Should I shortsale Las Vegas home that's 38K underwater?

Asked by Lvhomeowner, Las Vegas, Las Vegas, NV Thu Jan 27, 2011

I am contemplating shortselling my home. I live in Las Vegas, Nevada, a city with a real estate market that will likely not see great appreciation anytime soon. My home is worth approximately $150,000, and I
owe $188,000 on the loan. Thus, I am underwater by approximately $38,000. (I paid $250,000 for the house in 2007). I can probably rent a place for $1000 per month. So, there would be definite monthly cost savings for me versus paying my $1324 mortgage. I have a 5.625% rate on my loan. I don’t see myself living in this house for more than 5 to 7 years if I can help it. My credit scores currently are great. I would be willing to live with the negative credit implications of a shortsale for a couple of years. But, I would definitely like to buy a new home within 3 or 4 years. I have a hardship, a salary reduction, and a lender that is amenable to shortsales. Finally, I would only go through with the short-sale if and only if I can get the deficiency totally waived.

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Mark Fleysher, Agent, Las Vegas, NV
Thu Jan 27, 2011
Hello LV Home Owner,

Compared to many LV Home Owners today, this is actually not a huge difference. A short sale is definitely possible, but not necesarily your only option. Another option to consider is to rent out your home, if it covers your mortgage. If you'd like, you can contact me direct and I can assist you with an evaluation of the rental market, and discuss a short sale as well.

I can help with any of your Las Vegas Residential Real Estate needs or questions; feel free to contact me direct.



Mark D Fleysher, MBA, Broker, REALTOR
The Jack Conley Realty Group
C. 702-291-8186
1 vote
Reinvest Hom…, Both Buyer And Seller, Orange County, CA
Tue Mar 1, 2011
Look at Mortgage Assignment or MAPS. Your not that under water so you might be able to find a person that wants to buy a home under your financing terms in place.

Here is a link that might be helpful:…

0 votes
David Cooper, Agent, Los Angeles, CA
Mon Feb 21, 2011
Which bank is your $188,000 loan with. The Nevada Attorney General is putting the squeeze on Countrywide (B of A) and Wells to start doing short-sell deals. Not all banks are motivated?

David Cooper
Call Now +1-7024997037
0 votes
Mark Fleysher, Agent, Las Vegas, NV
Tue Feb 1, 2011
Hello LV Home Owner,

Have your concerns been answered?

Something I noticed that I didn't answer... during the close of the short sale, when I am representing the seller, I always do my best to have the banks acknowledge (on the short sale authorization) that "If all of the above cintongencies are met, Widget Bank will issue a full satisfaction of mortgage; this will be reported as a settled debt to the credit reporting agencies"; thus, ensuring that is shows paid in full, no remaining deficiencies. Can the bank still pursue you in the future? Of course... anyone can take anyone to court for any reason, but your innocent until proven guilty, and you have proof that your debt was settled in full.



Mark D Fleysher, MBA, Broker, REALTOR
The Jack Conley Realty Group
C. 702-291-8186 F. 702-946-0843
0 votes
Renee Burrows, Agent, Las Vegas, NV
Sat Jan 29, 2011
If your home has an FHA loan you may want to talk with the servicing company to see if you are eligible for a streamline refinance and if the new payment would make sense. Make sure you exhaust all of your options before you throw it all away. If you can get your payment down to $1000 wouldn't it make sense to keep it for the tax reduction too?
0 votes
Jennifer Har…, Agent, Las Vegas, NV
Fri Jan 28, 2011
Dear Lvhomeowner,

In your case there are reasons to short sale as well as reasons not to short sale. The negative equity of $38,000 is 25% of your home's value which is significantly less then many of the cases in Las Vegas. But if you ask different economists how long it will be before your homes value will rise above that level again, you will hear differing opionions. Since noone has a genuine crystal ball, it would be your personal choice if you decide to stay and ride it out, or leave and cut your losses.

Now if your unable to sustain your monthly payments, a firmly believe a short sale is a better option then a foreclosure. As you have already know since you've mentioned it, you would want to ensure you are working with an agent that will attempt to negotiate the deficiency amount waived. Once a Purchase Contract is prepared and the lender's package is put together and submitted, the negotiations begin. I've personally experienced short sales approved in as little as 2 weeks to waiting periods close to a year when the buyer finally backed out because they are tired of waiting. Every lender is different. Every property is different. If you have 2 mortgages with 2 different lenders the process is different then having one lender and a clear cut hardship.

Jennifer Harper, REALTOR
Pulse Realty Group
7575 Norman Rockwell Ste. 110
Las Vegas, NV 89143
Cell: (702) 542-3089

Real Results for your Real Estate Needs!!

