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Upside-Down on the House |
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My Grandmother fell ill and my husband and I had to get a house that had a floor plan that could accommodate her. Unfortunately our other house wouldn't sell, we found a couple who was interested in doing a lease-purchase. They fell through on the deal and moved out last month, they aren't paying the contractural penalties either but that's a whole other issue. What I was wondering is since we are unside down in the house now, what would our best option be? I have heard of 'short sales' but is this really the best option? We are having trouble renting it out because the market is flooded and to purchase a house is easier for a lot of people right now. I really would just like it gone, especially because we never intended on having a rental property in the first place. Any advise would be great! Thanks, Kristen |
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I'm getting so many letters like yours these days. But look -- if people have a loss on a stock purchase, they don't write me asking what to do. They just either hold on and hope things get better, or sell and take the loss on their income tax return. And as yours is now a rental property, you could indeed take your loss as a tax deduction (no room here to go into the details; talk with a tax professional.)
Yes, being a landlord is a skilled occupation, and you have to be temperamentally suited for it. For that matter, entering into a lease-option also calls for some know-how. Did you, for example, study your prospective buyers' credit report carefully?
As for short sales, lenders will usually agree to one only if you're practically penniless. You could always ask. With a short sale, the lender forgives the rest of the debt, if a sale on the open market doesn't yield enough to pay off the loan. The procedure can be cumbersome, but it's a lot better for your credit rating than a foreclosure. It's also possible, sometimes, to get the lender to accept a deed to the property and forgive the loan. "Deed in lieu of foreclosure." You'd be lucky if you could get that and just walk away.
Otherwise, what can I say? Think of it as if you'd lost money in the stock market, bite the bullet, sell and take the loss, make up the difference from your other assets (I hope) and just end the whole worry. |
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Edith
Originally published on July 19, 2008 |
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