Home Selling in Raleigh>Question Details

Lisad78, Home Seller in Raleigh, NC

My boyfriend and I would like to get married. You’d think this would be a happy occasion, but since we are both homeowners it's a nightmare!

Asked by Lisad78, Raleigh, NC Mon Jul 19, 2010

We are both underwater. When looking at our finances, the best decision for us would be to consolidate into my home so we can pay off some lingering student loan and credit card debt before starting a family. His mortgage is more than double mine and is a much longer commute to both of our jobs. It looks like we would need to come to closing with about $10000 cash. We don’t have this and we don’t have any assets to tap. His house is not in a rentable area so that really isn’t an option. The realtor doesn’t think a short sale would be an option since we are healthy, employed, and making payments. We just won’t be able to handle two mortgages and obviously want to live in the same house. We would be able to stomach paying the difference over the next few months if that’s an option. Has anyone heard of a bank allowing that? What are the repercussions and what would be the best strategy to make this happen?

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I, too, do not agree with some of the previous advice. Seller Financing is likely not an option as most mortgage notes have a Due on Sale Acceleration clause, meaning that all notes must be paid in full when the deed is transferred to a new owner (which would also stop you from making payments on the difference after the sale.) A Lease-Option "could" work but know that you're still responsible for the payments even if the lessor doesn't pay...and he/she could also be damaging the property in the short term then walk out on the "option" to purchase part of the deal. A lease option does not obligate the buyer in any way -- just you as a seller.

Good luck to you...it's going to be a tough road no matter what you choose...and I wish you much happiness in your upcoming marriage!

All the Best,
Susan Crawford, ABR, Broker, e-PRO
Triangle Home Crew Realty, LLC
919-491-4663
0 votes Thank Flag Link Mon Jul 19, 2010
He wouldn't have to sell for a loss (via a short-sale or otherwise) if he were to sell with seller financing, or lease-option (aka rent-to-own). Plus, he'd he'd have a larger pool of buyers to whom he could market/sell the property. Additionally, doing this eliminates a buyer's need for both a financing and appraisal contingencies; this also helps to increase the likelihood that the sale will actually close.
0 votes Thank Flag Link Mon Jul 19, 2010
You're welcome Lisad78,

I do not agree with some of the previous advice and I do not want to confuse you any more.

The fact is that you are not yet married so you will be looked separately and independently for now. The definition of a short sale is simply that the bank would agree to accept less than you owe them once the home is sold. Here are just some of the criteria used as an acceptable hardship:

1. Loss of job
2. Business failure
3. Damage to preopty
4. Death of a spouse
5. Death of family members
6. Severe illness
7. Inheritance
8. Divorce
9. Mandatory job relocation
10. Medical bills
11. Military Service
12. Payment increase or mortgage adjustment
13. Insurance or tax increase
14. Reduced income
15. Separation
16. Too much debt
17. Incarceration

You sound like a person who is trying to do the right thing and not skip out on your responsibilities. Please do the research before making a move!

Linda
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Mon Jul 19, 2010
I would be careful about shortselling (or foreclosing) also. If this happens after you are married and the bank takes re-course on your husband they may be able to get a judgement and attach a lien to your property based on community property laws. I am not a an attorney or versed in this area but I know banks are making up for their losses wherever they can. I would check with an attorney to see if that is a possibility.
0 votes Thank Flag Link Mon Jul 19, 2010
Lisa,

