jabb123, Other/Just Looking in 60626

What's better: rent at a loss, or try to short sale our 2bd/2ba condo? New job out of state, not sure which makes more sense?

Asked by jabb123, 60626 Sun Nov 24, 2013

We bought our place 8 years ago in east RP, still owe ~265 (original pp 311). Assessments ~400/mo. If we rent it, we prob can't even get enough to cover the full mortgage payment, so likely would lose 600-800/mo. Do we try to buy new place and then ask bank to short sale? I love our unit, but 8 years, 2 babies and a job change out of state later, it's time to move on...

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23
Dear Jabb,

Firstly you depending on the exact location of your condo you can rent the condo for $1500 - $1800 a month. It is also my personal opinion from the sales I have had as well as my investors that have purchased in Rogers Park that Rogers Park Park has stabilized and prices are finally starting to go up.

Moreover, groups likes the Rogers Park Builders Group are looking for ways to further improve the Howard Street Corridor and I feel confident things will be improving.

If you can hold on to your condo as an investment property it may pay off.

Best of luck.
2 votes Thank Flag Link Tue Nov 26, 2013
I am a long time East Rogers Park resident and have a home office here too. Unfortunately, this is a fairly common situation here in the area. I would be happy to meet with you at our Starbucks to discuss your situation in detail.
2 votes Thank Flag Link Sun Nov 24, 2013
It's tough to say without knowing more information about your personal situation but to eat $7K+ a year is a huge loss to take on for the foreseeable future.

If you're upside down by 100K- or something close- it could take a half decade or more of appreciation to even close close and more likely closer to 10 years. In that time you'll give away $80,000 in the hopes of breaking even.

Again, I can't say for sure what your best option is but I'd love to talk to you about it- it sounds like a short sale is something you should strongly consider.
1 vote Thank Flag Link Wed Dec 11, 2013
Hi Jabb,

Many variables. I've been working short sales in the RP neighborhood since 2007 and I live close by.

Feel free to call me to discuss your options privately, 773-981-2005, NO OBLIGATION!
1 vote Thank Flag Link Mon Nov 25, 2013
I would get a good attorney involved, but i believe there are pros/cons to both and you have to do whats right for you and your family
1 vote Thank Flag Link Mon Nov 25, 2013
PS there are free credit scores online. You want a Broker ( same as agent) who specializes in your area. Interview at least two and ask them for their marketing plan. Then decide which way you want to go.
1 vote Thank Flag Link Sun Nov 24, 2013
If you are being transferred, the new job out of state will mitigate the short sale credit impact, and you will be able to buy another property. I have two great short sale attorneys who can provide specific advice to you after a short phone interview.
If you are interested, email me back.

Best of luck.

Dave
1 vote Thank Flag Link Sun Nov 24, 2013
Yes, you need a "realtor" which is also a "licensed broker". Have a discussion with your tax advisor. Get prepared with financial details then interiew a couple of experienced agents in your market area. RP is my long time home and specialize in the north side of chicago.
The agent you hire will do a market analysis on your property and will consider your neighbors appraisal value. The neighbors appraisal could be factored in once it's determined who, why and when the appraisal was done. I've seen low appraisals that were not accurate for various reasons. Again, the who, why and when is an important piece of the market analysis.
1 vote Thank Flag Link Sun Nov 24, 2013
Shortsale and release you credit you can buy another property in the next future , plus if you are with Bank of America or Chase bank , you maybe getting 20k , for early shortsale .
1 vote Thank Flag Link Sun Nov 24, 2013
OK, I have some questions............first question is rather simple:

1. Can you AFFORD to pay the $600-800 loss/deficit every month if you decide to rent it out?

2. If "yes", then..........how many months/years can you afford to pay it before it becomes a hardship?
(Why start out renting if you cannot continue do so until the housing prices catch up, since that is the purpose of renting it out in the first place - plan on this being longer than shorter term).

3. Do you have enough assets to pay for any major repairs that might become necessary over the period of the rental? Once you're a landlord, you need to factor that in. If you're in another state, who will oversee the property? (if you need to hire a property manager, that may be another cost). You said you love your "unit" - if that means it's a condo, you might want to make sure there aren't any restrictions to renting it out. You will also have to factor in periods of vacancy when you might have to pay the full amount of the mortgage, and not just the loss.

If you can't comfortably afford this added monthly expense and you will have sleepless nights with this hanging over your head........then you've answered the question (imo) as to whether renting is an option.

The financial "hole" you're currently in with be increased by the monthly loss you will be paying to cover the mortgage.
Look at the big picture.

In regard as to whether you "try to buy a new place"......NO........in my opinion, you don't want to add more debt until you figure out a way to pay off your current debt.
You said you are moving to a new state and a new job........do NOT tie yourself down to a purchase until you know this is working, you're settled into your new locations and job, and you've got a handle on your current financial issue.

