I recently received an email from a reader who is a homeowner having problems trying to figure out what to do with an upside-down home. The saddest thing about this email is that such requests are not uncommon in today's housing market. Here is what "EG" has to say:
I have a house that I owe $160,000 on. I'm 16,000 behind in my mortgage. My lender denied a modification, because I got a modification in 2009.
They will only allow 1 modification during the life of the loan. Do you have any ideas about creatively selling my house without going into forclosure without the use of a bank?
Or any suggestions that will guide me to a brighter financial future. The lender told me that I needed to pay the entire back balance before they will consider another modification. I thought about a chapter 13 to keep the house as I work a plan to creatively sell it or rent it out. Any guidance would be greatly appreciated."EG" Mobile, Alabama
These questions need to be answered by a short sale specialist in Mobile, Alabama. There are many homeowners having problems and fortunately there are specialists in the real estate brokerage business who can help.
The specialist will need to know a lot more information about "EG's" situation and will also need to know more about the value of his home. These are some of the questions that I would ask EG (and any homeowner having problems) if he was in this short sale situation in Tallahassee:
- Do you believe that there is equity in the home now?
- Have you been counseled on the differences between doing a short sale versus a deed in lieu versus a bank foreclosure?
- If you were to work through a Chapter 13, how would you afford the payments that you are struggling with now?
- Which lender holds your note (not the service provider)? Are they local? Have you spoken with the investor?
This is just a short list that I would immediately cover. I would make sure that the house was worth fighting for, and make sure that EG knew all of his local housing options. At a very minimum, I would ensure that he knew how to even the playing field with the bank.
As far as creative selling techniques, I have written several articles on creative home selling that can be found at this link. Ultimately, I think EG needs a strategy first, then the home selling plan would come in the next phase of decision making. I will refer EG to a short sale specialist in his local market area and hopefully he will see his way through these difficult times.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.