A Taste Of Reality - RV-Dreams Community Forum

2fortheroad · RV-Dreams Family Member

A Taste Of Reality

The Bear II · RV-Dreams Family Member

Sorry about the house, this economy is tough, I'm seeing more and more businesses going out as well. It's not getting better.

My Brother and his wife just bought a house, the one they really wanted was priced too high and the owner wouldn't come down. They've been in their new house for about 2 months and yesterday they told me the house that was too high, the price was lowered to about $9000 more than they paid for their second choice house.

It was nearly $100K more (than the house they ended up buying) when they first looked at it 5 months ago. They would have bought it if the price had been at the current lowered price.

Happytrails · RV-Dreams Family Member

Ron & Sharon,
You guys hang in there. Five months is really not so long in this market. We had our house on the market- minus the winter months - for close to 2 1/2 years. It is a slow market and the economy is tough so hang in there it WILL sell. We also had to lower our price but felt it was worth it to us for making this happen. Our call came kinda out of the blue but it did come, we got our asking price and closed last August. Dreams do come true....believe that.

Have fun on your trip to Alaska!! That is our dream trip and hope to make it in a few years.

rjenkins · RV-Dreams Family Member

Many of us are in the same situation as far as selling goes. Whether it will continue to go down and by how much depends on the market area you are in. I am in South Florida, heavily hit by the real estate boom. I have lost 90% of the equity I had in my house. I am at a point now, that if I sell at the appraised price, I barely make out but here is the biggest problem. The appraised price is mostly based on recent sales. However, in my neighborhood there are 14, almost identical homes currently in foreclosure. So you know the appraised price is only a dream because once the foreclosed homes start being sold, it will be considerably less than the price the house is appraised at, thus a new appraised price, much lower than the previous appraised price!
I still can't sell because of my job and I won't have the opportunity to sell until first part of next year. I am sure that all my equity will be wiped out by then. I am thinking about selling now and renting and listing the house for 10K below the appraised house in order to compete with the foreclosures but the foreclosures selling over the past year in my neighborhood sold for much less than 10K of the neighborhood appraised houses so I think I am stuck.
What is interesting is that a lot of the foreclosures that are taking place are not because higher interest rates kicked in and the person can not afford it. It is because owners are upside down in the mortgage and have decided the only equity they will salvage from their home is to not pay the mortgage, save the money and leave 15-24 months down the road when they are finally kicked out by the banks. It's a sad state of affair when people do this but as a nation it has been encouraged with the bailouts of the banks that gave out loans like this, repackaged them and resold them as another form of investment.
A lot of people now say, why should I be the last one holding the bag and the banks come out smelling like a rose. Although ethically it goes against everything I was ever taught, I can't say that I blame them.

Luvglass · RV-Dreams Family Member

Here's an interesting article from today's NYT on people starting to walk away form mortgages that are upside down.

http://www.nytimes.com/2010/06/01/business/01nopay.html?ref=us

Sad, but true.

Racerguy · RV-Dreams Family Member

Our situation was a little different because our property was paid off years ago but we were on the market 8 months with maybe 1 showing every two weeks.Although the golf course was across the street there was also a large Grocery Chain/shopping center planned for the other corner from ours.Traffic was going to be a major problem and people were using that to insult me with their offers.We ended up having to do something we swore we would never do.That was taking a sizable cash down payment and self financing for a young widow that wanted it and had a lucritive business left to her by her recently deceased Husband.Several reasons kept her from getting a bank loan at this time even though she is financially stable(we checked).
I'm not suggesting you take our path but just saying keep your head up and think outside the box.In todays economy nothing works the way it used to.

2fortheroad · RV-Dreams Family Member

Thanks to all for your support, and encouragement. Didn't mean to sound as though we were having a Pity Party, just blowing off some steam.

LakeConroePenny · RV-Dreams Family Member

Racerguy wrote:
We ended up having to do something we swore we would never do.That was taking a sizable cash down payment and self financing for a young widow that wanted it and had a lucritive business left to her by her recently deceased Husband.Several reasons kept her from getting a bank loan at this time even though she is financially stable(we checked).

That can be the best way to sell it, Racerguy.
You make a lot more money on the house, especially over the first few years of the mortgage. When it gets paid down enough that you are not making much interest, then you shop around and sell the morgage for the best price.
Make sure you have a good legal contract where they cannot linger if they need to be evicted. If they default, you get your house back, you have had the down payment, all the payments they have made, and you start all over.
Also you are in a better tax situation than if you had all cash up front.
Usually, when they are buying it they will take better care of it than a renter would.
Happy Trails, Penny, TX

Racerguy · RV-Dreams Family Member

Penny,Good point to any one contemplating doing the same.We hired a prominant Real Estate Attorney to write the contract for us.He was well worth the fee because he included things we didn't even think about. We were also fortunate the buyer was very open with her financial information so we didn't have to dig for it.

