[lilmiss5573]

We owe more than the home is worth and want out what is the best way to do this without just foreclosing? By owner, through a realitor? We are not sure where to start.

[JudyKayTee]

It depends on the market, your skills in negotiating. Without a realtor (obviously) you don't need to pay commission. Without a realtor, however, you aren't sure what you are or are not signing away.

Have you approached the mortgage company and discussed your options with them?

[ma0641]

Are you behind in payments? The cheapest way would be to find someone to take over the payments if your lender approved. The 2nd cheapest way, although maybe not the fastest and best way is to FSBO. I am in a similar situation, have a house we are having a difficult time selling, have slowly dropped the price from $420,000 to $300,000 but, it is paid off. I understand your concern but if you are current on payment, foreclosure will affect any future home purchase and prices will come back.

[lilmiss5573]

We are current but haven't always been. Wells Fargo is the lender and they tend to not want to help anyone.

[ma0641]

If you are current and can stay current, your best bet is to stay where you are, at least for a couple of years. Any rental options that would cover your costs? What is your interest rate? Refi?

[Ilike]

Talk to a REALTOR that specializes in short sales in your area. Short Sales "by Owner" usually do not meet the requirements for the Investors and Mortgage Insurers. Investors and Mortgage Insurers usually want to have the home placed in the local MLS so that the "highest & best offer" can be received.

Short sales are not for the faint hearted and require a tremendous amount of time and effort. A REALTOR will want to list your property at close to or slightly below market value depending on your circumstances and the amount of time you have to sell prior to a foreclosure or other event. Wells Fargo is one of the better Lenders when it comes to Short Sales (which doesn't mean a whole lot).

The Loss Mitigation Department is not the same as the Collection Department that is calling you for the late payments.

You will eventually have to provide paperwork to the Lender that shows that you have a financial hardship that prevents you from paying the loan in full (e.g. medical hardship, loss of job, new job in a different community, lower wages, less hours, etc). The same type of paperwork that obtained you a mortgage will get you out of the mortgage... bank statements, pay stubs, copies of tax returns, and them pulling your credit. Wells Fargo will not normally do a whole lot for you until you have an offer.

Usually what happens is that you list your home for sale at a price that will sell. You accept an "as-is condition" non-binding type offer on the property subject to the bank's approval. Your REALTOR forwards the offer to the bank for their approval with the other documents. Your REALTOR calls them daily until your file is assigned to a Negotiator. The Negotiator will likely misplace the file/or their job or will go on vacation and it is assigned to a 2nd Negotiator who dispatches an appraiser to the property. The Negotiator reviews the appraisal and weighs the costs of foreclosing on you verses what they can obtain by leaving things the way they are. To foreclose on you a bank will often spend $10k-$20k and then have to maintain your property (and sell it in a vandalized condition).

Your mortgage company reserves the right in certain situations to 1099 you for the difference in what you owed verses what you sold it for... in some situations they cannot 1099 you for the difference. I would suggest you discuss tax consequences with a CPA (you want necessarily know what your consequences are until you receive an offer).

Most Mortgage companies ask that you list the property in the MLS so that they can get the greatest return for their investors. You will not be able to sell the property to a family member or sell it to someone that will rent it back to you. If you have a 2nd Mortgage, property taxes, or additional liens these too can be negotiated as part of the sale by a competent Realtor. You will lose any money in your escrow account to the Mortgage company. FYI the REALTOR commission is paid out of the proceeds of the offer... so you are not on the hook for those expenses out-of-pocket.

BEWARE: Don't be a guinea pig of a REALTOR that has never completed a short sale. A REALTOR that has done these things should be able to have you contact previous clients that you should talk to that will tell you about their specific circumstances and how things ended up for them. If you have additional questions ask away... if not... Goodluck!