I have an investment property that I can’t sell. Right now it is currently rented, but I have a negative cash flow each month. The lease will be up in April, and I do not think the market will be any better.
At this point, I just want out and have thought about a Deed in lieu of foreclosure. Would I qualify for this? There is some equity in the house, maybe 10 - 15K.
What kind of hit would this be on my credit?
or you could try a short sale and get rid of it that way…
I’ve never actually seen a bank take a deed back in lieu of foreclosure. I think they prefer to foreclose because it will ensure all other debts are eliminated from the property. If they just take the deed back they don’t have that reassurance. But, it’s always worth asking, there is a chance they would say yes.
Good Luck! :beer
I think the chances of the bank taking it back when you have been making the payments are slim to none.
With foreclosure, they get a clear title and they get their PMI payment.
I suggest that you stop thinking about the easy option and get busy and get that place sold.
Start running FSBO ads right now that say FREE! $15,000! That’s the instant equity you get when you buy this place for $xxxxx because it is worth $xxxxx. Then a short description of the property.
You are going to have to get over there and make sure the paint and flooring and curb appeal are good— very difficult to do with tenants in the house. Do the best you can while they are in there and then get them out at the end of the lease and get the place into show shape.
The key to a Deed in Lieu is you can only have a first on the property. If that is the case, then the lender would consider it. However, if you are not behind on payments then it will be very hard to convince the lender to take it back.
I just had an investor who had one of their homes listed with me and he did a DIL successfully but was behind on payments by 2 months.
I would also encourage you to advertise and get that baby sold yourself. Even a SS will be hard to do if you are not behind in payments. Plus you have to be asset poor for a SS to occur.
Many blessings on getting it done. Sheila
Thank you for the replies. I do not have a second mortgage, just the first and not behind on payments at all.
Should I try the FSBO route or list with a realtor? What happens if I get the house sold but it’s less then I owe?
I am not sure a Deed in Lieu is even an option unless you are behind on payemnts. Since you only have a first then you are good to go there. Hard to say since I have not known anyone who is not behind on their payments going in to ask for a Deed in Lieu. I would not recommend you call the lender to see if they would consider one either. Could put a red flag on your acct. Maybe do another post here and ask if anyone has done a Deed in Lieu and not been behind on payments. Also google the topic. Research it and you may find your answer.
As far as welling, I would recommend a Realtor only because they can link your home to MLS which is where it will get viewed much more than putting a sign in the yard. Plus they pay for the advertising.
Know that you don’t have to sell it if an offer comes in and you will have to bring your own money to the table. However, you may want to weigh your options. How much to bring to the table versus to the loss you are taking now with your rent vs mortgage payments. It could be worth just letting it go to get it off your books…your call.
If you are not in a hurry to sell it then try and sell it yourself. I am not by any means saying that if you list it with a Realtor then it will sell fast. This market sucks for selling right now. I would make sure you point out the equity on the home and have it priced right to begin with. None of the trying to get a bigger buck in the beginning to see if some sucker is out there and will take it on. There are too many smart RE investors out there for that kind of stuff to take place. It is waste of your time and the Realtors too.
Well I have spoken my peace. Hope this helps. Sheila
The only reason that I suggest FSBO is that you have very little equity. If you reduce the price by all the equity, it looks like a good bargain to the average home buyer. But if you list with an agent, you have to come up with the commission money, which means you have to start with a higher listing price to cover all your expenses.
The easiest and fastest way to sell is to list with a good agent.
If you accept an offer that is less than your mortgage, you will have to make up the difference.
In this market, if you want to sell fast, the place is going to have to look very attractive and be move-in ready. Buyers have a lot to choose from.
Just so you know, an in lieu DOES show up on your credit report and can hurt you. It should always be as a last resort.
Jim
Same as a foreclosure – stays on your credit report for seven years.