Want to sell but owe more than its worth

[HigherFico]

My husband and I want to sell our home but owe more than its worth...about $26,000 more. Any advice on how we can sell? I checked Zoloft for a zestimate we have now gotten an official appraiser. There are a few other homes in the neighborhood for sale but they have been on sale forever! What can we do?

[Anonymous]

I'm not an expert but maybe get a seperate loan for the 26k or higher if you can. Your payments/debt ratio on that loan vs income would have to be considered if you want to buy anther home in the future.

[StartingOver10]

It is  a good idea to engage an appraiser as you have done to determine market value when you are not sure. You could also get a general idea by having a Realtor give you a market analysis with sold comps in your immediate area so you know how far you are upside down.

If your actual market value comes in lower than the amount you owe on your mortgage(s) then you have a couple of options:  1) bring cash to closing to pay off the mortgage and other costs to sell or 2) offer your home as a short sale.

In a short sale the lender would have to approve the sale since they would be picking up the seller closing costs (typically Realtor commissions, transfer fees, title fees and whatever is customary in your area).  The lender would also accept a short payoff, but only if they approve the buyer and the price. If you decide to go in this direction, you won't be able to buy anything and finance it for 3 years (if the new mortgage is FHA) and for a min of 4 years if it is conventional.

If you bring cash to the closing naturally you wouldn't have that waiting period because the bank's loan would be paid off in full at time of closing. Some people have the resources to bring cash to closing and others don't.

[HighGoals]

We don't ave the resources to pay off anything and I know that no one would buy. The homes in the on our block and the next block haven't sold in over year. The one on our block had been on the market for almost two years. So I'm guessing that a shirt sale wouldn't work?

We plan on renting for a while or seeing if we are able to get a home with little to no money down with just me in the loan. My husband is on the loan for this home by himself. We really need more space to expand our family and we have really grown out if this home.
We just want this home gone lol

[StartingOver10]

Well, a short sale is where the amount owed on the mortgage (and any other liens on the property) is higher than market value.

If homes are not selling in your neighborhood, it really boils down to two main reasons:  1) the price is too high for the condition of the home or 2) it's a declining neighborhood. In a declining neighborhood the price keeps moving downward until people come in and begin revitalization or the neighborhood. Option 1 is much easier to work with than option 2. It also is much more common than option 2.

The houses that you mention that have been on the market for one or two years could very well be priced too high for their current condition. It would be extremely unusual that there would be no one interested in your home at any price. To give an extreme example - I'm sure someone would buy it for $1000.  But the bank wouldn't accept it. You would have to find the short sale price that works for the bank and for the buyer. Not as easy as it sounds. Get an experienced short sale agent out to discuss your options. You may decide to stay awhile. By the way, the size of the short sale is immaterial to your husband. It takes the same amount of time to recover financially.

One other option is a forelosure, also a severe hit to your husband's credit. And, if you are in a community property state, a f/c or short sale would hurt your chances too.

How bad is the size problem with your place now? Can you work with it until the market comes back in your neighborhood? Remember, your neighborhood is much larger than one or two blocks. Speak to a good agent (one with experience - not a nooby) to get an idea of the entire neighborhood, not just your block and the next block over.