those closed doors.

Best of success in your relocation.
0 votes Thank Flag Link Wed Sep 21, 2011
Renting out the home in Tangerine Crossing might be your best option. Hire an experienced property management company so that you have someone local who can find qualified renters, and ensure that the home is well maintained. By buying a new home in Michigan before short selling the home you currently own, the lender is more likely to come after you for the deficiency, so I would advise you to avoid this option.
0 votes Thank Flag Link Wed Sep 21, 2011
Dear Mario,

Here are my thoughts regarding your situation.

- If you have a financial hardship which it sounds like you inevitably will once you move back to MI, consult with a Realtor who does short sales. I would also be sure to consult with an attorney to see if this really would benefit you in your current situation.

- Another option would be to sell the home and bring cash to the closing table if this is an option.

- My last option (which I have personally done) would be to rent out your home in Marana and then purchase one when you move out to MI. We have a house that is leased in Austin, TX and are about to purchase a home in here Colorado. This may not be the best option but is definitely workable if need be.

Brooke Hengst
REALTOR, CDPE The Elite Team
Your Castle Real Estate
(720) 988 5952
0 votes Thank Flag Link Wed Sep 21, 2011
I recommend that you go to the Certified Distressed Property Expert web site and search for an agent who is CDPE-certified. This agent will have knowledge about programs that may work for you, and will have experience in dealing with short sales. Good luck.
Web Reference: http://www.cdpe.com/home
0 votes Thank Flag Link Wed Sep 21, 2011
This is a tricky situation, however, if you can keep the payments on your Arizona home current you may be able to do a short sale and not do too much damage to your credit rating. It's not easy but sometimes you can do the short sale and still be able to purchase another home under circumstances such as relocating for your job.

Another option, though I am not sure it is a very good one, is to rent your home in Arizona. It's difficult to manage when you don't live nearby, however and so I am not sure I would recommend it.

Talk to a mortgage lender and talk to an experienced real estate agent. Look for the SFR designation. The combination of those two professionals should give you the guidance and advice you need.
0 votes Thank Flag Link Sat Sep 17, 2011
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