I would love to come out and give you another opinion as a Realtor. I have been selling homes in the Raleigh market for the past 18 years and have sold over 1500 homes. I own a local branch of a national franchise and have been training real estate agents for the past 13 years and was one of the first agents in our market to specialize in distressed property sales (short sales, foreclosures, REO's). I also have the SFR (Short sale and foreclosure resource) designation through the National Association of Realtors which means I have taken additional training in distressed sale properties. There are so many options that it is most important to find an agent with experience and knowledge to assist you in making the right decisions and to know that you are working with the best advise possible. As the trainer of agents I know that many have great intentions but without the experience needed may not be able to assist you with such a complicated situation. I also love working with newly married and engaged couples because it is a great opportunity to get started in the right direction and as an agent I hate to see a house be a stumbling block to your happiness.
As you know from meeting with the other 1 agents there is no fee associated with getting another opinion so feel free to give me a call or send me an email through Trulia if you are interested in getting another CMA on your properties and a suggested gameplan.
Sheri Moritz
Broker/Owner
Real Living Realty Experts
919-387-4100
0 votes Thank Flag Link Mon Jul 19, 2010
Thank you Linda - that's helpful information. We aren't under contract yet - just have a had a couple of realtors out to see the property and both have said about the same thing about the value. One said sell my house instead, but the other had a better grasp on our financial situation as a whole and agreed that selling his is the best option. We just want to be sure we have a good grasp on the situation before we can even judge who has our best interests in mind. We feel like we essentially have two mortgages right now, we're just still functioning as two hosueholds. We could live together and pay both mortgages, but not for long. That's what I mean when I say that we could "stomach" paying the difference for awhile. If we are 10K short at closing, would the bank allow us to keep paying that 10K after closing or write us a promissary note or something of that sort so we could pay off that difference after the propery is sold or am I totally naive? We certainly don't have the spare cash right now to save that up. I'll look on the forums like you suggested. Thanks again!
0 votes Thank Flag Link Mon Jul 19, 2010
My first thought was for you to rent out the property until one the market recovers or two you come up with the funds to sell. When will the market recover? That's the million dollar question and I can not answer that.

My second reaction was a short sale. These are becoming very popular and have mixed results. I would reccommend you call your mortgage lender and discuss the situation you are in and see how they will work with you to resolve the problem. I have seen banks give a personal loan to the seller that allows them to get out of the high payments and sell their home. Will the mrtgage company do this? Well, every bank is different and every situation is different so you will just need to ask. I have helped several clients on both the buyers and sellers sides with a success rate of about 65%.



Good luck!
0 votes Thank Flag Link Mon Jul 19, 2010
Lisa: I have a lot of experience with short sales and foreclosures and you probably will not be able to negotiate with the bank to allow you to sell the home for less than you owe. They base these decisions on hardships and your realtor is correct in telling you the bank will not consider getting married a hardship! If you could afford the homes separately, they will wonder why you can't afford them together? That being said, it seems like you have a few options: 1) if your house is more marketable, sell yours and bite the bullet on his higher payment, the commute, etc. until the market turns a bit and you can sell it without bringing money to close; 2) write a letter to his lender explaining the situation and see if they cannot work out an acceptable payment term on any unpaid balance once it is sold; 3) offer the home as a lease with option to buy: you might be able to attract a good buyer that needs 6 months or so to clean up their credit before being able to qualify for a loan. They can move in, make your payments and work on cleaning up their credit (I recommend a non-refundable deposit in this situation to dissuade unqualified buyers). Once they get their credit resolved, they can close on the house.
Congratulations on your marriage and good luck!

Mary Jo Ryan - NC Realty Solutions - 919-274-1330
0 votes Thank Flag Link Mon Jul 19, 2010
Yes, Lisad78, a short sale is definitely an option. There are many other options available as well. I would suggest going through the Trulia site on similar questions. I don't want to be repetitive and there are many options available to you already posted.

And since you are not married yet, I would have many questions as to the value of each home; how far underwater each of you are separately; what your other assets are and so on. If you "realtor" is not well versed in distressed properies, you would be wise to ask her to point you to someone who is. If you are under contract with her, that could be a little tricky, but if she is looking out for your best interests, I'm sure she will help you.

I'm not sure what you mean when you refer to "stomach paying the difference".... so hard to answer that portion.

For further help, check out the CDPE website. There is very valuable information with direct answers to your questions from people who deal with this daily.

Hope that helped.
Linda
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Mon Jul 19, 2010
If you can pay the difference over the next few months, bank that money in a savings account and then put his home on the market. Painful? Yes. Can you do it? From what you write, yes.
0 votes Thank Flag Link Mon Jul 19, 2010
An option that you probably haven't considered is having him sell his property with seller financing.
0 votes Thank Flag Link Mon Jul 19, 2010
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