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I have been behind on payments for quite some time(thanks to the tenants).Currently I owe the lender $ 3-4,000 in past dues & including late fees.I would like to pay this off (I am able to pay it off now) but since I live in So Cal(inland empire)the house values out here are going south so I want to sell ASAP!!!Besides its a rental property & I haven’t made too much on it so I want to get out of this loan before I lose it all.An aquantaince is offering to buy it for $ 390,000 (its only worth 380,000)BUT a realtor told me the other day that the bank won’t want to allow that because of my history in payments on this house.Is he right?He told me that the only way out of this is a short sale because my credit is not so great (because of the backed payments).He really seems shady when it comes to explaining a short sale.I want to know what happens & if I can actually still win this.Can I sell the house over what its worth AFTER the short sale?Do I have to pay fees?Please help!!!!!

3 Thoughts on What do I do with my home in So Cal?? Short sale or no short sale??
  1. Reply
    Joe M
    February 13, 2014 at 12:55 am

    1st, have you been served with foreclosure papers. If you have not been served then you still have time to sell the house for what ever you like. Remember, the home still belongs to you prior to a foreclosure. If your acquaintance wants to pay 390k for a 380k home. That is between them and their lender. Their lender WILL NOT loan more than what the house is worth. So if your acquaintance is borrowing the money. Do not expect 390k. But, if they are paying cash. THEY CAN PAY WHATEVER THEY WANT TO. 2nd, Do not list your home with a Realtor if you already have someone that will purchase it. I hope this helps. I have been in the mortgage industry for 20 years now.

  2. Reply
    Greg S
    February 13, 2014 at 1:30 am

    I saw the title of your question and was thinking to myself “I hope you don’t own a home in Riverside” and of course you are in the dreaded “I.E.”! When I heard people were paying $ 500K in for condos in RIVERSIDE I knew the market had gone mad….

    I need a little clarification before I can give you the CORRECT answer. If your home is only “worth” 380K then you can’t sell it for $ 390K because the bank will not finance that dollar amount (loan amount based purchase price or appraisal price, whichever is LOWER). I suppose the borrower (your aquaintance) could bring in the difference but that would be kinda fishy.

    As far as you being behind on payments that has nothing to do with the ability of your “acquaintance” to purchase it from you. You can be in foreclosure right now and someone can purchase it from you. Now if you are going into foreclosure and your mother/father/brother/sister is trying to purchase it from you the bank where THEY obtain the loan will not approve. The reason is because many people use this as a “foreclosure bailout” if they cannot qualify on their own. (you’re in foreclosure, your credit sucks ((can’t refi)), so your family member “purchases” it from you to save the house). Maybe that’s what the realtor is talking about??

    As far as a short sale goes, that has to do with the bank who is your lien holder. A short sale is used if you owe more than the home is currently worth. If your home is worth $ 380K and the market will allow you to sell it for $ 380K then the bank probably won’t approve the “short sale”. You have to behind in payments before the bank would even consider so don’t catch up on payments if that is your plan. They have to feel like “hey if we don’t sell it for less money this borrower is going to default and we’ll be stuck with the home”.

    So what you do is let your home fall behind 90 days or so (I know that sucks but your credit is damaged anyway at this point) and THEN sign a purchase agreement with your buyer to purchase at say $ 350K (you owe $ 380K). The bank decides to accept or reject or counter the offer. If you have equity in the home the bank is NOT going to approve a “short sale” just to let you walk off with the profits. Sorry, it doesn’t work that way. The realtor wants you to do a short sale so he can list the property and make a commission. If you sell it to your aquaitance you can do a FSBO (for sale by owner) and avoid the realtor commission and keep more $ $ $ in your pocket!

    Remember, the bank does not have to appove the short sale. If you have a buyer and can sell it now (even if you don’t make any money) it’s better than further damaging your credit (late payments) and running the risk the bank will not approve the short sale and let it foreclose. The market will not get any better come holiday time.

  3. Reply
    Searchlight Crusade
    February 13, 2014 at 2:25 am

    So The Realtor said the lender won’t accept a short payoff through a direct sale but will if you pay him a listing commission?

    There actually is some justice in this claim. Lenders get scammed on this point all the time. You do need an expert who’s motivated to get the largest possible commission to get the bank to believe you that that’s really all the property is worth, and that this is the best possible sales price.

    On the other hand, the way you say he said it says, “Stay away!” to me.

    I’m not certain what you’re asking with, “Do I have to pay fees?” You’re going to pay everything you are liable for. Your wanting to execute a short sale simply is an acknowledgement that the short sale will lose you the least possible amount of money, in your estimation. If you you agents to work the transaction, they’re going to get paid. And every dollar that the lender comes up short of what they are owed is going to be reflected on a 1099 they send to you.

    On the other hand, if you get 10% more money than you would selling it yourself, those agents are a win for you. You end up with more money in your pocket, or owing less, after the agent(s) get paid. I’ll gladly hand someone thirty or sixty cents if they can get someone else to pay me a dollar more for something I’m selling!

    More depth here

    http://www.danmelson.com/2007/05/short-payoffs.html

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