Sellers- deed in lieu of foreclosure?

12bailey18 · August 2011

Have any sellers been through a Deed in Lieu of foreclosure? Our house has been on the market a year. DH has military orders to relocate so we are applying for one this week. Short sale is out of the question since we have to have an offer first and have had none, despite lowering. Just looking for personal experiences if you have done one or have insight on them....TIA!

m+j · August 2011

These are very common where I live, as are short sales. If there's any way you can swing a short sale I'd recommend that over a deed in lieu only because can actually buy again in a shorter time if you went short sale vs. deed in lieu. The impact to your credit is worst with a foreclosure and best with a short sale, with a deed in lieu falling in the middle. Also, with a short sale the bank will almost always waive the deficiency as part of the short sale process (assuming you make that a condition to the agreement to short sell). With a deed in lieu, the bank can typically still come after you for the deficiency. Have you contacted an attorney who specializes in short sales or even a realtor? I've read your posts and find it odd that you are giving up on short selling your home already, unless of course you've done more than simply listing it yourself or listing with a realtor who has no short sale experience. My good friend handles short sales and deed in lieus all the time and he thinks a short sale is a MUCH better bet than a deed in lieu.

12bailey18 · August 2011

Thanks for the info.The only reason we haven't thought more about a short sale is because our bank won't approve one until we have an offer. And that's where the problem lies, we can't get an offer. Since the market slows down then practically shuts down for the winter here we were afraid a short sale would be a much longer process. You gave me a lot of helpful information, though and we will definitely talk to our realtor more before we completely cancel short selling out. Thanks again. Oh and as far as buying again, DH is military so we will be living in base housing the next 10-12 years. This was just a fluke duty station we were at and decided to buy...learned our lesson! LOL

+Krystee+ · August 2011

I would drop your price substantially and hope for an offer that you can present to the bank for a short sale. If they accept it, you'll have avoided a deed in lieu. If they reject it, you can go forwarded with the deed in lieu.

Have you tried renting it out?

m+j · August 2011

If your realtor doesn't have a significant amount of experience handling short sales that could be the problem. I agree with pp, you need to lower your price to get an offer, then present whatever offer you get to the bank. Worst case scenario they say no and you move forward with a deed in lieu. My friend who is a realtor in our area says it takes at least 9 months for the bank to get to the point of even discussing a deed in lieu since they are so backed up.

mrs.kapow · September 2011

I'm coming in way late here and with not a TON to offer, but my cousin was in a similar situation and chose to rent the house at his last station rather than attempt a sale in this market.

Their experience showed us it is possible and it's the route we're going right now. Rent is up even though house sales are down. So many people have had to short sale or foreclose and therefore can't buy again for 2 years, so they are willing to sign longer leases until they can buy again. We just got an offer for a two year lease in that same situation. It will cover our mortgage and the tax shelter should end up covering additional costs we incur (insurance, etc.) through the year.

With being in base housing for the near future, I would say this situation could be appealing for you.

12bailey18 · September 2011

mrs.kapow:

I'm coming in way late here and with not a TON to offer, but my cousin was in a similar situation and chose to rent the house at his last station rather than attempt a sale in this market.

Their experience showed us it is possible and it's the route we're going right now. Rent is up even though house sales are down. So many people have had to short sale or foreclose and therefore can't buy again for 2 years, so they are willing to sign longer leases until they can buy again. We just got an offer for a two year lease in that same situation. It will cover our mortgage and the tax shelter should end up covering additional costs we incur (insurance, etc.) through the year.

With being in base housing for the near future, I would say this situation could be appealing for you.

Thank you so much for the input! We are actually starting to entertain the idea of renting it out for awhile and trying again down the road to sell it.

Sellers- deed in lieu of foreclosure?

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