Urgent! Your Input Needed!

By
Real Estate Agent with RE/MAX Haven - Northeast Ohio Real Estate Specialist

I have a lovely family that needs to move into a larger home.They would like a property where they can raise chickens!

No problem, right? Let's go, great bargains available and rates are down! They have great credit and a very good job, too!

Unfortunately, they own a home now that they have been very faithful paying down, but the market has been unfaithful swallowing all their hard earned equity, and we cannot sell their home without creating a loss.

They can't add on to have the space they need, because they will overbuild the neighborhood.

They can't get a renter to solve the problem, because they won't be able to get a new mortgage since the first mortgage will be a debt and ruin their ratios. If they do get a renter, it will be two years before the property is considered an investment property.

They really need to move asap. The family is growing and the current square footage is postage stampish...

I have run out of ideas: lease option, rent theirs and they rent another, etc. These choices do not seem like good alternatives.

I told them I would ask my brilliant friends on AR - so what do you think?

Dawn Maloney, REALTORĀ®, ABR, with RE/MAX Commitment.

Serving Hudson and Northeast Ohio since 2003, Call 330-990-4236.

www.DawnSold.com

Your Referrals Are Treated With Skilled Care & Appreciation!


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Dawn Maloney, REALTOR®, Member of The Institute for Luxury Home Marketing
RE/MAX Haven Realty

Best Listings from Dawn Maloney, REMAX Haven Realty    Direct:  (330) 990-4236         Email: dawn@dawnsold.com

"Distinguished by Service" Helping home buyers and sellers in Summit, Portage, Stark, Medina, Wayne, Lake, Geauga and Cuyahoga Counties since 2003. Dawn Maloney, REALTOR® | RE/MAX HAVEN| (330) 990-4236 | All content ©2006-2014 by Dawn Maloney, REALTOR® unless otherwise noted.

Disclaimer: Information contained in this post is deemed reliable on the date of publication, but it is not guaranteed and it is subject to change without notice.

 

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Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Yvette and Dennis, Thank you for the kinds words! I'm doing everything I can to help them get more space. The current house is just too small - it was really best for them with one child!

Jane, We are definitely keeping the lease idea alive, but no one is excited about it - of course!

Mark, I know, but I think we can come up with solution. We have great minds here, and many who have seen these cycles before and come up with ways to overcome a down market.

Mar 22, 2009 11:01 AM #29
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Judy, a trade might work - seems like trying to find a needle in a haystack with the matching part though. Thanks!

Jim, I will - this is why I like AR - we share the help!

Caren, Believe me - we are looking for a unique miracle!!! How is your daughter??

Rodgers Team, It's encouraging to hear from someone who got this done. I may call you and see how you worked out some of the finer points!

Mar 22, 2009 11:04 AM #30
Ambassador
602,146
Roland Woodworth
Keller Williams Realty - Clarksville, TN
Short Sale and Foreclosure Resource- SFR - Clarksv

Dawn: The current home should only count 75% of their payment against them if rented.. Unless this too has changed.

Mar 22, 2009 11:06 AM #31
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Roland, I don't know, but I will check. Thanks!!

Mar 22, 2009 11:13 AM #32
Ambassador
232,047
Lisa Udy
Platinum Real Estate Group - Logan, UT
Logan Utah Realtor

Hi Dawn,

I would see if you can do a house swap, or find someone who will do seller financing. This is a tough situation. Hope you can come up with a good solution. :)

-Lisa

Mar 22, 2009 11:14 AM #33
Rainmaker
331,047
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

... thinking ... back later ...

Mar 22, 2009 11:15 AM #34
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Lisa, Thanks! We will!

Paul, See you soon!

Mar 22, 2009 11:18 AM #35
Ambassador
972,846
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Dawn - If they did rent out the current home, I know that the rental income would defray some of the debt for their ratios.  It sounds like the square footage issue really has nohing to do with the chickens, right?  You mentioned that the current home was simply too small for their growing family.  They need/want to move regardless of the animals, correct?

They really have 3 realistic options, in my humble opinion:

  1. Stay.
  2. Rent it out.
  3. Take the loss.
Mar 22, 2009 01:04 PM #36
Anonymous
Anonymous
Anonymous

How about a straight lease purchase with a 2 year close?