Just my 2 cents............

Speaking to a real estate attorney and/or a CPA (once you know exactly what your home is worth) is another good suggestion........after 12/31/2013, .the IRS may not continue to forgive the debt should you short sale your home........get the facts first, and learn how this will impact you.

Last question..............do you have the assets on hand (ie: cash) to bite the bullet, sell the house at a loss, and pay off the mortgage?

This may not be appealing..............and leave a bad taste in your mouth, but.................
This would give you a clean start elsewhere even though your bank balance would be less.

I had a client who wasn't happy, but.........he came to closing with $40,000+ to pay off his mortgage just so he could walk away free and clear and maintain his excellent credit..... no need to look over his shoulder moving forward with his life.

Best wishes...........
1 vote Thank Flag Link Sun Nov 24, 2013
I would really sit down and discuss your options with a Realtor. There are many things to consider and a full time realtor will guide you on the right decision. Please feel free to contact our office if you want more help. Good luck!
1 vote Thank Flag Link Sun Nov 24, 2013
I would speak with some agents in your neighborhood. See what they have to say. This would be the best advice. From the sounds of it, I would just cut my losses and short sell it.
Web Reference: http://Americorpre.com
1 vote Thank Flag Link Sun Nov 24, 2013
You received lot's of valuable advice from real estate professionals. I have first hand experience with this situation as an owner of an investment condo in RP. I would be happy to share my experience and knowledge with you so you can make an informed decision. Proposed changes in 2014 to the short sale process may factor in to your final decision. Don't put this off too long so that you can make the the right decision for you and your family. Happy Thanksgiving to you and yours!
1 vote Thank Flag Link Sun Nov 24, 2013
The final decision must be yours, after you receive valid information to make an informed decision.

Please meet with two or three real estate professionals and discuss your options. The reason I suggest more than one is that questions will come up and information will be shared to help you decide because each agent is different, their experience with lenders and how successful that agent may be.

Talk with your trusted tax advisor. They will review your situation and help you understand where you are financially. If you have sufficient funds to you may not have a hardship to qualify for a short sale. So understand what funds you have and the type of funds.

Meet with a Real Estate Attorney. Ask questions.

These meetings are fact finding meetings. Through these professionals, you will know what you can rent your property for, the cost to rent it out and your shortfall. The process for short sale and the risk and benefits to you. You will also learn any legal consenquences.

Once you have the information you should see which option make sense for your situation and ultimate goal.

All the best to you.
1 vote Thank Flag Link Sun Nov 24, 2013
Talk to several agents that specialize in your area. They can give you a more accurate picture of the real numbers you are facing on selling versus renting and the possible shortfalls based on your monthly mortgage and total payoff amount.

If you can carry the monthly rent shortfall without hurting your family, you will protect your credit, as a short-sale will have a negative impact on your credit. The renting short fall can eventually be recovered on your taxes since you can write off maintenance fees against the rent and the net passive income loss, but you should talk to a tax professional about your exact situation.

Renting with a shortfall will give you a chance to recover some of the lost equity and possible come out even in a few years.
1 vote Thank Flag Link Sun Nov 24, 2013
You may also want to consider a loan modification before you move to get your monthly mortgage down to a more manageable amount.
Flag Sun Nov 24, 2013
Get accurate pricing from a local Rogers Park Realtor on both the probable rent and sale price of the unit. The decide what you prefer.
1 vote Thank Flag Link Sun Nov 24, 2013
Hi there,

First, please know that you're not alone when it comes to your scenario but fortunately you have options that can help you move on. I have quite a lot of experience helping homeowners navigate through the short sale process and it just so happens that the majority of my short sale experience has been in and around Rogers Park so I can assure you I have a lot of knowledge about the neighborhood and pricing - two things that are extremely important when it comes to selling your home.

As a Realtor my job is to work with you to price your home correctly and market your home to get the best offer and best Buyer to work with possible. At that point my job does not end however once you go under contract with a Buyer you will need to hire a short sale attorney who will then work directly with your bank(s) in order to obtain short sale approval. I have an amazing short sale attorney who I work with and can tell you I've had 100% success in my short sales with her. The only time I've had a short sale not happen was when an owner used their own attorney and a year later we used my go-to and we successfully closed. Throughout this time I'm always involved and I pride myself in keeping our Buyer and their team in the loop with updates. The biggest issue in short sales is keeping a Buyer due to the time it may take. The big reason why Buyers walk away is because the listing agent does not update and they're left in the dark. If there's no update, I still update!

On a final note my go-to short sale attorney can speak with you two about if they feel a short sale would be possible. In a short sale you need to prove hardship to the bank and my attorney will help to determine if she feels you'll have an easy or difficult time persuading the bank to grant short sale approval. Please contact me to both talk about selling your home, the marketing that I offer and I can also give you my attorneys contact information! I'm always available so just reach out!

