I'm hoping to downsize (townhouse or condo) and currently have a home with a mortgage that is likely higher than market value--any suggestions?

Asked by Chris, 60302 Sat Jan 2, 2010

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, ,
Sat Jan 2, 2010

Because you are downsizing, there are provisions that might allow you to do a short sale and still be eligible for a loan immediately.

If the reason you are moving is because you can't afford your current home (not because you want to take advantage of declining market prices) and you have not been late on your mortgage or any other installment loans such as credit cards, auto loans etc., then you can get an FHA 3.5% down without waiting.

Speak to a local FHA lender or feel free to post more information here about your situation.

Hope this was helpful.

Good luck.
2 votes
Rick Szekely, , Oak Park, IL
Sat Jan 2, 2010

The first thing I would think about is renting out your house for a couple of years. Craigslist will provide you with a general idea of rental prices in the area. You can also talk to a local Realtor to get pricing for rentals. This will allow you to wait until the market recovers enough for you to avoid a short sale on your credit rating.

You will also need to contact a loan officer to make sure that you will be able to qualify for a FHA loan (3.5% down) after you rent out your house. Finding a condo that accepts FHA financing will be a challenge in Oak Park, but most of the townhomes in the area will accept FHA financing (you will really need to contact a Realtor on this issue).

There are a couple of bills in the Senate and House right now that will hopefully address the problems we are seeing in the Short Sale market, but I would not count on them to provide you relief in the short term.

Steve is very right that the strongest housing market will be late winter to early spring this year while the tax credit's still apply, but with a short sale you still might not get any buyers. It is a hard business to close these deals.

This is a very complicated process, and getting a Realtor on your side would probably be your best bet at this point. They will be able to help you navigate the stormy sea that you find yourself on, and really help you fomulate a plan will get you where you need to go.

Best of luck,

0 votes
Christopher…, , Chicago, IL
Sat Jan 2, 2010
While I agree with Steve, you should definitely talk to an experienced and qualified agent. This agent can conduct a CMA(Comparative Market Analysis) for your home. This will help you and the agent you chose to decide on the price to list your home. It should be noted that this is one of the most difficult parts of listing your home and the price the two of you determine will most likely not be the price your home sells for. The final selling price will be determined by "the market" which is made up of ready, willing, and able buyers searching for homes similar to yours. The difficulty of pricing the home is why Weichert takes our investigation a step further. While a CMA is a great tool it is limited to focusing on what your home is worth today. Weichert has developed a tool called PTA(Price Trend Analysis). This tool allows us to consider the price today but also helps us focus on the trend of the market. This allows us to be more accurate with the final sale price and more efficiently and quickly sell your home. Which in turn NETS you the most money.

In order to best serve your particular situation, and to more directly answer your question, we would need to even take it a step further. In this market it has become quite common for individuals to owe more than there house is worth. So know that you are not alone. This situation is known commonly as a "Short Sale." You may ask yourself what exactly is a short sale. I will quote from Wikipedia since their definition is accurate. A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.[1] It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower. Our solution to this particular issue is to bring in an outside company to help negotiate with the bank directly for you at no cost to you. Our focus, as with all of our clients, is to make sure you are taken care of from the beginning to the close of your sale.

I would love to talk to you more about this Chris. In this reply I have only scratched the surface of this issue. There is still a lot to go over. Please feel free to email me at ckrohe@weichert.com or call me at 708.212.2587. I hope my answer helped you and look forward to hearing from you.

Christopher Krohe
Weichert Realtors-Nickel Group
101 N. Oak Park Ave.
Oak Park, IL 60301
0 votes
Anna M Brocco, Agent, Williston Park, NY
Sat Jan 2, 2010
Contact any local Realty office(s) and ask for recent comps--you should be aware of recently closed similar properties in the immediate area, days on the market, etc., in order to make any determination--alternatively you can also have a professional appraisal done--once you know the information can make an educated decision and take it from there.
0 votes
Steve Scheur…, Agent, Oak Park, IL
Sat Jan 2, 2010
Chris, you would best serve yourself to contact a local real estate... or two or three... and have them give you a presentation on the current Oak Park market and what that agent can do to get your home sold. It is my professional opinion that a home is going to get its best price of the year if sold between now and April-May of this year. Rates are going to rise and I think we are going to see a good amount of buyers come out into the cold over the next months. Let me know if I can help.
0 votes
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