Home Selling in Roseville>Question Details

Lucky, Home Buyer in Roseville, CA

Bought a house for 540K with 200K down, 340K loan. Current market value 370K. If I sell it, I will loose money. Any smart suggestions what to do?

Asked by Lucky, Roseville, CA Wed Sep 29, 2010

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If you are not a position where you are forced to sell...don't sell. I can't predict the future, but it's safe to say the market will recover at some point. Of course, if there is some external factor forcing you to consider selling, that's a different story. My
Web Reference: http://KyleGroves.com
1 vote Thank Flag Link Wed Sep 29, 2010
Lucky,

You have already lost the $ you put down. That is gone whether you sell or not. I would look at your family's 5 year plan. If you are raising a family and the home is working for you, and you are still able to make payments on the home and your other obligations, I would sit tight. Right now, in my opinion, owning a home is like owning stock. Most of us own stock for the long term. We don't sell it all because the value went down for several months. We stay the course.

If you are experiencing financial difficulties, then you might want to explore your options. Everyone's circumstances are different, but you should talk to a financial planner, your tax advisor, Realtor and real estate attorney, to see what scenarios work best for you.

Mechelle
916 955-8698
1 vote Thank Flag Link Fri Oct 1, 2010
Two of the agents think that you might have to write a check to close escrow. That might not be the case. With $30,000 in equity you may be able to pick up a small check at the escrow company at close of escrow if you get full price and have low closing costs. Say you keep your closing costs to $25,000 and get full price. That leaves you with about $5,000 just about enough for first and last months rent on a nice rental house of the same value as the one you have now. For example if your housing costs are $2200 per month including interest, taxes and insurance, compared to paying someone $2200 per month for the same house, your monthly cash flow remains unchanged.

However, you will find that your tax refund in 2012 will be much lower because you will no longer be able to write off mortgage interest and property taxes on your itemized deductions. You would probably only take the standard deduction... (talk to a tax guy on that, though.... I am not a tax guy)

So even though your monthly stays the same, you'd probably lose.

Almost all of your $200,000 loss occurred during George W Bush's second term, the past two years we have seen almost zero appreciation, but it is not widely know that values here have not dropped either since February 2009.

In recent sales a lot of people realized losses that had already occurred, so it felt like it happened to them later, but actually real estate value disappeared in the years 2005 through 2008.

I can't draw a graph here but imagine an gradual upward line from 1974 through 1989, with a wobble here and there a flat line from 1990 through 1994, then a slightly upward line starting in 1995. The line wobbles in 2001 then starts climbing like a rocket from 2002 to 2005 then it stalls it starts to plummet in 2006 gaining momentum downward till 2009 then flattening out again.


2002 through 2005 was a freak aberration in real estate values. A classic bubble. The crash has been deep and sustained. Flatness is likely for several more years. with wobbles. I think it will be five to ten years before you see $540 again. but you might get some of it back in the meantime. If I can stay in my house five more years I will. I makes no economic sense to downsize after the kids move out.
1 vote Thank Flag Link Wed Sep 29, 2010
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Lucky,
I would stay put, but only you know your whole financial picture: for example have you lost your job and now it is difficult to make that payment? or is it you can make the payment but it is bugging you the house is worth less?

Sit down with your financial advisor and see what makes sense for you.

You may want to check on having your property tax value adjusted, if it hasn't been done already, at least that will help a little. Contact the county tax assesor.
1 vote Thank Flag Link Wed Sep 29, 2010
I would have to agree with the other two answers, don't sell if you don't have to. But the real answer is yes, you would be in a situation where you would be losing money in that scenario and as indicated, unless you are prepared to write a check for the difference you would be looking at a "Short Sale", and that is an entirely different animal. No one has a crystal ball, but eventually the market will turn and if you can hold on to the property that is your best option.
1 vote Thank Flag Link Wed Sep 29, 2010
If your interest rate is higher than what you could qualify for today. It may make sense to sell the home, take the loss and buy new. And being confident that the market will go back at some point so you could regain the investment on principle and pay less interest over the life of the loan. This is assuming you don't need to sell short of your loan amount and you have enough income/assets/credit to qualify for today's great rates.
1 vote Thank Flag Link Wed Sep 29, 2010
Was this your first home, or was the 200K equity from another home?
1 vote Thank Flag Link Wed Sep 29, 2010
The best way to look at this is to forget about the $200k you put down...I know its difficult, but at this point it is what we call a sunk cost...in order to make a sound decision, what you need to focus on is that you have a home worth $370k and you owe $340k. On it...based on that what do you want to do?
Web Reference: http://MerrittRealHomes.com
1 vote Thank Flag Link Wed Sep 29, 2010
Keep it if you can, because the alternative, if you value your credit, is to sell it and write a check for the difference between the sales price and the balance of your mortgage.
Web Reference: http://www.golftobeach.com
1 vote Thank Flag Link Wed Sep 29, 2010
Post is from three and a half years ago so I am sure that if you did not sell or default you are pretty close to breaking even or seeing your $200k again. I need more information to give you adequate advice. Based on the little information you provided it sounds like you need to sell but you do not want to loose out on your $200k and I wouldn't either. Depending on your personal circumstance I think that handing it over to a property management company and renting it out is your best bet because the market will bring that $540k price back eventually. You just have to wait it out. Look at it as an investment or return on your money. Even if you had to come out of pocket a few hundred dollars per month you would be seeing about a 900% return while paying down the loan.

With out more information about your exact circumstance I will be giving you to much information that will not apply. My advice, consult with a Realtor you feel you can trust, get along with, and can communicate with you clearly. Good Luck!
0 votes Thank Flag Link Mon Feb 10, 2014
Do you have any hardship? If you have a hardship, you may be able to do a short sale. Also depending on if your loan is with Fannie Mae or Freddie Mac, you may be able to refinance even being upside down. Contact me for more details. Tami
0 votes Thank Flag Link Mon Jan 20, 2014
I would avoid selling your home if possible. You would lose the majority of your 30k in equity if you sell your home now. Have you thought of refinancing? Interest rates are incredibly low. Best wishes.

Anthony
0 votes Thank Flag Link Sat Oct 2, 2010
What would you like to do? Let's talk about it.
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Fri Oct 1, 2010
Another thought to bring up. If you do get your self in a situation where you do need do consider selling short, please discuss your situation with a Real Estate Attorney and Tax Advisor as there are legal issues you need to be informed of. In addition, any of us here are more then happy to discuss your options with you. We are a friendly bunch :)

Good Luck!
Michelle 916-804-2981
0 votes Thank Flag Link Thu Sep 30, 2010
You won't lose money unless you sell. My suggeston is to not sell unless you have to. If you have to sell, then as tough as it is believe price below market and you will sell fast and for the best price. In a declining market, which we are still very much in, you need to be the leader. The followers get less, be the one with the moving truck in the driveway while they are working on the price reduction paperwork with their agent.

Get it?

Best,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Thu Sep 30, 2010
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