The best compliment I can recieve is a referral from you :)
0 votes
Valerie Edwa…, Agent, Las Vegas, NV
Thu Jan 27, 2011
1. Short sales take a while, they are NEVER quick, however some banks are more efficient than others in response time. There are never any guarantees on a short sale. Each lien holder is different and every hardship is different.
2. You definitely need a hardship to qualify otherwise you will not likely like the response. I have seen some HO's who have been denied a short sale straight out despite an incredibly legitimate hardship and others who have had approvals that were not so clear cut. Again it comes down to the lien holder and their investors and your financial situation.
3. I agree with the others $38K is nothing compared to overwhelming majority of HO's in the valley. However, i am unclear of how you arrived at the $150K market value because there are a variety of factors to consider when comparing your home to another that has sold in the last 6 months in your neighborhood. Obviously size & condition are the 2 most important variable. You need a Realtor to really help you determine how upside down you are. If you purchased it in 2007 you will not likely be as upside down as someone who purchased between 2003-2006 but $38K is an awfully small difference- even for a 2007 purchase.
4. You are looking in the right direction for help. Most agents do not charge the seller for their services unlike attorney services which haven't proven to be any more successful but tend to cost the HO several thousand dollars (up front). Our office has an attorney on retainer that helps the seller with legal questions and to determine what are all your options.
5. It will likely take anywhere between 4 to 12 months to either have the short sale be approved or denied. Hence your credit will be getting negatively hit each and every month (if you are not paying your mortgage). You really can't start improving your credit under these circumstances until the sale is completed. Hence, you normally will not likely qualify for a loan for 2 to 4 years after successful close and that is if you do receive a waiver of the deficiency. Some may speak of qualifying earlier for a loan, but often times the interest rate is considerably higher than if you waited another year to improve your credit score.
6. KNOW that in Nevada, under most circumstances for owner occupied properties (not investors), the following timelines are as followed:
-Foreclosed homes: lien holder only has SIX MONTHS to seek a judgment against you.
-Short sale homes without waiver of deficiency: has SIX YEARS to seek a judgment against you.
-Short sale homes with waivers can immediately begin improving their credit scores .
I always recommend to my clients, to go the extra distance and be absolutely sure that ALL BILLS are paid on time. Additionally If you don't currently have credit card, get one before your scores are too low to permit it. Charge stuff but immediately pay it off each month in order to help offset any negative hits that are a result of unpaid mortgages.. However, if you have a problem with impulse control and lack the ability to control your spending than a credit card would not be something you would want to acquire because it can further put you in debt and ruin rather than rebuild your credit. If you pay off the credit card each month, never allowing any balance to accumulate, that will help in rebuilding your credit. Since you are not carrying a balance the interest rate would never be a concern-but you have to be committed to not allowing a balance to ever exist regardless of reason/excuse.
7. You should also consider a loan modification. I tell my clients it is always in their best interest to attempt it to see if the lien holder will negotiate. However most lien holders have not been to cooperative and tend to put the difference on the back end of the loan. But you will never know unless you try!

Anyway, there is a lot of tid bits any experienced short sale agent can share with you...your first step is to talk to an agent sooner rather than later and decide on a course of action.

If you want to talk, my contact information is below. Best of luck.

Valerie Edwards, REALTOR
Direct: (702) 371-5533
Premier Real Estate
0 votes
Jillian Batc…, Agent, Las Vegas, NV
Thu Jan 27, 2011
Hello LvHomeowner,
Ok you will have many agents telling you what to do and not to do, but you really need to look out for yourself. If you are in a hardship and you feel you need to get out of your house, don't let anyone tell you not too or the VS. Just pick an agent that has experience in many short sales, I would ask the agent have they completed at LEAST 30 short sales. Ask them have they had any training? Do they have experience having lenders waive the deficiency judgements? Then ask for proof, can they provide you past approval letters (Of course with the past clients info removed for privacy) Ask for referrals. At LEAST 20 from past SHORT SALE CLIENTS. As other agents have said, one missed phone call or email or fax can mean a missed short sale opportunity for you. Also make sure your agent if a FULL -TIME licensed Realtor with FULL -TIME support if they are unavailable, like an assistant or business partner. This is important because if your bank try's to reach your Realtor and can not, this can compromise you. I have a FANTASTIC web site that can help answer ALL of the questions you may or may not have, please feel free to visit it:

Also I would love to speak with you if you would like further advice, you can contact me anytime.
Jillian Batchelor, Realtor
702-595-8036 direct

Most importantly Seek advice from an Attorney and CPA. (I can refer you to a few good one's if you need some).
0 votes
Len McGuirk, , Las Vegas, NV
Thu Jan 27, 2011
Hi Lvhomeowner,

I would love to speak with you over the phone if you will call me. I can give you a ton of information that will be helpful to your decision. I specialize in short sales and have been extremely successful in them over the past few years. They have been my main focus of my business and contribute to me being ranked in the Top 5 agents in the #1 real estate firm in Nevada, Prudential Americana Group.

