How to Sell a House When It's Worth Less Than the Mortgage

DWAN BENT-TWYFORD, “The Queen of Short Sales,” is the country’s leading authority on buying and selling “underwater” properties. She runs popular boot camps for real estate investors and is a sought-after public speaker on real estate investing. She is also the coauthor of Short-Sale Pre-Foreclosure Investing, from Wiley. BILL TWYFORD is a successful real estate investor, speaker, author, motivator, and teacher.

Downloadable Forms vii

Introduction ix

How Did So Many of Us End Up with Underwater Houses ix

What Happened to Real Estate Prices? x

Easy Money Home Loans xiii

When Lending Guidelines

Loosened—The Beginning of Our Current Problems xvii

Meet the Authors xix

Acknowledgments xxii

Part I

Options For “Underwater” Property Owners

Chapter 1 Is Your Home Worth Less Than the Mortgage? 3

How to Estimate the Value of Your Home 4

What Banks Want 6

Introduction to a Short Sale 7

Other Options for Underwater Homeowners 8

Chapter 2 What Happens If I Walk Away from My Property? 11

Stop Making Payments, Move Out, Let the Bank Foreclose 11

Deed in Lieu of Foreclosure 13

How to Protect Yourself 14

Your Losses Don’t Stop with Foreclosure 15

Mortgage Forgiveness Debt Relief Act 19

Chapter 3 If You Are in Financial Trouble, Deal with Your Emotions First! 25

The Typical Mindset of People in Distress 25

How It Feels to Be Trapped 31

Putting Your Pride Aside—The First Step to a New Life 34

How to Get Free from Your Property and Get on with Your Life 36

Chapter 4 Aggressive First Steps to Get the Highest Possible Price 39

Try to Sell the Property Yourself before Calling a Real Estate Agent 39

Using a Real Estate Agent 41

What If My House Is Underwater but the Payments Aren’t Late? 44

Chapter 5 Try a Loan Modification: Negotiating a Lower Monthly

Payment with Your Lender 47

Loan Modification 48

Forbearance Agreement 52

Chapter 6 Government Programs and Mortgage Relief Organizations 57

Mortgage Relief 58

Financial Relief 61

Part II

Short Sales: How To Sell A House When It’s Worth Less Than You Owe

Chapter 7 The Short Sale Solution 65

When a Short Sale Won’t Work 67

Short Sale Requirements 68

Short Sales for Investment Properties 71

How to Approach Your Bank 73

How to Ace the Broker’s Price Opinion 75

Chapter 8 How to Put Together Your Own Short Sale Package 79

Requirements for Financially Distressed Homeowners 81

Requirements for Solvent Homeowners 84

Putting the Package Together 85

Sample Contract for Sale and Purchase 85

Sample Comparable Sales 86

Sample Pictures of Disrepair 86

Sample Net Sheet 87

Sample Investor Letter 87

Sample Repair List 87

Making Sure Your Package Is Complete 88

Sample Short Sale Package 89

Chapter 9 How to Work with an Ethical Investor to Short Sale a Property 105

What Should an Investor Do for Me? 106

How to Negotiate with Investors 117

Chapter 10 Closing Any Deal—What You Need to Get in Writing 123

Get Everything in Writing from the Bank, Investor, or Real Estate Agent 124

What to Expect from the Closing Agent 126

Check Your Credit after the Deal Is Done 128

Part III

Other Options And Issues For Underwater Homeowners

Chapter 11 If Nothing Else Works, Consider

Bankruptcy 133

Bankruptcy—How to Buy Time 135

Will Bankruptcy Help or Hurt My Credit? 138

Chapter 12 Temporarily Renting Your Home 143

Section 8 Program 160

Chapter 13 Don’t Go Broke Trying to Save Your House 165

Don’t Go Broke 166

Living with Negative Cash Flow 168

Living with the Emotional Stress 172

Chapter 14 How to Rebuild Your Credit 175

Credit Repair Services 176

Steps to Rebuilding Your Credit 181

Formula for Paying Off Credit Cards 183

Chapter 15 Is There Life after Financial Disaster? 187

How Do I Avoid Disaster Again? 188

Will I Be Able to Invest Again? 190

Sharing Your Experience with Other

Distressed Homeowners 192

Consider Becoming a Real Estate Investor 193

Index 195