Leif Wilson, Both Buyer and Seller in Torrance, CA

Purchased a townhome in Torrance in 2006, our incomes have doubled and we would like to know if we have any

Asked by Leif Wilson, Torrance, CA Sun Jul 27, 2008

options.. The townhome has gone down in value so we are currently upside down. It was a new townhome and we have the first cash deed on the property.

Help the community by answering this question:


The good news is that your incomes have increased even in this slow economic climate. In order to obtain a short sale on your townhome, your lender will only approve it if you have a documented hardship. The hardship can be personal and/or economic. A few examples of hardships would be loss of job, death of co-owner, physical health issues, job relocation or divorce. However, even if you had a hardship, you may not want a short sale if you have good credit. A short sale could have a major impact on your credit score.

I would suggest renting the townhome if you could come close to breaking even. This would allow you to take advantage of the current low home prices and purchase another home with payments that you can afford. Moreover, you would still be able to maintain your good credit score.

Harold Avent, CDPE, CRS, CRB, e-PRO
REMAX Execs South Bay
Email: harold@haroldavent.com
Web Reference: http://www.HaroldAvent.com
0 votes Thank Flag Link Fri Nov 19, 2010
Leif! You have several options. I have several customers in your same situation. If I'm correct, it seems like you are asking if you could possibly buy something else while prices are low and so are interest rates, since your incomes have doubled...and also do a short sale getting you out of your current situation. The answer is YES! You can approach this 2 different ways. 1)We can see what you can get approved for with your incomes the way they are now, and showing the current mortgage amount on the house to see if you could "go shopping" BEFORE doing a possible short sale on your current property OR do a short sale FIRST, and then concurrently "Go shopping" and BUY another home right away. I have several customers doing this right now. YES..there is a program offered by Fannie Mae that allows a homeowner to short sale their current home and BUY another home right away, you can almost close both escrows concurrently..but the short sale would need to close first. This program allows you to BUY right away if your fico is above 640 and you are current with your mortgage payments in your upside down property. There are also ways on how to do just a short sale, if you are not interested in purchasing another property...and not pay any deficiency or be pursued by your lender. Your deficiency is also NOT taxable, since purchase money is not taxable income. Contact me to see the options I discussed at 310-429-4170 or email me at shy@shysells.com Hope this helps! Shy:)
Web Reference: http://www.shysells.com
0 votes Thank Flag Link Sun Jul 25, 2010
I can check out your situation so send me your address and I'll tell you what I see as far as options.
Web Reference: http://www.centuryside.com
0 votes Thank Flag Link Mon Aug 4, 2008
It's great about your income. Although your Townhome might not have moved up at the same pace, unless you have to sell it...I would hold on to your property until the market corrects it'self. As others have said, you could lease it if necessary. Get a good property management firm to handle your lease.
0 votes Thank Flag Link Sun Aug 3, 2008
I like Shel-lee's response. The townhome's shift in value is temporary, like the stock market. Be careful what you do with your credit. That can have LONG TERM consequences.

There are more people looking to rent (where do you think all those folks that used to live in a home that now is either foreclosed or was sold via a short sale are living?) so the rental market is strong. Check the HOA CC & Rs for restrictions on non-owner occupied unit rules.

If you are thinking of buying before you do anything else:
1. Check with a lender on how you might qualify for a loan if you keep it as a rental
2. if you have never owned rental property consult your CPA for after tax consequences. There are short and long term consequences that may affect you down the road.

Good luck
0 votes Thank Flag Link Wed Jul 30, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
HI Leif,

I'm not sure that I understand your question...you bought a new townhome in 2006 and your incomes have doubled, but you say you are upside down in the property...do you mean that you owe more than the market value, or just that the market value isn't as much as when you purchased it. The other question I have is do you need to sell or are you just concerned since values have come down?

One thing you can do is call your local tax collector and see if you can get an adjustment on your taxes. If your value has dropped you should be able to lower your tax basis.

If you don't have to sell, then perhaps the best thing to do is stay where you are and continue to enjoy your Townhome. If you are in a position where you must sell, then you might want to explore renting it out instead of selling.

Talk to a local realtor to get a clearer picture of your options...I have a great referral for you if you are interested.

Good Luck!

0 votes Thank Flag Link Tue Jul 29, 2008
Leif, if you do not have bad credit do not do a short sale, it will damage your credit possibly to the point that you will not be able to buy for quite awhile. It sounds as though you are in a position to purchase, but you can not sell, so the next and possibly only answer would be to rent your townhouse out. FHA would be great for you! Please make sure to speak with someone that has your best interest at heart!

Good Luck!
0 votes Thank Flag Link Mon Jul 28, 2008
You do have several options. Agree with prior comments.

Since 1988 I have been assisting clients like yourself. I'm a licensed appraiser also so let me know your address and I'll present several options for you to consider.....

David Krecker, BSBA, SRA, MRA
Centuryside Real Estate Inc.
David Krecker
Broker/Owner/State License Appraiser
Office 562-690-6987
Fax: 562-690-7337
Serving the areas of Orange County, Los Angeles County, San Bernardino, and Riverside.

Email: dave@centuryside.com
Website: http://www.centuryside.com
Web Reference: http://www.centuryside.com
0 votes Thank Flag Link Mon Jul 28, 2008
Hi Leif,

Congratulations on the doubled income and take comfort in knowing that you are not alone in being upside down on your townhome.

The good news is that you do have options. Holding the townhome and renting it out may certainly be one route. Selling it and negotiating a short sale with your current lender is another. Most importantly, you need to make an informed decision and be comfortable with the financial implications of taking either of those paths.

Feel welcome to contact me. I'd be happy to help.

Jennifer Merritt
South Bay Brokers, Inc.
0 votes Thank Flag Link Sun Jul 27, 2008

Of course you have options and I would love to discuss them with you. Here are some examples:
1. Rent out your current property and buy something new. If you use FHA financing, they accept 90% of the rental income for qualifying purposes.
2. If you are moving out of the area you could qualify for a short sale. Out of area moves are considered a hardship.
3. If we put our heads together I am sure we can come up with other ideas.

You can contact me directly through my profile. My office is in Torrance on Hawthorne. Let's look at the options. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes / Execs
0 votes Thank Flag Link Sun Jul 27, 2008
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