Should I sell my condo or keep it?

[marlon]

According to appraisal from bank last week, my condo in Redmond costs at least $300K. I owe $284K.

Including condo Home Owner Association dues, I pay total of $2,300/month. End of the year tax rebates makes total payment at $2,150/month, still too high. I make $5,500 net income. Wife is sick, pregnant, can't work. According to real state agent they believe I canb sell and break even on my condo.

I have been fighting bank for loan modification program (Obama plan) that has been a nightmare for 90 days and no results. I am assuming at this point I will not be able to get a meaninful modification on my loan.

All that said, do you think I should keep my condo or sell and start renting again?

[Markor]

Everything I've read says that loan modifications happen only when you're delinquent 90+ days on the loan. Makes sense; if you're paying on time, they have no incentive to help you.

It would take a lot of luck to sell at a non-realistic price these days. Look at the MLS to see what you'd really need to price at, to have a good chance to sell. (5-10% below recently-sold comps.) If too low, you may want to play hardball with your bank.

A friend who has a house in Vegas, of all places, recently got a loan mod to interest-only for 3 years, which is covered by rent for now. I think it's a decent deal, since a lot can happen in that time, and he can always walk away and accept the consequences of that. Principal reductions may become common by then.

[ira s]

If your real estate agent knows what he/she is talking about, and you can indeed break even on your condo, you might be better off renting. You could probably rent an identical condo for 1200-1500, and buy another house/condo in another year or two when prices have fallen further.

[jillayne]

Marlon if 5500 is your gross monthly income your payment to income ratio is 41% what happens when you add in all your other monthly expenses?

Questions: Is wife's illness short term or long term? Long term problems = long term solutions like selling or loan modification. Short term problems = short term solutions.
If she'll be back on her feet again and working soon, then you may not qualify for a full loan mod. Instead your lender may offer you a temporary solution such as a repayment plan for a few missed monthly payments.

Check around to see what condos are renting for within your own complex. Not enough to cover your monthly payment?

Then maybe it IS time to sell.

Check to see what kind of an apartment or house or condo you could rent on your income alone (not counting wife's income) if you know she will be out of the workforce for a long time.

You could end up renting a comparable or even nicer place for less than what you are paying now, and if/when wife goes back to work, you can save the difference or use it to pay off your other consumer debt.

You are super lucky that you're not underwater. If you wait until next year, the value of the condo may fall even further and then you'll be looking at the horror that is called The Short Sale.

Keep us posted.

[marlon]

In my case, I lost my six figure job in February. Then immediately I submitted the modification for the Obama plan. It is under review now and the only reason it was not approved to get the 2% 40 years according to the bank is because the stupid negotiator stated that I had a high debt-to-income ratio based on my income money from unemployment insurance. Banks are dragging their feet and they usually do not give a damn.

So very recently I have strong prospect of new job, but at the same time, wife is sick in medium to long term.

So let's assume:

1) I get no meaningful loan modification.
2) My real state knows what he is talking about and I can sell and break even.
3) I already checked rental:It is possible to rent a 3-bedroom house around here for $1,400-$1,500/month without a problem.
4) You can count that my monthly income will be $5,500/month net.
5) I likely will move from thje Seattle area in 3 years from now. In fact, I would move out of the country in 3 years from now.
6) I am tired of spending this much money on mortgage given the risk house prices will fall. I'd rather take this money and invest overseas.

So some folks still believe house prices may fall further around here?

[ira s]

"So some folks still believe house prices may fall further around here?"

I'd say 80%+ of the posters here ( including myself) believe that prices will fall further here. Where we diverge is by how much. I feel pretty strongly that we'll easily see at least an additional 10% drop, but possibly as much as another 20%. But Sniglet and Scotsman and some others here maintain that we will see much more significant declines than I predict.

[Markor]

If you can't sell for enough in a short time, stop paying until the bank either gives you a loan mod or kicks you out. Forget about Obama's plan; that's just an incentive to the banks. A loan mod is still voluntary for them, so as long as you're paying they'll avoid the issue. WA is a non-recourse state (bank can't come after you for their loss on the loan), and (currently, due to temp law change) you don't even have to pay taxes on the debt you abandoned. Of course, get confirmation on that. I've read that the FICA credit-scoring formula will likely be changed to reduce the impact of a foreclosure.

[WestSideBilly]

[jillayne]

Marlon,

Here is the most important interview question to ask your real estate agent, to see if this is the best agent to select for a short sale listing:

How many short sales have you successfully closed?

If your agent has not successfully closed at least 5 or more short sales then you will want to strongly consider interviewing other agents who are more experienced. Why let them practice with your home?

You may also want to consider hiring your own legal counsel NOW. You're going to need to eventually, in order to get some help reviewing the final paperwork from the lender. If your agent knows nothing about short sales and you really want to use him/her, then negotiate his/her commission DOWN and then take the remaning money you would have spent on the agent and use it to pay an attorney.

I agree with the others that prices will continue to drop. Selling now is prudent, especially knowing your wife is out of the job market for the forseeable future.

Best of luck. Keep us posted!

[Scotsman]

Are you serious about leaving the country in three years? If so, you need to do something now, as there will not be any recovery in prices within that time frame.

The bank won't talk to you about anything if your payments are current. It's time to play hardball. Stop making your payments with the only goal being to force them into allowing/facilitating a short sale. If they will expedite a short sale, offer to resume some reduced level of payments. If they won't play, let them foreclose. In all honesty it won't matter to you or your credit rating anyway. Save the money, take care of your wife and marriage. Don't take it personally. In a non-recourse state like Washington, it's just business. The bank doesn't care about anything but their money. Everyone is playing by the rules, even though it may seem harsh. Just my opinion, not legal advice.