Kathy B

Mar 22, 2009 01:31 PM #37
Rainmaker
312,527
Carol Culkin
Reece & Nichols - Leawood, KS
Overland Park

Dawn - Most of us are facing the same problems as you with our listings. I was going to make the same point Jason did - "if they did rent out the current home, the rental income would defray some of the debt for their ratios". I totally agree and think this is the best solution for most people. Check with a lender. I believe if your client can produce a lease, then the debt is forgiven because the income is taken into consideration.

Mar 22, 2009 01:48 PM #38
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Jason, Kathy and Carol, the rent/lease used to erase the debt, but that has changed. I think we are going to follow up with the USDA loan program and see if that will work, then see what we have to do with the current house to make it happen - whether that is 2 yr. lease purchase, or regular rental.

You guys are all great! The chicken farm is on the way!!!

Mar 22, 2009 01:59 PM #39
Rainer
54,190
Barbara Delaney
Park Place REALTORS, Inc. - Roanoke, VA

Dear Dawn,

I thought the chickens were the problem, too.

I'll check back, if I think of a solution!

Barbara

Mar 22, 2009 03:01 PM #40
Ambassador
1,568,393
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

I think seller carry, trade or maybe the USDA loan (if they qualify) are your best bets.  The rules did change a few months ago which allowed rental income to be counted in the first 2 years as a rental.  Now you have to wait two years before counting rental income.

Mar 22, 2009 05:14 PM #41
Rainmaker
211,957
Tim Bradford
American Midwest Mortgage - Cleveland, OH
NMLS 250013

Dawn,   Last week I check on the USDA Rural Home Program and at this time was told they did not have any funds.   They are waiting for additional Funding. 

In my opinion, trying to get a short sale from the current lender would be the avenue I would check out first.  I have seen some people arrange a short sale, without damaging their credit.  My read of your post is that they are underwater on the mortgage and any Lease option and or rental might be playing with fire. 

I can understand with the upcoming birth of a baby, that the current home may not meet their needs but am scratching my head about "Raising Chickens" 

Summarizing, I see two options;

Short Sale, then Rental or purchase with assistance of Family for Down Payment

Or

Stick it out. 

Mar 22, 2009 08:04 PM #42
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Barbara, thanks!

Christine, That's what my lenders have been saying too.

Tim, My client is a farm girl at heart, hence the desire for some chickens and a more rural way of life. I hope they get some funding asap - did you get any insight on when that might be?? This was a huge lifeline for me, so I'm not thrilled to hear that...

Mar 22, 2009 08:28 PM #43
Rainmaker
211,957
Tim Bradford
American Midwest Mortgage - Cleveland, OH
NMLS 250013

Dawn,

I will try to find out this week and drop you an email. 

I agree that the program is great and very under used.  For any realtors that would like a little more information about the program, Check this site  

Mar 22, 2009 08:59 PM #44
Rainmaker
189,092
League City, TX - Worrell Team, REALTORS, GRI, CNE
Bayou Properties Realty - League City, TX

Sounds like they may have to bite the bullet or wait.  Let us all know how you work this out...  Sorry I can't think of anything that hasn't been mentioned already.

Mar 22, 2009 11:11 PM #45
Rainmaker
359,159
Lori Mode
Keller Williams Realty - Elk Grove, CA Homes for Sale - Elk Grove, CA
Mode and Durham, Your Elk Grove Real Estate team

Dawn - unfortunately we all have clients like this at this time.  There is no easy answer for the millions of homeowners in this situation.  I wish there was.

Mar 22, 2009 11:47 PM #46
Rainmaker
211,957
Tim Bradford
American Midwest Mortgage - Cleveland, OH
NMLS 250013

Dawn,  I sent an email off last night and got the reply already.  They did recieve additional funds and also funds from the new Federal budget and believe they are now good the the year.  

Mar 23, 2009 06:33 AM #47
Rainmaker
1,675,930
Dorie Dillard
Coldwell Banker United Realtors - Austin, TX
Realtor-Canyon Creek- NW, Austin TX Homes For Sale

Dawn,

Unfortunately Lenn is right on this one!

Apr 08, 2009 07:07 AM #48
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Dawn Maloney

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