Home Selling in 92807>Question Details

Tescobedo, Home Seller in 92807

Should we short sale our condo if we are only 10,000$ upside down to purchase a new home?

Asked by Tescobedo, 92807 Fri Nov 25, 2011

We own our condo, but are looking to buy a bigger home. The bank counts this condo as a debt (198,000) and will not lend us as much as we need to purchase a new bigger home. Should we short sale our condo if we are only upside down 10,000? I heard that credit is not as affected as it was a year ago.

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From a financial standpoint, as the answers already indicate, you'll blast a hole in your credit. You heard wrong that your credit won't be affected, or as affected as a year ago.

From a moral standpoint, no. You're only $10,000 upside down? Is that all your reputation (general and credit) is worth? And you don't say that you're financially distressed--just that you want a bigger home. That raises the question of whether you'd even qualify for a short sale.

Answer: No. Don't short sale your condo.
2 votes Thank Flag Link Fri Nov 25, 2011
Don Tepper, Real Estate Pro in Burke, VA
Short sales are for people in distress, you are definitely not in distress. I have had to help Sellers with Short Sales that have absolutely nothing and nowhere to go - it is a serious step with serious consequences to credit and family life. The reason for a Short Sale is a TRUE HARDSHIP. Short sales are NOT and should not be optional for people like yourself. Apologies, if I seem harsh, but lets get real here........
1 vote Thank Flag Link Mon Nov 28, 2011
Everybody is spot-on:
It's not worth it for $10,000;
it'll cost more than that if you SS it.

If you could rent your Condo, even for $100-$200 per month negative, you would be better off.
You may be able to write off the negative, talk to your taxman.
You would need a Lease Agreement in your hand when you talk to the Lender; but it's doable.

Good luck and may God bless
1 vote Thank Flag Link Fri Nov 25, 2011
You will have to speak to your bank to find out if you will even qualify for a short sale. It's not something you can just decide to do. Your credit is definitely affected with a shortsale but not as much as a foreclosure.

0 votes Thank Flag Link Sat Nov 10, 2012
0 votes Thank Flag Link Sat Nov 10, 2012
psst Sheryl - don't hold your breath waiting for a call from the poster - this question was asked close to a year ago!
0 votes Thank Flag Link Thu Sep 13, 2012
If you are not going through a hardship situation the bank won't approved the short sale just because you are upside down you have to be in a financially distressed . Your Credit will be affected and you can't qualify to get a new loan for at least two years. Rent and move to a larger home and lease your condo can be an option.

Best Regards

0 votes Thank Flag Link Tue Jun 5, 2012
I agree. Don't do a short sale in your situation. We have lenders that will give you credit for the rental, with an appraiser's opinion, prior to sale or lease, for what the monthly rent will be for jumbo loans and others that originate conforming loans should as well. They will give you credit for 75% of the rental amount to count as income. Also, they do not require prior landlord/management experience. This is a portfolio loan program. This is not available with FHA or other government back entities.

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Fri Nov 25, 2011
Hi Tescobedo,
Another option may be to lease out your condo. The banks will count a certain amount of the rent as income. You may be able to qualify for the bigger home that way. I agree with the other answers that short selling your condo will make it much more difficult to purchase a new home.
Good luck,
Web Reference: http://ocnorth.com
0 votes Thank Flag Link Fri Nov 25, 2011
If you short sale your home you will not be able to get a mortgage on the purchase of another home for at least 3 years.
0 votes Thank Flag Link Fri Nov 25, 2011
A short sale does impact your credit....there's no two ways about it! Based on the limited information provided, your best bet may be to try to sell the property based an the asking price necessary to be able to avoid a "distressed" sale (short sale or foreclosure). This approach should allow you to avoid the penalties of either distressed option.

The bottom line is that if you go the distressed sale route, it's very likely that you will not be able to qualify for a loan necessary to purchase a future residence without a period of time necessary to repair your credit.

Your best approach is to get the facts and do everything possible to avoid a short sale of foreclosure. Being able to ake the best decision for your situation may come from having conversations with a reliable local real estate professional and an attorney.

Good luck,

0 votes Thank Flag Link Fri Nov 25, 2011
Credit is affected. If you have been late, the short sale is viewed the same as a foreclosure. If you are not late on a payment, it dings your credit for about 3 yrs.
Can you afford to make the payments? Would you consider renting to a tenant? Could you afford to sell it for less than owed and bring money to the closing table. It might be possible to close on a new house with a deep discount so what you lose on the condo can be gained in the new one...call a local Realtor and Mortgage Professional in your area. They will give you a free consult. A CPA could be a good reg also
0 votes Thank Flag Link Fri Nov 25, 2011
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