First of all you are not alone. As we know there are several people across the country making the same difficult decision as you are.
I am going to suggest you to get a Realtor and have your house listed as a short sale. By doing that your agent will have to submit to your lender a number of paperwork to substantiate the the current market price in your area. That is an option i have done with clients of mine that were facing the possibility of a foreclosure. It is not the best but it is better than letting it go into foreclosure. Short sale stands for short pay where the lender agrees to sell for less of what is owed and the borrower ( the seller ) can not make a single cent in profit.
Hope this helps you and good luck.
A big part of that issue has to do with the fact that banks, generally, do not pay for appraissals. They just get a BPO, which is like a very basic version of an appraissal. Many times the bank request only an external BPO, where the person doing the BPO do not even see the inside of the house. Someone recently entered a posting here about a person with very little experience (and no license) doing BPOs unsupervised. And, yes a big reason for this is because the banks are cheap!
Ask your agent to send active and recently sold comparables to the bank. If that does not work you might want to consider paying for an appraisal and sending it to the bank - if it supports your numbers, or to the buyer if it supports the bank's numbers.
what you did not mention, is how much you owe on your mortgage,
if you owe 220K to the bank, then your the fool for buying a 179k house for 220K! Sorry, thats the fact
If your facing foreclosure, YOU TAKE WHAT EVER IS OWED ON THE MORTGAGE, KISS THE BUYER FOR GETTING YOU OUT OF HOCK!
If you owe more to the bank than the house is worth, I blame the fools at the bank for loaning the money and for you for taking the money for the obvious.
Ask the bank for a short sale packet if you owe more than the house is worth or get ready for foreclosure and the financial nightmare that brings
While a lot of banks do use BPOs and/or CMAs for a suggested sales or list price, prepared by sales people to obtain the listing, they also obtain full appraisals from licensed/certified appraisers on properties to determine the "market value" or "fair market value". A majority of my business has been and is doing appraisals on preforeclosure, short sale, and foreclosed properties requested on behalf of banks.
It is also quite common for banks not to accept less than 80 - 85% of the appraised market value. The appraisal (by an independant third party) takes into account and consideration far more data and information then what a sales person is willing, capable, or licensed to do, thereby providing a more accurate and justifiable value conclusion. Sales people pretty much only provide data that supports their price,
You need to have a Real Estate attorney write a letter to the bank for you to bring them to their senses.
I have an attorney I work with who can help you on the web site I have (listed below).
I have no financial benefit from doing this, it's simply a way to help you.
Ph (480) 220-7491
Fax (866) 711-8573
Keller Williams - Scottsdale, AZ
2008-2009 Master of Real Estate award recipient