Any knowledgable real estate people on the board?

[deezdad]

Story is....back in 08 my mom sold her house she owned in Mass for 35 years and bought a house in Cleveland to be close with some family out there and basically start a new life. Since then things have changed, family has moved away and her neighborhood is going to crap. She's not happy and has had her house on the market for a year asking in the $100k range with no bites. Similar homes in her area short- sell for like $10-20k these days, its clear she's not getting her money back but to this point has been too proud to seek alternatives ie short sale, bankruptcy etc...It's in her blood to work hard and honor her obligations, shes always done that! Her employer had to issue her a special access badge cuz the she has little to no finger prints to use what everyone else uses, finger print access, she worked them off & yes its possible.
It's now time for my 64 year old mom to put her pride aside and play pool the way that region likes it. Problem is she or I don't know where or how to begin a plan to get her out of there, so im starting here, seeking advice from those in the know-THANKS

 

[RobsIron]

3 options off the top of my head are not the most ethical, but will reduce the hit she takes on the home. First, the obvious is to walk away. Take the hit on her credit. Many banks are more forgiving on a foreclosure and she can build her credit back sooner than you think. Second, find a good FHA appraiser and try to get a good # on the property and then get a reverse mortgage. She can then stay or walk. Lastly, get a good renter in there to help offset her expenses and then wait until the market comes back in that area.

 

[deezdad]

Thanks Rob, your thoughts will be discussed but 99.9% sure renting it out or staying is not an option. Appreciate your reply..

 

[RobsIron]

I understand how proud your Mom is. I own quite a bit of real estate and held on to all of it when interest rates started to rise in Sept 2005 and then the Sept 2008 crash didn't help. I lost hundreds of thousands of dollars (out of pocket not speculated value) in order to maintain my honor. That's is good for your core, but most would say it is bad business. Fortunately, I was able to withstand the beating and many good opportunities have come my way. As I said, I appreciate your Mom's position, but every situation is different. She should think about her health and happiness over honoring some bank that would burn her in a second if given the chance.

 

[deezdad]

I understand how proud your Mom is. I own quite a bit of real estate and held on to all of it when interest rates started to rise in Sept 2005 and then the Sept 2008 crash didn't help. I lost hundreds of thousands of dollars (out of pocket not speculated value) in order to maintain my honor. That's is good for your core, but most would say it is bad business. Fortunately, I was able to withstand the beating and many good opportunities have come my way. As I said, I appreciate your Mom's position, but every situation is different. She should think about her health and happiness over honoring some bank that would burn her in a second if given the chance.

Exactly!

 

[Pronto]

How about a match?

 

[6cylboost]

dang pronto. You have a dark side. I like your thinking out of the box though

 

[deezdad]

How about a match?

it may get to that point lol

 

[79transam]

damn good luck.. but seeing those house prices I need to get out of ny lol. 600k for a house you need a complete gut or knock down and rebuild

 

[Pronto]

dang pronto. You have a dark side. I like your thinking out of the box though

My boss owns rental properties. He thought he was a wheeler dealer slum lord and going to make millions. 2 went to bankruptcy and he hates the other 2 he owns. They are huge drains on his time and patience dealing with low life deadbeats. He wouldn't mind losing them in a fire.

I can't imagine the real estate in Cleveland ever coming "back".

 

[chadly]

I've bought many houses through the short sale process. In order for a bank to even consider a short sale the home has to be behind on payments. I'm not suggesting your mother get behind but rather pointing out the fact. One home I was in the process of buying the owners owed roughly $100k. I ordered for the BPO and it came back in the $58'sK range. When the home owner saw that I was going to buy the house at 15% or so under the BPO they wanted the option to buy the home at that price. I did not get involved with what they did nor do I know what took place but they did get the bank to refinance them and keep the home. They contacted me a year or so later as they were in foreclosure again.

 

[TurboTnZ06]

Even if you get a short sale, the bank may not issue the 1099c or whatever its called, so the IRS may declare the difference in forgiven debt to sale price as income and she'll be taxed on that difference. Contact a local real estate attorney in that area. Have her also contact her original real estate agent, or one that will take on a short sale deal, and have them and the attorney work it so it'll sell and it'll be non taxed after the sale. Have to be behind on payments and have to write hardship letters explaining the situation to the bank. My real estate agent says they'll have to call the bank weekly at a minimum to keep the short sale process going...

 

[chadly]

Each state may be different. I met with my accountant and attorney when I first started doing short sales. The 1099 was concern for me as I did not want to make money off someone who was already in financial distress that would then be forced with another debt. I've never had a person forced with any tax consequence. Now in Iowa second mortgages or liens can and often will sue for the losses they may suffer. One thing for sure is short sales are a lot of bs for the person doing it. Not so much for the seller. Many banks are awful to deal with and tons of time can be spent and everything done right and still have unsuccessful transaction. while the discounts are often great I quit doing them a few years ago as there are easier ways to acquire properties.

 

[TRICKSIXPA]

Well questions are what did she pay for the house? What does she owe on the house? Is the house in market shape or badly need of repairs? Short sales are basically a foreclosure with a catchy name!! IMO not worth doing. Find out what houses in the area are selling for for comparable value. Decisions can be easier if you know what your going to lose if you make them!! Don't file Bankruptcy unless she's going to be living with someone. Unless she has a job she will have to file for Chp 7 which is a liquidating process. If I'm not mistaken somewhere in the past few years if you had your house foreclosed on or short sales there is a IRS form to be filled out with a 1099C so you can report the cancellation of debt due to a foreclosure. That will get you off the hook for the taxes as long as there is no capital gains due to foreclosure. IRS publications 4681 & 544 pull them up and read.


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[deezdad]

Well questions are what did she pay for the house? What does she owe on the house? Is the house in market shape or badly need of repairs? Short sales are basically a foreclosure with a catchy name!! IMO not worth doing. Find out what houses in the area are selling for for comparable value. Decisions can be easier if you know what your going to lose if you make them!! Don't file Bankruptcy unless she's going to be living with someone. Unless she has a job she will have to file for Chp 7 which is a liquidating process. If I'm not mistaken somewhere in the past few years if you had your house foreclosed on or short sales there is a IRS form to be filled out with a 1099C so you can report the cancellation of debt due to a foreclosure. That will get you off the hook for the taxes as long as there is no capital gains due to foreclosure. IRS publications 4681 & 544 pull them up and read.


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Paid 135k owes 100k she maintanes it diligently the neighborhood doesn't deserve her, houses sell in the 10k-20k range maybe up to 30-40 depending on a lot. She wants to relocate to az. where staying with family is certainly an option. She's extremely proud and independent but is gonna have to put some of that aside to get the hell out of the Cleve. Her income is steady but low but is not behind at this point, its just that she couldn't absorb the hit of selling for so low. This reply and the others have been extremely helpful, thank you all...

 

[TRICKSIXPA]

Bankruptcy would force the issue but she would have to show that she is insolvent and not just late on mortgage payments but show financially that she has no money. You just can't transfer assets to relatives that would be a crime just as throwing a match on the house. Could apply to sell the house to the city. Maybe public housing would want to buy it??


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[deezdad]

The crazy lady dolled the thing up best she could hung in there n got 114k for it . Looking for moving companies to get her to Pheonix, know of any good companies? Thank you all very much.

 

[Gene Van Horn]

Good for her! Now if only the steelers would play better.