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Short Sale Experience
Hi there! I was wondering if anyone had any experience doing a short sale on your home? We bought at the peak of the market and now our home is listing for at least 100k less then what we bought for and everyone in our community is doing short sales so forget trying to do the right thing. How do you list at a "fair" price (still taking a huge hit) and willing to hand over every penny we've ever saved to get out of this mess, when everyone is just giving away their homes? We met with a realtor last week and he suggested the short sale route. I've talked to several friends that are in the process and it seems like everyone is a little unsure of what exactly the outcome is.
So from any personal experience if you dont mind sharing, did your credit take a huge hit and were you able to get a loan for a new mortgage after having done a SS? We are in a small 1 bedroom townhouse and expecting baby #2 and have completely outgrown the space here. Hoping to eventually buy property and build but I can't see any bank approving and giving a construction loan when there is a short sale on our history. Could always go the rent route and find someone to rent but we would still have to pay a nice part of the mortgage. Any advice, experience, tips would be great!! Thanks 
Re: Short Sale Experience
I sold my home as a short-sale. It was an emotionally draining and otherwise difficult experience that I wouldn't wish on anyone. As PP said, you need a qualifying reason. I was laid off at my job and unable to get another. I actually remained current on my mortgage for over a year after the lay-off and completely used up all savings in the process.
If you have a qualifying reason (job loss, possibly divorce, possibly a job-related move, etc) then you meet with a Real Estate Broker, as you have done. The Broker determines the price of the home based on comps (other sales in the area). My Broker set our price very low. There are many hoops to jump through with the bank to get them to agree to the short-sale. These include producing all of your financial documents. I think it would be very difficult to obtain a short-sale without documented financial need.
Anyway, the bank did agree but they wanted $15K more than the listed price of the home that our Realtor set. The Buyer agreed. The bank also made us pay several thousand dollars to settle the second loan and even so, they reported it as unpaid debt to the credit agencies. We had stellar credit to begin with, so it's not great now but credit scores really aren't the main issue. You simply can't buy another home for a minimum of 3 years after a SS (well possibly FHA after 2 years with 20% down, but as I mentioned we poured our entire savings into that house so that's unlikely for us). So right now, we're renting for almost double what it would cost to buy the house that we now live in.
Sorry about your home losing value. I know it's really difficult to watch your hard earned money going down the drain. I hope things work out for the best for you.