Jeff Stewart
REALTOR®, @properties
3101 N. Greenview Avenue, Chicago, IL 60657
309-269-3499 CELL | 773-305-0480 FAX
jeffstewart@atproperties.com
1 vote Thank Flag Link Sun Nov 24, 2013
What this really comes down to is how much is your credit worth to you? Your actual credit score may recover relatively quickly from a short sale. Some of my clients recovered in 6 months. Individual results may vary. But you won't be able to buy another house for like 3 years with a short sale on your record. But figure out how much money you would save in a short sale and then ask yourself if your credit is worth that.

If you would like to talk please call me at 312-738-0232.
Web Reference: http://lucidrealty.com
1 vote Thank Flag Link Sun Nov 24, 2013
Give me a call or send me an email to discuss. I have helped clients in similar situations. Depending on where the property is in Rogers Park you may have to wait a LONG time for the prices to come back.
1 vote Thank Flag Link Sun Nov 24, 2013
1st have an agent or 2 do a market analysis to see what the value might be and get an idea how fast values might move up in the next 2-3 yrs. Then do the math to see what might be better for you. If you buy and then try to short sale, the lienholder might not agree to forgive the shortfall. There is no guarantee. E RP has been harder hit than many areas yet it sure has started to come back.
1 vote Thank Flag Link Sun Nov 24, 2013
I would rent it until prices come back to where you can sell it. Get a current rent and sale price analysis from a local Roger's Park Realtor. Discuss what a short sale would do to you and for you with your attorney.
1 vote Thank Flag Link Sun Nov 24, 2013
My accountant would say to rent at a loss. At least that way you may be able get some sort of tax benefit. A short sale can only be done if you can prove a loss of income and a hardship that prevents you from making your payments. Talk to a tax accountant or financial advisor.
0 votes Thank Flag Link Sun Nov 24, 2013
moving to another state for a job would qualify as a reason for a short sale.... and as a hardship
Flag Mon Nov 25, 2013
Wow, I appreciate all the responses. To clarify, it is a condo, neighbor's unit with same footprint recently appraised less than 180k (ouch), rental of about 1500/1600. Not a BoA or Chase mortgage. We don't qualify for any refi programs (I've researched/inquired).

No restrictions on rental from the board, but leary of becoming a landlord, especially from another state. A prop mgmt co. would only increase the loss we'd already take on a rental. We could absorb a loss for some time, but not forever. I know it's ultimately what we can afford, but was wondering where I can obtain a credit score for free?

Is there an average range for how much a short sale dings your credit score? How do you determine the length of time your credit takes a hit? Also, what are the proposed changes in 2014 to the short sale process that we need to be aware of, or where can we find more info about the proposed changes? And where can I find a projected market analysis?

Finally, while we have a tax advisor, do we need to find a broker, an agent or a Realtor? I don't know the difference. I assume once we narrow that down, we can get a referral to a real estate attorney from whomever we choose to work with.
0 votes Thank Flag Link Sun Nov 24, 2013
A broker and Realtors are real estate agents. A broker requires a state license. The Realtor designation membership for which we pay annual fees to belong to once we are brokers.

You don't need a management company. Repair everything you before you leave and get a good real estate agent and contractor who can handle things locally. I have clients who live out of town and I let contactors in, do final walk through, inspect repair work that they cannot living halfway around the country. I do for them what I would want someone to do for me.
Flag Sun Nov 24, 2013
Also, you will need a Realtor to represent you. Broker, agent and Realtor are all the same thing! If you'd like to speak with my go-to short sale attorney she is very happy to chat and answer any of your questions so please contact me if you'd like me to send her contact information. If you're ready for me to provide you with a market analysis for pricing and to go over what I can offer as your Realtor please call or email and I'm available to help. I can also provide you with multiple testimonials from my past short sale sellers!

Jeff Stewart
REALTOR®, @properties
3101 N. Greenview Avenue, Chicago, IL 60657
309-269-3499 CELL
jeffstewart@atproperties.com
Flag Sun Nov 24, 2013
Hi there,

I answered a bit down the page but I truly feel your best bet is to contact an attorney who specializes in short sales in order to answer more of the questions you have. While I'm a Realtor who has helped a lot of sellers short sell their homes a lot of your questions are highly variable. Some banks require you to be delinquent on mortgage payments where I've also had a couple sellers remain current on payments and were still able to get short sale approval from their bank. My short sale attorney knows exactly what each bank looks for and she is able to advise you on how best to move forward. Regarding the effects on your credit it, again, completely depends but know that a short sale will lower your credit. Regarding changes, also know that the short sale process changes constantly which is why you need a Realtor, like myself, and a short sale attorney to represent you.
Flag Sun Nov 24, 2013
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