Home Selling in 15234>Question Details

rebelyelljr, Other/Just Looking in Pittsburgh, PA

Rent or Short Sale?

Asked by rebelyelljr, Pittsburgh, PA Thu Feb 21, 2013

Ok this is an odd situation. But trying to help a good friend, more opinions the better i guess.
Friend purchased a cute 2 bed home in Baldwin in 2009. Admittedly overpaid for the home, but she is currently upside down in the mortgage, by about 10-15K. Home probably valued around same less than purchased for.
She moved to Cranberry about 2 years ago, to move in with husband. Has remained current and attempted to sell the home close to what she paid with no success.
Due to some personal problems she was forced to move back into the Baldwin home, but now the fathers of both her children live in Cranberry, Butler county and she needs to relocate back to Butler county.
If she short sales, she ruins her credit and loses all the money she put into the home, and the downpayment and upkeep over last few years.
If she rents she is a single mother of two so could not maintain the property herself and would need outside help for that. Plus not sure what rent will be in that area.
Help?

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Answers

5
It really depends on the specific financial information. Both SS and Renting may be possible options at this point. But, if she is current on her payments Short sale will not be an option. Again, this comes down to all of the little details involved. You will want to speak with a local and experienced real estate agent in your area that can review all of the necessary financial statements and paperwork and advise you on the next steps in the process. Great question!
1 vote Thank Flag Link Fri Feb 22, 2013
One you assume your friend will be approved for a short sale and this is a big assumption and the odds are 50-50 that she would in fact be approved.

You're trying to make a decision without the necessary data. Can the house be rented and if so would the rent (less property managers fees) be sufficient to cover her mortgage, taxes and insurance? This is a vital piece of missing info. Does your friend want to be a landlord, it's not for everyone and the further you are from your property the riskier it is.

Has your fiend looked into refinancing? If she's paying more than 4.5% on her mortgage she should be looking into this.

Your friend should be speaking with an attorney, under no conditions should she attempt to negotiate with her lender with out one and this would be the best advice you could offer her.
1 vote Thank Flag Link Fri Feb 22, 2013
My guess is that that rent would fall short, slightly. Guessing a rent of about the mortgage tax and insurance amount, but the prop manage fees would be additional. She doesn't want to be a landlord, but if its best for her long term she would consider it. She needs to move 45 mins away so refinancing isn't the problem, plus she doesn't have the cash for closing costs. If she could pick the house up and move it to the location she needs all would be just dandy. But she is driving 45 in the am to take kids to school, 35 back down to work, 35 to pick kids up, 45 back to home. instead of 35 to and from work.
Flag Fri Feb 22, 2013
Not hitting a real good batting average on her decisions!
Is $10-$15 enough $$ to make it worth destroying her Credit?
Isn't her current monthly payment about equal to what she will pay for renting a place?
Then some of the questions are obvious, and so are the answers.
Just like all of us; she has to live with some of her decisions. Or not.
0 votes Thank Flag Link Fri Feb 22, 2013
Show me the money. Rent seems to be the best option for a couple of years. If possible, work full time AND PART TIME, save some money.....Make sure tennant pays all utilities ..and make sure tennant pays on time.............Good luck....................
0 votes Thank Flag Link Fri Feb 22, 2013
Sounds like short sale is probably the best option. I am both a realtor and a landlord. I can tell you going a landlord from any distance is not going to be easy. As you say, the property needs to be maintained and, if the tenants fall behind in their payments, collecting will also be difficult.

A short sale will damage your friend's credit but 'destroy' may be too big a word. If she is current on the payments and continues to keep current until the home is sold the damage to her credit will be var less. Your credit score is damaged more so when you miss payments than when you short sell. She will lose the money she put into the home, yes, but she will be eligible to buy again in just two short years.

So, unless the rent would cover the mortgage payments and expenses, and unless she can find someone to help with maintenance and collection of rent, I would still think short selling would be a better option under the circumstances.
0 votes Thank Flag Link Fri Feb 22, 2013
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