Expert: Dick Dennis - 6/22/2006

Question
Unfortunately I put a home on the market at the exact time buyers became scarce.  My second home has been on the market for 6 months without even one offer.  The list price was $274,900, but has been lowered to $249,900.  I am $259,000 invested into the home.  I know I will take a loss. There are thousands of homes on the market (many new ones like mine) in the area.  I can't afford to make two mortgage payments anymore.  What advice can you give me?  Foreclosure? I've NEVER had any
debt before and always pay my bills on time.  My credit is excellent. I have no idea what is involved with foreclosure.  Any advice? I'm losing sleep over this investment and am getting desperate for a solution.  Any help you can give would be greatly appreciated.

Answer
I wish I had a remedy for you, Liz, other than you should have had the $249,900 price six months ago. But you didn't know .  .  .  and either did you real estate agent.

You didn't tell me in what state the property is located. Foreclosures are different in each state. But you might want to go to your lender and ask them for a "short pay." It's when you sell the property for less than your loan and you ask the lender to accept that and you do get nothing out of it. While it is not as bad as a foreclosure, it will reflect on your credit. The lender may not accept a short pay because you are not in default yet. But tell them you may certainly be pretty soon and then they will have the property added to their inventory of foreclosured homes.

You also might try, or have your agent do it, an ad in the paper offering the property at a loss. There are vultures out there who will only buy property when they know the seller is over a barrel .  .  .  or they think so.

Be aware that a short pay may give you a tax obligation with the IRS. Consult with your tax expert.

I do wish you well.

Dick Dennis