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4 years ago
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How bad is a deed in lieu of foreclosure?

Our home has been listed over 1 year (2 realtors and once by owner) and has only 1 showing in the past 10 months. The home was fairly priced for our location but couldn't compete with short sales & foreclosures. We lowered 10k = nothing. We are now on short sale which lowered it to 185k from original 249k. Still nothing!!! We are carrying rent in SC (relocated due to job) and mortgage (1900/month in MI) + 2 househould expenses. Aside from living apart which is awful how long can we keep carrying these dual expenses? We spent our entire life building good credit and now we are considering deed in lieu of foreclosure which we don't know much about and even just walking away from our home. This will kill our credit I suppose but can't really determine how badly. Google reading shows that deed in lieu has very little effect all the way to same as foreclosure effect.

We can't buy a home in SC since we own one already but if we walk away we won't be able to buy I am sure BUT having only rent we can be debt free in 2-3 years after walking away from our home. that must be some positive impacts right? 140-160k annual salary and no debt? Will that help with a foreclosure/deed in lieu on our report?

Any thoughts, advice or experience with this would be appreciated.
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Travis Waller
Travis Waller
Real Estate Professional
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3 years ago
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From a credit worthiness standpoint, short sales, deed in lieu, then a foreclosure, in this order are best to worst case for you credit.

If you successfully complete a short sale, you can repurchase another home in approximately 2 years. For a deed in lieu, 5 years. For a foreclosures, 7-10 years.

I list a ton of short sales in my area and if you are looking for a short sale specialist in your area to sell your home, please contact me.

Your home being listed for so long tells me that your previous realtors didn't have much experience in the distressed property market. Unfortunately, this is where we are. Most homes being sold are distressed sales. It's truly a buyers market and buyers always look for discounts.

The flip side of the coin is many Realtors don't know how to successfully close a short sale. Pricing is everything in this market and it's the listing agents(your realtors) job to convey to the bank that they are actually receiving what the market can actually bear. Just because the bank may want so much, doesn't necessarily mean they are going to receive what they want.

The typical timeframe of receiving a contract on your home and getting the approval from the bank to close is less than 60 days. If the realtors tells you it could take months, they don't know what they should be doing.

Call me so we can discuss more details on your home and get it sold and get you out of your financial situation.

Yes, your credit will be damaged for a short time with a successful short sale, but it's a heck of alot better than a deed in lieu or a foreclosure.

Travis Waller, Realtor
Certified Residential Specialist
RE/MAX Advantage Plus
201.755.6517 Direct
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3 years ago
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Are you in the West Michigan area?

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3 years ago
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The house is in West MI and it appears you are in NJ. Thanks for the information though and wish you were closer.
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Travis Waller
Travis Waller
Real Estate Professional
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3 years ago
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I have a strong referral network. I actually know two CRS' in the Saugatuck, MI area that I can reach out to. Do you mind if they contact you to help with the home? If so, email me your contact info to TravisCWaller@remax.net

Thanks and looking forward to making you a happy customer.

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Jon Griffith
Jon Griffith
Real Estate Professional
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4 years ago
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A deed in lieu IS a foreclosure. It's simply voluntary, but the idea is that you negotiate terms that prevent the lender from coming after you. Sometimes a lender won't even accept a deed in lieu, because they want the money, not the house. You'd be better off short selling. Now that you're in a short sale position, it should be as simple as properly marketing the property with regular price reductions until you receive an offer.

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4 years ago
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Thanks. I really thought that the drop from 249k to 185k would have the buyers or at least the lookers coming in droves but so far there was only 1 since the price drop and nobody other than that since it was listed. I guess it is hard to decide how long to carry the $2k month mortgage cost and keep our family apart. I just couldn't pass up a doubled salary.

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