Home Selling in 22152>Question Details

Jagdip, Home Buyer in Springfield, VA

how to sell a below market home during divorce?

Asked by Jagdip, Springfield, VA Tue Jun 21, 2011

If couple bought home during 2005 housing boom for double of price of today's market value, how do they sell it during divorce? is short sale an option and divorce good enough reason to short sell?

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Hello Jaddip:

Choices are limited for home sales these days if you do not have a mortgage already paid off or have a lot of equity in the home. If you still have a mortgage, one of the three scenarios bellow is possible when must move out of your home:

Your home goes into foreclosure and gets sold to another buyer by the bank
No one purchase the home after foreclosure and it become a bank-owned property knows as a difficult.
You sell your home to the highest and best bidder similar to a regular sale but requiring bank approval before closing (short sale).

If you owe more on your home than the home is worth, and don't want to declare bankruptcy (because it won't solve your financial problem), you can hire a short sale real estate specialist to market the property and negotiate a short sale agreement with your lender or mortgage servicer. A short sale allows you to avoid foreclosure and minimize the damage to your credit score. You may avoid a deficiency judgment if your lender forgives your mortgage debt in its entirety according to the terms outlined in The Mortgage Debt Relief Act of 2007. Also a short sale keeps a foreclosure off your credit record. Fannie Mae has reduced the mandatory waiting period to establish credit history after a short sale to 2 years. This waiting period after a short sale is lower than the required 5-7 years following a foreclosure.
In this continues drooping value market owners have to be ready to confront difficult decisions regarding their financial life when they need to move out, So If you find yourself in this position, and you may begin to think that there is no way out of this mess and that you will have to foreclose on your home. You do not have to take this drastic step.

Carlos Caraballo
1 vote Thank Flag Link Tue Jun 21, 2011
In your situation, a short sale will probably be your best option. You need to show a financial hardship, and a divorce (or going through a divorce) qualifies as one.

You should look for a licensed real estate professional in your area who has experience handling short sales and distressed property sales. He or she should also have an experienced negotiator on his or her team to negotiate with the lenders. The expenses of the real estate agent and negotiator will be paid by the lender. You can also get up to $3000 from the mortgage servicer to help cover moving expenses.

For more information, visit Fannie Mae's Home Affordable Foreclosure Alternatives website at https://www.efanniemae.com/sf/servicing/hafa/ and Know Your Options website at http://www.knowyouroptions.com.
1 vote Thank Flag Link Tue Jun 21, 2011
In order to best protect yourself consult with your attorney beforehand, and see exactly what options you may have; a short sale could be one of those options...
1 vote Thank Flag Link Tue Jun 21, 2011
Yes, if you are going thur a divorce, selling the home as a short sale is a better way to go. In order to do a short sale you must have a hardship letter, a divorce is a hardship. The lender would honor the short sale of the property.
0 votes Thank Flag Link Sat Jun 25, 2011
Yes, you can short sale. Feel free to give me a call and I can explain the process.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
0 votes Thank Flag Link Tue Jun 21, 2011
To answer your question..is divorce good enough reason to short sell...the answer is it depends. In and of itself divorce alone is not..nor is it considered a hardship. If you make 500k and your wife 500k and you have a home with a mortgage of say 500k..they bank would tell you to pay up. So..it depends on if it makes sense to the bank..and if you indeed have hardship..say..you needed both incomes to qualify for the mortgage and now only one person will be living in the home..then it's a possibility.

Keeping the home..as some suggest..could work..if all is amicable and you wish to play the waiting game.

You need to consult with a professional...familiar with short sales..look for the CDPE..Certified Distressed Property Expert..though this by no means makes one an expert as the designation implies..it does mean they will typically be more well versed than those without. If I can be of assistance..feel free to contact me.

Kind Regards,

Erik J. Weisskopf, ABR,CDPE,CRS,GRI
0 votes Thank Flag Link Tue Jun 21, 2011

You need to do what is best for you in this situation. Although I can understand the advice to hold on to it until the market goes up, if you are in the middle of a divorce, that might not be a feasible option. There could also be tax implications to turning your home into a rental and you will need to consult a CPA for more information regarding that. Not to mention that, although the market is on the rise, it could be 20 years before you regain value, and this might not help with parting ways and moving on with your life.
You and your spouse should sit down and figure out the best option for you both to proceed. Although a short sale might not be ideal, there are reasons for them, and divorce does qualify as a hardship depending on your cash situation.
If you are interested in gathering more informatino about the details and process of a short sale, I would be happy to sit down with you or talk over the phone. Whether it is the best option for you is hard to say until you have all the details you need to make an informed decision!
0 votes Thank Flag Link Tue Jun 21, 2011
In order to do a short sale you must have a hardship. Hardships usually are things such as loss of job, medical conditions/injuries, etc. You should contact your lender and ask them if they consider "divorce" a hardship? I do not think it will qualify but you never know. If you would like to talk further about your situation in particular, feel free to email or call me directly.
renee.burney@yahoo.com or 571-215-7847
0 votes Thank Flag Link Tue Jun 21, 2011
A short sale is a feasible solution; however, both spouses need to acknowledge that they will not get any proceeds out of the sale. In a short sale, all proceeds go to the bank holding the liens. Since it is a complicated process, it is best to list the house with an agent who has experience selling distressed properties. In a divorce situation, the lawyer usually drafts a Property Settlement Agreement (PSA) which is filed in court. The PSA may address the short sale but the Sellers need to get approval from their bank for the short sale.
0 votes Thank Flag Link Tue Jun 21, 2011
Short Sale? aren't yu guys hurting enough,, do you want a short sale hurting your credit as well. Agree to own it together until market values go up, Get a renter and let them pay the mortgage and expenses until you can sell at a decent price!
0 votes Thank Flag Link Tue Jun 21, 2011
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