My bank (Homecomings) approved a short sale on my home for $165K. The investor that negotiated this has now been scrambling to try to find another buyer, as the market is very bad in my area (SW FL) and now he won’t make a profit on the house if he buys it. His intention was to find someone else, talk to the bank, and have them change the contract to reflect the new buyer.
The bank wanted to close no later than Jan 20th 2007, and I don’t know what to do. I thought about asking for a deed in lieu of foreclosure instead, but I don’t know where to start with that, or how I can be careful that they don’t come after me for the shortfall if it sells for less than I owe on the courthouse steps. I’m assuming if you give the deed back voluntarily, they can’t do that, but I just want to be sure.
If it makes any difference, we already moved out and into a much cheaper rental as soon as the bank said they would approve the short sale.
I think the problem is that the market has dropped so much in the last few months, even brand new houses of the same size and similar location are selling for only $180K-ish. He had to make 2 counter-offers to even get the bank to accept $165K, as the BPO came in at $195K. His investor friends in this area won’t even entertain anything more than $120K, so one of them buying it is out of the question. The house also needs quite a bit of work.
The BPO is too high. Get comps showing houses selling at $185K, or better yet distressed comps. Do a spreadsheet showing the bank how much $ they lose (including depreciating home values) if the house goes to foreclosure. Then get the bank to do the BPO again.
If it were me, there’s no way I’d buy the house for $165. Worst case, scenario, you don’t buy the house, and the owner files bankruptcy. Tell that to the bank if they don’t order another BPO to get the price lower based on the “new” info regarding comps.
I am the owner. The investor that was negotiating for me does not want the house now, but he was trying to find another buyer for me.
In all honesty, I don’t want to go through yet more hassle of waiting and wishing for someone to come along and take the house, as it’s already taken 6 months even to get this far. I just want rid of it, which is why I was hoping for some advice on how to approach the bank for a deed in lieu. I’ve asked a couple of people I know to recommend a good RE lawyer.
We’ve had the house since Sep 2005. Other people living in the house had bad financial probs, thus not able to pay their share, and it caused a lot of tension and we were not able to keep up the payments by ourselves. We’re back on our own in a rental now, though. I haven’t spoken to the bank about the deed in lieu before, as I got the short sale approval, so I didn’t think I’d need to bring the subject up with them.
Moo: I’m sorry to see that you seem to be in a very stressful situation.
I would still highly recommend the investor pursue getting a reduced SS price, since that would be the least detrimental to your credit. Even though it could drag the process out, it would be worth it.
Otherwise, a Deed In Lieu of Foreclosure is a better option than foreclosure.
I assumed that the “nevermind” approach would ruin one’s reputation with the lender. Has anyone else ever gotten into this situation and been able to work a deal somehow? One option is obviously to hold it ourselves, fix it up and rent it out or sell it. Thoughts? Thanks!
I just got off the phone with the bank and told them what happened. They said that as long as the house is vacant (which it now is), and there are no liens on the property (which, to my knowledge, there aren’t), we should be okay with the deed in lieu, as we aren’t within 30 days of a foreclosure sale. They are contacting their legal dept to see what can be done. Light at the end of the tunnel.