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In a Tight Place |
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If we auction our house and the sale price is not high enough to cover the mortgage, what is our legal obligation and liability? We are behind on our mortgage payments and have the house listed with a top broker but despite lowering the price (total over 20%) we have not been able to sell. The auction company said they thought we would get enough to cover mortgage and their fees so we should auction without a reserve. If we put a reserve and it does not sell they will charge us what amounts to three payments which we do not have. So if we auction it with no reserve and the highest bid is less than mortgage amount owed and the bank does not agree to a short sale what happens? We can not afford to pay a reserve; or for that matter a commission if the sale does not go through. |
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If the sale doesn't bring enough to cover the mortgage, you could be hit with a deficiency judgment to cover the shortfall. You're really in a bind. It would be great if the bank would agree, in advance, to a short sale. Do you have a lawyer who could try to arrange it? Can the auction company try negotiating with the bank?
If the auction company feels you can get enough to cover the mortgage and fees, why won't they advise that as a reserve? You could make it just that amount, no more. Try to get them to agree to waive the penalty if it doesn't reach that figure. After all, they want your business, try to remember that.
To go back to the regular broker, clearly you didn't drop your price down to what the buying public was willing to pay. No use telling me you dropped it 20% -- that doesn't give me any information at all. Have you already tried an asking price just enough to clear the mortgage and costs of selling? Perhaps you have. If not, that'd be a lot better than the auction problems.
Let me know what happens; I'm interested.
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Edith
Originally published on October 10, 2007 |
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