Short Sale or Voluntary Foreclosure

[LoriDolan]

What is the name of your state?
Florida...need I say more...

First off, I'm not a flipper, having bought my townhome 4-1/2 years ago. My house has been on the market well over a year, with virtually no bites. My salary has not kept up with the cost of living, and I am choking. I am now considering a short sale or voluntary foreclosure. My lender tells me the former will go on my credit as a Settlement and last for three years. The latter will also remain for three years.

I do not plan on buying a home again for quite a while, but I have questions:

Which is a better option?
Will this affect me when it comes to renting a place?
Will I owe any money? (I believe I will get a 1099)
What happens with my association fees/does the association have a say in what I do?

Any advice is greatly appreciated.

Thanks,
LoriWhat is the name of your state?

[nextwife]

Can you reduce the price?

Get a roommate?

[FlyingRon]

Actually they are wrong, both derogatory items will stay on your report for SEVEN years.

As things currently stands, a short-sale will result in a 1099 (and a possible tax debt).

The association can still chase you on the delinquent fees. Unless this is some sort of
co-op arrangement, they can't block you from selling short. They obviously can't stop
a foreclosure.

If they will accept a deed-in-lieu (a better term for the voluntary foreclosure) they won't
1099 you as they've accepted the value of the property to be the same as the outstanding
debt.

[LoriDolan]

Originally Posted by nextwife

Can you reduce the price?

Get a roommate?

I have to sell at $190K just to break even, and there are some people in my development down to $172K and no go. And I'd have to come to the closing with cash...which, if I had it, would be going to my mortgage. So I'm stuck.

And no, no roommate. All of my friends have moved out of state (where I will be moving), and ever since Single White Female, I'm not a fan of total strangers moving into my home.

[seniorjudge]

My opinion is the short sale is the best way to go.

(Just a personal opinion.)

[nextwife]

Originally Posted by LoriDolan

I have to sell at $190K just to break even, and there are some people in my development down to $172K and no go. And I'd have to come to the closing with cash...which, if I had it, would be going to my mortgage. So I'm stuck.

And no, no roommate. All of my friends have moved out of state (where I will be moving), and ever since Single White Female, I'm not a fan of total strangers moving into my home.

That movie is bunk. I have had several wonderful roommates, when I was single. I screened them and chose carefully. One was a newly graduated elementary teacher going for an advanced degree, another was a nurse from a small town an hour away - and she spent almost every weekend back home at her parents house hanging out with her HS friends. I had "house rules" clearly established and never had a problem in all those years. Run a credit, background check and get references. It's far better than ruining your credit. If you can keep up the payments a year or so longer, the market will surely bounce back.

Keeping my condo ended up eventually providing me a modest down-payment to buy a better place, which has now, even in this market increased in value by 2 and half times what I paid. Think LONG term when you think real estate, not short term. Having a roommate while needed ultimately made me $350,000 richer.

[LindaP777]

Very good advice, nextwife. I, too, would rather take on a roommate (or second job) to avoid losing my home and ruining my credit. House rules set in place and careful screening are 'a must'. OP, find out what 1 bedrooms rent for in the area and reduce that a bit and you should have your choice of roommates calling. You can use Craig's List, post pictures, but don't give them the address until you get a little background info from the prospective tenant.

[LoriDolan]

Thanks, everyone. Unfortunate as it may be, I am going with a deed-in-lieu of foreclosure. Some townhomes in my development have been reduced to $160s now, and I really have no shot.