Don Tepper

Contact a lawyer and your state's attorney general's office. - Yesterday, 07:38

As the others say, don't worry. It's a game. What it means is that the appraiser looked at the condo, looked at the comps, and it appraised at or (highly likely) somewhat above the purchase price. And you're probably right that it appraised for around $50,000 more than the purchase price. Appraisers (when appraising for mortgages) almost always have put down an appraisal equal to the purchase price so long as the actual appraisal is there or higher.

When a property fails to appraise for the purchase price, then they'll put down the actual appraisal price.

So, don't worry. It's all part of the process. And it won't have any effect on you when, at some point in the future, you want to sell.

Hope that helps. - Yesterday, 07:35

My answer differs somewhat from the others provided.

True, you have to be very careful. However, in some instances this strategy can work.

What the company is proposing to do is called a "Subject To." They buy your home "subject to" the existing mortgage. Your name remains on the loan. They own the house. And, yes, that's very risky to you. At some point in the future, they will sell or refinance your loan, and you'll be off the mortgage. Their argument--and it's accurate for the legitimate companies out there--is that they'll make up the back payments, help reestablish your credit by paying the mortgage on time, and at some point get your name off the mortgage. You might end up with a share of any profits, as well.

A "Subject To" is legal. However, it will violate your lender's "due on sale" clause. In your case, that's really not a problem, since your heading to foreclosure anyway. But, as a practical matter, in today's economy lenders would much rather have someone else (the investment firm) paying your mortgage than for you to remain unable to, and for the lender to have to foreclose.

To correct another answer below, this is not an option contract. Ownership WILL transfer. Under an option, an investor would have the ability to assign a purchase contract to someone else. However, in your case (assuming you have little or no equity), that wouldn't make sense.

I know reputable investors who do "Subject Tos." It's a legitimate strategy that, when executed properly and ethically, is a win-win-win for all involved. However, to repeat, it's very, very risky for you. And before you even consider it, you should explore the other options mentioned below: loan modification, short sale, examination of paperwork to detect errors when you purchased the property, and so on.

Hope that helps. - Yesterday, 07:30

Plenty of ways.

The answers below are fine if you limit yourself to conventional financing. But there are lots of other ways: Lease-purchase, lease-option, contract for deed, Subject To, land contract, use of a land trust (with you as the resident beneficiary), and seller financing.

Most of those get you into a property, and give you time to improve your credit (and build up that time from date of bankruptcy) before you go out and get traditional financing. With "Subject To," you actually acquire ownership immediately.

Hope that helps. - Wed Jul 1 2009, 09:07

Sydney:

Just to address a couple of points you raised in your most recent post:

SYDNEY: We cannot stage the house because we no longer live there.
ANSWER: Sure you can. It's done all the time. Some stagers have an inventory of items. Others will work with a furniture rental company. Many do a combination. It can get expensive for a full staging if everything's rented. So many stagers will do "tableaus"--not a complete staging of a room, but elements of it. And only the critical rooms. I don't know if it would help, or make financial sense, in your case. But I did want to point out that homes that are no longer occupied can be staged.

SYDNEY: I had photos of the empty rooms and I was told that we should stage the house. So I tried to find the best photos I could but since we don't live there anymore, I cannot take any furniture out and rearrange the house.
ANSWER: There are other options, too. Some Realtors and stagers use software programs that start with an imported photo of a room. Then "furniture" (either photos or high-resolution drawings) are sized, positioned, and added. What you come up with looks very much like a photo of a staged room. Another option--one my wife (among, I'm sure, many other stagers) does is use a specialized 3-D architecture program to "draw" the rooms and put in furniture. What she's done, in one property we're selling, is to print out nice full-color images of a staged room, frame them, then hang them on the wall of that room. So you get double-duty: A nice display of pictures on a wall (they look pretty), and an illustration of what that very room would look like with furniture in it.

SYDNEY: My realtor said, that it really is all about price, and people these days don't care about a staged house as much as they do feeling like they got a steal.
ANSWER: Yes, maybe, and no. As is noted below, price is very important. And some people want to think they're getting a steal. But . . . and a BIG but here . . . there's a difference between perception and reality. More specifically, you can MAKE people feel like they're getting a steal, even if they're not. Staging is one way. Using words in descriptions is another. Offering terms is another.

With staging: You create value by showing off the strengths and minimizing the weaknesses of a property. If you have an empty property, it may look like it's worth $240,000. Properly staged, it may look like it's worth $275,000. Price it at $240,000. No steal if it's empty; a steal if it's staged.

With words: Which appeals to you more: "House for sale. Many upgrades. Please take a look." OR "Steal this house! Over $30,000 in upgrades! Owner motivated!"

With terms: Maybe (if you can) offer owner financing. Or offer the property on a lease-option.

Hope that helps. - Wed Jul 1 2009, 09:02