The Crash is truly coming...A first hand accont

[Big Mike 34]

My niece bought her home in 06...2500 Sq Ft. in Bothell...Price $408,000...In Bothell (location, location, location)

She and her husband put in Hardwood floors throughout the house including the Stairs...put in Granite counter tops in the kitchen and the 3 baths....built a walk through to a small bedroom to connect it to the master suite...(Can be used as a babies bedroom, For exercise equipment, an office or made into a fantastic huge closet), in the master bath they put in a multi headed shower ..and replaced all the tile work...

By year end 07 Realtors told them the house was worth $550,000....

The family has now been told by their doctor that they must move, The North West Allergies has all but crippled their young daughter ...The husband is looking for a Job...in another state....

NOW THE REAL ESTATE PART:

Thanks to The Governors State tax on the house ...and... real estate commissions to sell (approx $30,000) and with the declining market, This family is totally under water....They must move...At best they may be able to sell the house for $350,000 Which is what the exact same house sold for a block away. But they owe the bank $400,000 and then there is that $30,000 in costs to sell....

These are very responsible people...Their Mortgage payments are completely up to date they have never even been late with a payment...But they have to move to a different state, There is no alternatives for them but Foreclosure...

We are just looking at the tip of the iceberg....This housing market will crash and I really don't see how we can avoid it....Who would buy a house knowing it's value will go down in the next few months....

Other facts...They have talked to over a dozen Realtors and none will take the house ...They say it will cost them too much to carry it on their books...and there is no way they can sell it for the 400,000+ they need Their Realtor who sold them the house says he hasn't sold one in 6 months and is getting out of the business... They believe him to be a very good and experience Realtor who had been in the business for years.....They have spoken to a real estate attorney to find out how to end this disaster as honorably as possible He tells them he has taken on 100s of new clients as have all the attorneys he knows. He tells them there is little that can be done other then to put the house in spotless order take lots of pictures, Give their bank a copy of the Doctors letter...and hand them the keys.

It seems this situation is far worse then most of the public believes, The Realtors continue to put a happy face on it but I just don't see how the crash can be avoided.

[explorer]

Based upon what you have said, it sounds like a classic case of a short sale to me. They need to talk to their lender, NOT the Realtors. They can also still do it FSBO. No one says you HAVE to use a NAR sanctioned person. Put it up on Redfin?

The above does not necessarily make their situation better, but it seems like they are indeed not the only ones finding themselves in that situation.

[Big Mike 34]

Good suggestion...They are exploring with their attorney any and all options they may have....

[redmondjp]

[Alan]

They could also sell it to someone else for $600k. That person could take out a 100% LTV. The sellers could then rebate $100k back to the buyers. The buyers would then walk away.

They could also go to jail for fraud.

But it is another alternative.

[Big Mike 34]

Redmondip:

You sound like a banker....Yes they could do what you suggest....They could eat the $30,000 in taxes and selling fees...They are already eating about $30,000 in upgrades they paid for...and to sell would have to eat another $58,000 the difference between what they paid for the house and what they hope it can be sold for....

They made an investment....and the bank made an investment...they will lose and ultimately the bank will have a shot of making money because they can wait it out.

[Notabull]

[Alan]

[Notabull]

[perfectfire]

[Big Mike 34]

Notabull:

The situation does suck for them.....But ...On the other hand my daughter wants to buy a house....In a few months it wouldn't suck for her...If the crash that some of us expects actually happens....

The April Numbers were down ...and if the sales keep going down and the supply keeps going up...My little girl will get a very nice house at a great price....I think the 2005 price is where the bubble started and where the bottom will be for prices.

But ...It is all physiological...Our employment is still good...Boeing and Microsoft are doing well ....But fact is we are still over built, people are not buying and who can blame them, It is not good to try and catch the falling knife...

[mike2]

If they strip the house and stop making payments they'll be an excellent candidate for a short sale.

Nothing says "Im seriously going to walk" like refusing to pay the mortgage on a house needing a rehab.

Sux, but true.

[Rhonda P]

Can they rent out the Bothell property and rent their next home? (My apologies if someone all ready suggested this).

[rose-colored-coolaid]

[redmondjp]