A short sale is a great option for someone in your position. The larger investors say that they only stay on your credit score for about two years, then you can start qualifying for another home loan. Ihave many clients that I have helped short sale their home and their credit score hardly even changed after the short sale. I have also had the deficiencies waived on most of the short sales I have completed as well. This is due to me having many inside contacts at most of the banks out there. I have negotiated many excellent terms for my short sale sellers.

I may also be able to get you $3,000 for relocation money from your lender if you qualify in the HAFA program. Feel free to call me and I will let you know your options and the benefits to the short sale. I can tell you one thing though, if anyone can get your deficiency waived, I am definitely that person. Hope to hear from you.

Len McGuirk
Short Sale Specialist
Prudential Americana Group
Direct: (702) 203-6688
0 votes
Danya Gresham, , Las Vegas, NV
Thu Jan 27, 2011
Just a quick follow-up in regards to Ant Cash's answer. It would make sense if you're an investor looking to rent out a property to buy it if it's only $38k upside down. Be aware though that your bank rarely, if ever will negotiate a short-sale without an agent. It's especially imnportant to make sure you're represented in a any real estate transaction by professionals who understand the laws, but even more so in a short-sale situation.

0 votes
Steve Matthe…, Agent, North Las Vegas, NV
Thu Jan 27, 2011
Just a quick response to a recent post by others. Beware of anyone who wants to buy your home and have you remain liable for the debt. This often ends up with a scam being foisted at the expense of your credit and liability. Did a red flag raise for you? It does for me. Why would anyone pay $38,000 more for a property in this market? The news is replete with stories of scams like this where people are fined, or end up in jail for fraud.
0 votes
Ant Cash, Home Buyer, California
Thu Jan 27, 2011
Hi Friend,

I would consider buying your home if you still wanted to sell it...
If Its only upside down 38k.. i think i might be interested if its a nice property and nice neighbohood..

Would love to talk too u..

Give me a call
(909) 648-5227
0 votes
Steve Matthe…, Agent, North Las Vegas, NV
Thu Jan 27, 2011
Hello lvhomeowner,

I think I answered this question for you on a different forum, so much of what I said there I will restate here for those who may be reading your post and who may be considering the same question. What has changed in your question is the note that you have had a reduction in Salary.

What you haven't addressed is they why you are considering a Short Sale. If it is merely because you are $38,000 short does not seem like a compelling reason to me. See my points number 3 and 5 below.

In this market, the typical answer has been, yes, Short Sale. But if your estimation of your property value is correct, your situation is a bit different than the typical Homeowner today.

Most People who bought around 2007 for $250,000 are under water by a more significant amount than you say that you are. Others who bought might have a current property value of as low as $100,000 which would change the answer to your question. I guess what I am beating around the bush about is that you owe it to yourself to get more than one market analysis on your home to verify its current market value.

However, if in fact your home is worth $150,000, my answer is that you might want to consider holding on to the home, since you are only upside down by $38,000. Here is my logic.

1) First, you don't need to move.

2) Unless your drop in salary is more than $500 per month (again, see #5 below), you don't appear to have a reason to move other than the drop in value. A drop in value does not constitute a hardship, which you typically have to be able to substantiate in order to get a short sale approval. I say typically, because some banks are allowing short sales when no hardship is supported, but where the homeowner has become delinquent and it is apparent that they intend to default on the loan.

3) Consider that you are in this house for another 5 years. You will have paid down the loan, and the value will most assuredly have gone up from where it is today, and you will likely actually make money on the home when you do sell.

4) With your interest rate where it is, I would like to think that you could renegotiate a modification to the rate and lower the payment bringing you closer to a break even cash flow on rent.

5) If you Short Sale, as a tenant you lose the interest deduction off your taxes. Depending on your tax bracket, this is big. For instance, let's say you are in the 25% tax bracket, and your interest is in the neighborhood of $1,000 per month. As a homeowner, you are able to claim that interest deduction on your taxes. First, because of your 25% tax bracket, that means you will receive approximately $3000 back on your taxes each year. But wait... like a Ginsu knife offer, "There's more". It doesn't stop there, because there is, in effect, a deduction multiplier (lets call it "the DM") on your taxes for the following reason. Because you are able to deduct the interest off your taxes, you get other deductions as well. Which means, if you do not have the interest deduction, you likely are not able to itemize your deductions at all, so many of the expenses that are now deductible for you now, will not be available to you in your post homeowner life as a renter. So the result of possibly saving $325 per month by renting is taken away. Yes, your low rent landlord giveth and the IRS taketh away.

