Tuesday, April 29, 2008

Options for the House

Background: three years ago, my wife and I combined a first and second mortgage into "one good mortgage", maxing out the equity in our house. We were put on a two year ARM with a huge interest rate blow up after two years, but the mortgage agency was going to refinance us after those two years. Last year, about this time (April), my in-laws asked us to consider selling our house and taking over theirs. The plan is to either build a second floor or finish the basement or something, and have four generations living under the same roof like the "good old days." During that timeframe, the housing bubble "burst", and the company we refinanced with, Decision One Mortgage, disappeared off the face of the earth. Seriously, I called the cell phone number of the broker I worked with and it had become an emergency number for a forest service in San Bernadino (I knew he moved out here from California.)

As we had just refinanced, our equity was maxed out (we planned to stay in the house for a while), so we listed with BuyOwner to avoid the 6% realtor's commission, allowing us to price the house lower. It took us a couple of months to get the house ready to go on the market (lots of clutter), but we finally went up around the end of June. Then very little happened. The ARM ran out and our mortgage interest blew up to astronomical proportions, but we couldn't refinance as we were on the market and the closing costs would eat up any equity we might have had.

In February, we listed with a realtor in the hopes that the MLS listing would generate more exposure in time for spring. We had two showings and that was it. We were growing frustrated. I had a discussion with my realtor the other day in which she released us from our listing agreement and referred us to a mortgage broker to refinance. Although more than a week ago I became very frustrated and posted two entries on this blog (thus deleted), I believe that we parted business amicably.

Now we're at the decision point. We're out of our listing agreement, but still listed with BuyOwner for all the good that's done us. We could stay with BuyOwner, we could list with another realtor, or we could just refinance and apologize to my in-laws for failing. I'm not so sure that would be best for their situation, which I will leave vague.

With BuyOwner, we could drop our price to rock bottom, to just what we need to cover the closing costs in the hopes that would bring in buyers. We've had our price as low as we could get anyway with just a little room for negotiation (like, drop the price $500 to appear willing to cooperate), but we could go the last few bucks to "rock bottom."

We could list with another realtor. We're not sure that ours gave us the best possible exposure. She didn't believe that open houses brought in buyers, and only held one in the entire two months we were listed with her. All we could see is that she put us on MLS and waited for calls to come in, which is what we'd done with BuyOwner anyway. We weren't even on her web page, but to be fair that appeared to be externally operated. I also discovered last week while we were working out a communications issue that led to those two deleted posts I mentioned, that her expertise is in short sales. She did recommend a short sale, but I need my credit for the mortgage and construction on my in-laws' house. My credit could also have a negative effect on my job, so I'm not going to screw with my credit. Perhaps a little bit of pride is involved as well. To paraphrase Forest Gump: "Momma always tole me to make mah payments on time." Seriously, my parents gave me a really crappy financial education that has taken years to overcome, but my mom ALWAYS stressed making payments on time every time.

We've been seeing the "We buy houses, any situation" signs for a while. My wife wanted to call and check them out. We have an appointment on Thursday to see if that could be an option. Considering that we used up the equity in the refinance three years ago, we've known all along that we'd be happy to get out for what we owe and walk away even. Our realtor said she liked that mentality. She said some of her clients sign a listing agreement then spend $100,000 before the first showing, then get mad when offers come in much lower.

Technorati Tags: Realtors,short sale,selling a house,we buy houses

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