Home Selling in 85335>Question Details

Mary, Home Seller in Phoenix-metro

Home Value Crisis. What should we do?

Asked by Mary, Phoenix-metro Sun Feb 22, 2009

I am hoping you can offer some help regarding our current situation. Let me preface this by saying that we are active duty military and are forced to move at other's discretion. We bought our current home a little over a year ago in the Phoenix metro area. We were given orders to relocate and we did not want to lose money on renting a home, so we bought the cheapest house (a short-sale) we could find that would accommodate our family of 6. Now, we are facing orders to move again, soon. We purchased our home for about 200,000 and current market conditions place our current value around 35-40% less than what we owe. We have no problems making our payments, we budgeted well and did not buy beyond our means. However, what can we do? We do not have 70-80,000 to bring to the table if we sell for less than our home is worth. We are considering, when the time comes for us to move, to try a short-sale or let the property go into foreclosure.

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Mary’s answer
We cannot say when we will be told to move, it could be as early as six months or as long as 2-3 years. This is one of the problems we are facing, when we are told to move we do not have much time but we do not want to do anything too rash in case we have more time for the market to recover or a better option to come about. However, even if, at best, we have 3 years, I do not think that is enough time for us to regain the lost value.
0 votes Thank Flag Link Mon Feb 23, 2009
Hi Mary,

I can give you contact information of a financial adviser I believe can help you. It would be worth your while at the very least to have a phone conversation with him.
Web Reference: http://www.lorichasse.com
0 votes Thank Flag Link Mon Feb 23, 2009

How much time before you have to move? This may help some of us give you some answers.

Thank you
Web Reference: http://www.TheKeysTeam.com
0 votes Thank Flag Link Mon Feb 23, 2009
Other things you might want to consider are a lease purchase, long term agreement of sale, rent with an option, or anything that will allow you to get some to occupy the property with little or no money.

Remember, yes properties in the area are selling for a lot less. But more than likely they are conventional sales with conventional mortgages for folks who have good credit. There are enough people out there who are having a hard time and who have lost a home and are desperate for a chance to get started again. You might be the savior, bank, investor that they need. Terms are what are going to get your home sold now, not price. Think creatively and get someone to help you come up with choices.For example we have a plan for renters here who have been willing to pay 6 months to a year in rent up front to get a house. That may buy you some time until the market changes.
0 votes Thank Flag Link Sun Feb 22, 2009
To answer your questions and provide a little more information, no, we did not use a VA loan. We used the VA on the last home we owned and we did not want to pay the additional points for using the VA again. We would GLADLY rent out our home when we move. As I mentioned, we budgeted well and could easily pay more than half of this mortgage and mortgage/rent for our primary residence when we move. The problem is, people can buy a home for less per month than renting our home for half of our mortgage (entire mortgage is about 1500). As far as comps go, we have looked and the news is dismal to say the least. We live in one of those neighborhoods where foreclosure/for sale signs are everywhere and the homes are beginning to sell. The home next to us, a very close comp, just sold for 99,000 (our mortgage is 200,000). The very same model home as ours, about 5 houses down the street is listed for 74,900, this is horrifying to us and there are no recent sales, at all close to us, that have sold for more than 120,000. As I mentioned, we bought this home as a short-sale that needed some work. We put new flooring throughout the entire 2400 sq. ft. home and updated the bathrooms. We were going to update the kitchen (we put new appliances) but halted those plans once the market imploded! It seems as though the only hope we have at this point is to pray that Obama's plan revives this market and by the time we move, hopefully, our home value will have increased enough for us to be able to cover the difference in what we will still owe!
0 votes Thank Flag Link Sun Feb 22, 2009
I would agree with the previous member. If there is anyway that you can keep the home and rent it you will do better in the long run than walking away and going into foreclosure. Did you buy the home using the VA? If it is a VA mortgage, then a buyer with good credit can assume the mortgage for very little money. Why would they do that if you are upside down on the loan. Maybe they are going to be there for at least 5 years and they can afford to wait for values to turn around. They can get in for very little cash. A short sale is a possibility if you can the lenders to operate in a timely manner. The organizational paperwork with the banks in short sales can be time consuming. I persoally have had buyers walk from a shorty sale because they got tired of waiting for answer from the bank.
The credit problems that you will have from a foreclosure will haunt your for a long time. Forget getting a new loan for several years. Rent your old house to at least cover your mortgage and taxes or close to it.
Wherever you are heading, rent for at least a year and wait to see where the market goes. Good luck, l know a little of what you are going through, my daughter-in-law is from the Phoenix, Scottsdale area.
0 votes Thank Flag Link Sun Feb 22, 2009
Mary, so sorry to hear of your dilemma....this is happening across the board. I always ask if the seller has thought about keeping and renting out the home if possible. Owning real estate and renting it can be a pain, but that might prevent you from having to lose any money. And in the long run, it can bring in passive income.

Secondly, if you purchased a year ago, and if your home does show well, you might still be able to sell it for more than you paid - especially if you purchased through a short sale. Just check with a good Realtor and let them provide you with the comps - especially any that has sold within the last few months. Then, just price your home at or below that price.

Best of luck....
0 votes Thank Flag Link Sun Feb 22, 2009
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