6) You lose your pride of ownership in "The American Dream"

7) Regardless of what someone might try to "guarantee", there is no guarantee that the bank will agree to no deficiency, unless your Home Loan and you qualify for a HAFA Short Sale. Because the amount of deficiency is small, your chances are good, but not assured.

8) Lastly, if you do short sale, your credit will, at least for a year get hit which has a cascading affect on all of your credit, including credit cards, car loans, etc.

Having said all that, I will tell you that I specialize in Short Sales. That accounts for nearly all of my sales. If you decide you do want to do a Short Sale, use someone who will work hard to get the deficiency release. I would be more happy to help you through the maze.

Best of Luck and thanks for reading.
0 votes
J B, Other Pro, Henderson, NV
Thu Jan 27, 2011
If you are able to maintain your home by leasing it and running a small negative, that would probably be your best bet as your current lienholder will not commit to a total deficiency until you are well into the short sale process. You might want to contact an attorney for legal purposes and a CPA for tax issues. I recommend Wendell Waite at Waite CPA here in town. He is not only a CPA but he's a Real Estate Broker, has helped several of my clients and provides short sale seminars to real estate agents. If you would like to contact me my # is 702-582-9255 to answer any other questions that you might have.
John Bonner
Tesoro Realty
Web Reference:
0 votes
Justin Chang, Agent, Henderson, NV
Thu Jan 27, 2011
If you qualify for the HAFA program than I would definitely recommend it. You can avoid the deficiency, get up to $3,000 for moving cost and if you still current on your payment you would take a very small hit to your credit and be able to buy a home again in two to three years. If you would like to find out more feel free to contact me at 702-429-0122.

Justin Chang
Realty Executives
2855 St. Rose Pkwy
Henderson, NV 89052
Cell: (702) 429-0122
Fax: (702) 436-5112
0 votes
Michele Dutc…, Agent, Las Vegas, NV
Thu Jan 27, 2011
Based on all the information you have stated above a short sale would be one option for you. If you did decide to short sale your home you would be eligible for to purchase another home in 2 1/2 years after your short sale. I also know of a lender who has a new 20% down loan that eliminates any waiting period for your new purchase so long as your credit score is at 580 or above after your short sale is complete.

I would love the opportunity to discuss all of your options with you to resolve your situation. My clients get free attorney services when they decide to short sale and much more. I also provide assistance finding a your new home whether your buying or renting. Give me a call at 702-324-9281 I think I can help you.

Warmest Regards,

Michele Dutchess
Realtor/Short Sale & Foreclosure Resource Certified
Keller Williams Realty Las Vegas
Cell: 702-324-9281
Office: 702-212-2222
0 votes
Danya Gresham, , Las Vegas, NV
Thu Jan 27, 2011
Hi Lvhomeowner!
Wow, that's a loaded question! You should have a ton of answers pretty quickly! Like Mark said, you are in a better position than most. In the realm of short-sales, $38k is hardly anything. He's also correct that it's not your only option.

It sounds like you definately need to interview a few agents and find one that's a good fit for you. You should check out this blog post of 12 questions you should ask before you have someone list your house. Another seller here in Las Vegas asked these questions...I thought they were good questions so I made it into a blog post.…

Be prepared, you're going to get a lot of agents trying to convince you that they should be the one to sell your house, make sure you ask the right questions. Experience definately counts in the short-sale incorrect document, a late fax, an unreturned phone call to your lender can cost you the make sure you do your homework on the agent before you let them list your home!

If you have any questions or want to find out more information, definately feel free to give me a call or shoot me an email. If it looks like we can work together, great! If not, I still give you as much information as i can!

Godd luck!

Coldwell Banker Wardley Real Estate
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Thu Jan 27, 2011
Hi Lvhomeowner:

It seems you are ready to bail based on all the justification you are providing.

Get in touch with a CPA and a lawyer and then a Realtor.

Good luck.
0 votes
Marina Gulak…, Agent, Portland, OR
Thu Jan 27, 2011
I think $38,000 is not that large of a sum to be considering a short sale; however, that is just my opinion. Can you really show the valid hardship? Salary reduction alone might not be enough - your total monthly expenses have to be at least 50% or (preferably) more of your total monthly income.
You might want to consider loan modification instead- negotiating with a bank to reduce the interest rate for few years to 2 or 3%, that would give you a break on the mortgage payment. Renting out is a good option as well, if the rent covers the mortgage.

Otherwise, if you really want to sell the house, then short sell is a way to go.

Web Reference:
0 votes
Heather Peck, Home Owner, Las Vegas, NV
Thu Jan 27, 2011
That's one option, or you could do a mortgage assignment to another buyer that may not care its $38,000 upside down.

If you'd like to know more, shoot me an email.
0 votes
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