-- Edited by Racerguy on Wednesday 2nd of June 2010 08:56:58 AM

Dreamers · RV-Dreams Family Member

Well, we're in the same boat. I know how discouraging it is for you and all the others. Our house went on the market March 15th and we have had two showings. We did get an offer from the first showing and he was willing to come close to our asking price but we only built in to the sales price our realtors fee above what we paid for the house 2 1/2 years ago and he wanted us to pay all the closing costs. We kept countering until we really dropped another $6,000 but he would not budge on the closing closts. On top of that, his realtor kept claiming that our house would not appraise for the anticipated selling price and what would we do then - the proposed buyer wanted the $8,000 new buyer credit and it was fixing to end.
Our tax appraisal is the same thing we are asking for the house. So, now we're hearing that the tax appraisal is far more than the house will appraise for a mortgage. Something is wrong here! We finally agreed to part ways and he went 3 doors down and bought my neighbors house that was forsale by owner. She had more wiggle room than we did. He wanted on the lake (which we live on) and was willing to do whatever accept pay his closing costs. Our house was cheaper, but, if your house wouldn't appraise for enough to cover them, then what can you do. Her house had 100 more sq ft (which he didn't care about - just the lake) but she could get a higher appraisal and she only had to pay his realtor commission - half what we have to pay.

The 2nd looker, we never heard from. Their realtor never had the courtesy to even call our realtor with comments.

It's a depressing market out there.

Racerguy · RV-Dreams Family Member

Dreamers,I know it's hard to do but hang in there. 3 months in this economy is a short time.We were 8 months in and looking grim when all the sudden what I described in my previous post happened seemingly overnight.I understand not everyone has the wiggle room we had but keep the faith.You hang in there too 2fortheroad.We're all pulling for you.

2fortheroad · RV-Dreams Family Member

Fortunately we are currently in a position that we do not have to sell. Yes it would make life easier not to have the burden and the extra expense of a S&B. We are going to leave it on the market but truthfully, I kind of hope we do not get an offer for a month or so, we are really looking forward to the Alaska trip and really don't want to have to cut it short. I know the sell can be handled electronically but unfortunately we haven't been very diligent in getting rid of the STUFF. That will be our goal when we return. And then hopefully we will go South for the winter.

Sushidog · RV-Dreams Family Member

Take courage 2forthe road, it could be a lot worse. We've had our house listed twice by different agents for about 2 years and haven't got a single offer, though we dropped our asking price well below even its property tax value. Unfortunately, 6 months ago my wife lost her job and has had no income since. We can't meet all our financial obligations on my income alone, as after the damages we suffered in Katrina, I had to take out a second mortgage and the Parish increased my property taxes 1,000%. After going through all our savings, we were forced to go see a bankruptcy attorney last week. In my state, the bank could forclose on my home appraised at over $200,000, sell it at auction for $50,000 (or buy it themselves for this amount if they receive no other bids) and then go after the borrower (me) for the balance owed on the $150,000 mortgages, appraisal fees, auction fees, attorney fees, etc.. So without bankrupcy protection, I could end up owing more after they forclosed on my home than I do now, as Louisiana allows recourse.

I just hope the court lets me keep my little Aliner as it's all we will have to live in after they throw us out. We still owe about $3,500 on it, though we probably have a couple grand in equity in it that the court may want. We wanted to go full-time anyway, but not in a 6.5 ft x 12 ft. tin tent! I guess it still beats sleeping under an overpass. :) We found that we can live in a campground for $500/month including utilities and wi-fi, while even a cheap rental house or apartment goes for $900-$1,200/month + utilities, internet, etc. According to the attorney, the good news is that we'll get to stay in our home till around Christmas without paying the mortgage and will get to keep 75% of the money we save during this time. Of course some of this will be used to pay the attorney, but at least we won't be facing a big legal bill afterwards. I never thought I'd ever have to go down the bankruptcy road, but who knows what the future will hold for any of us.

I hope you have better luck than me and your house sells soon!

Chip

-- Edited by Sushidog on Monday 7th of June 2010 02:36:30 PM

azrving · RV-Dreams Family Member

Hey Sushidog,

I hope things turn around soon for both of you. smile

We have lost all of the equity in our home and although we are not unable to make our payments, we have considered walking away from the house given the condition of the housing market here in AZ. Like a lot of people we had most of our money invested in real estate (our home). Bank of America holds the note on our home and when we inquired about a re-fi to lower our interest rate 2% they said we would have to be behind on our payments at least 3 months to take advantage of the "Obama Plan" which would ruin our good credit rating, or do a short sale (they even recommended a person to handle this for us

), or we could just walk away! Our bank told us this!! We have never been late on our house payment and they still wouldn't modify/adjust/re-fi our mortgage and we have no other debt.

We too have considered walking away and realizing our full-timing dream a little sooner than planned. It really is hard to make that mortgage payment every month knowing that the house isn't worth what we paid for it 3 years ago (and we put 100,000 of our equity from our old house into this one). We are very fortunate that all of our other possessions are paid for and can be disposed of to help offset our losses on the home.

The link that Fred posted makes a lot of sense.

http://www.nytimes.com/2010/06/01/business/01nopay.html?ref=us

Sushidog · RV-Dreams Family Member

It's sad that people are compromising their character and milking the system, however many feel forced to do it, having been dealt with dishonestly by the banks. I wouldn't have declared bankruptcy if my lender, Citi Mortgage, hadn't used deceptive lending tactics. Last year, I was in the process of getting a no-cost refi at 2% less (I now have a 5.75%, 30 yr fixed.) with another lender (and roll my 12% second mortgage into the package), however Citi Mortgage stepped in promising me an even lower rate to keep my business. They then strategically reneged on the deal at the last minute (after the other refi offer expired.) I also talked to them about a loan modification before I was late on a payment, but they refused. They are certainly within their legal rights to refuse a loan modification, however they should only be allowed to seize my home, which is the sole collateral for the loan, not to buy my home for pennies on the dollar and go after future earnings for years to come, to satisfy a bogus, inflated debt.

Chip