Should We Pay Someone To Buy Our Home In A Down Market?
Answer: No. Your problems will just get worse.
In areas of the country where prices have declined, homeowners are sometimes offered the “opportunity” to “sell” their homes to an individual or company for a price equal to the mortgage balance. Sellers are expected to pay the buyer perhaps one percent of the mortgage amount.
The “buyer” then turns around and tries to either sell the property or to work out a so-called “short sale” with the lender. Since the property is worth less than the mortgage, this avenue is generally dead because the lender has little incentive to take a loss on the property.
Where does all this leave the owner? The owner paid perhaps one percent of the mortgage to the “buyer.” The owner no longer has title — that was assigned to the “buyer.” The owner still owes the full mortgage amount to the lender (title changed hands but not the obligation to repay the debt). If monthly payments are not made, the lender will foreclose. If the lender forecloses, the owner’s credit will be injured for years.
If market conditions allow a short sale, then have your attorney contact the lender directly. No third party need be involved.
Before signing anything from anyone, please carefully read any short sale offers with the assistance of an attorney. Your loan is with the lender, not a third party. If for some reason this idea remains appealing, before “selling” please call the consumer affairs division of your state attorney general‘s office to discuss this “opportunity.”
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