so heres the deal, bought this place a few years back when rates were super low, like below 3%, felt like a genius back then lol. fast forward to now, i got some life stuff changing and need to move but the house is… not in great shape. roof leaks in a couple spots, hvac is ancient, and i found out theres some cast iron pipe issues under the slab that a plumber said could be 20k+ to fix
i called my lender to ask about options cause im not exactly sitting on a pile of cash for repairs. they said i could do a cash out refi but with todays rates im looking at almost double what i pay now, thats insane. plus then im taking on more debt for a house i dont even wanna stay in
my other thought was just selling as-is and being done with it but i owe like 80% of what its worth with the mortgage balance, so after realtor commissions id probably walk away with nothing or even owe money at closing? thats terrifying tbh
for people who been through this – what did you actually do? did you find a lender willing to work with you or did you just cut your losses and sell to an investor? also anyone know if a short sale is even worth considering or does that trash your credit too bad
im not trying to make a profit at this point i just wanna get out without going bankrupt lol. any advice appreciated cause im losing sleep over this
kinda stuck with this house and dont know what to do anymore
byu/Luann1497 inpersonalfinance
Posted by Luann1497
13 Comments
How many of the issues are MUST DOs?
Get a quote for the absolute minimum work that must be done.
Then go speak to a realtor and get local comps.
Now compare the possible sale $$ to the repair $$.
Then decide on your next steps.
If the purchase price net of fees, taxes, and commissions is less than the payoff for the mortgage, then it would be a short sale. The lender would have to approve it. You would walk away with nothing but you would not owe any money at closing nor would you owe anything to the lender after closing.
The lender is likely to approve it if the house is in as rough a shape as you say, since the whole process of foreclosure, securing the house after foreclosure, and selling it themself is generally much more expensive for no additional payoff. They do not actually want the house. They would much rather have the cash.
If you can buy your new place before the short sale, then the impact on your credit would be less important.
Congrats, you got a deal for the last couple years.
You didn’t build up a ton of equity so it’s nothing more than that. It didn’t set you up for life and it’s fine to walk away.
How much did you put down and what would you get out if you sold?
Its possible that you arent actually out money even if you net less on sale than your down payment. It depends on what the cost of housing would have been otherwise.
What I did was learn how to fix things myself. When my house needed a roof I learned to do roofing; iit’s actually easy, as long as the pitch isn’t steep. When I needed plumbing work I bought a Pex A tool and figured it out, did it all myself. When the floor needed refinished, I bought a sander and refinished it. Etc…I have no idea how anyone who owns a house afford to pay contractors myself, but I just do the work myself. Plenty of contractors got into the work because they didn’t finish high school and needed a job that didn’t take a whole lot of education. Not that working with your hands doesn’t require knowledge, but it’s not rocket science.
I should add – I have a house that I was renting out until last year, and don’t want at all. The renter moved out and left a mess and I’ve been spending my free time for months now fixing and refinishing various things. It’s about done now. Of course I’d rather be doing other things, but if I paid contractors I’d first have to borrow money, then I wouldn’t make a dime on the eventual sale. Like a lot of things in life, you do what you have to do.
It’s not as common as it was during the pandemic boom, but they’re are investors who will buy distressed properties if they can get a deal. I would spend some time on r/realestateinvesting and maybe even post some info about the house there. You never know, maybe someone will bite!
Sounds like you’ve got low rate, big repairs, and not much equity. That leaves three plausible options~
First option is to sell as‑is, this is probably the fastest way out. You likely won’t make anything, but you usually won’t have to bring cash unless you’re truly underwater.
Second option is to list it as‑is, you might be able to get a bit more out of it, but it’s slower and buyers will likely be nitpicky and point out all the issues.
Last option I can think of is a short sale, but that’s only if the house is worth less than what you owe. Your credit might tank a bit, but its better than foreclosure.
A cash‑out refi at today’s rates in my opinion really isn’t worth it.
What you could do is get a couple investor offers and compare them to what a realtor thinks you can get as‑is. That should make your cleanest exit path clear
How do you not have equity? Is the condition a lot worse than when you bought it for? Have you looked into getting a HELOC for the repairs?
I hate to be that guy, kind of, but this is what banks mean when they say ‘just because you can afford rent doesn’t mean you can afford a mortgage’. Buying a house is an absolute trap for at least 10 years, minimum and by then you might have enough equity to repair and sell and break even. Banks don’t care that life happens and things change. I don’t know that there’s a good out for you that doesn’t involve walking away and losing anything you have already put into the place.
What’s stopping you from selling without a realtor?
We did this twice and saved about 100k total on commissions.
Roof leaks are a big problem though. Water damage is scary and can also cascade REAL QUICK.
Remedy stuff that’s a short term and high potential cost in consequences.
Sound alike you got a good deal on a house that needed work. And you didn’t do the work
Not flaming you. But I hope you learned some lessons.
Free lunche in life are far and few in between.
Fix the roof cheaply and rent it out. Do the math. You have a responsibility to owning a property and walking away from this will likely backfire on you big time. You have issues with property that’s fixable. What you need is income to alleviate what you’re paying for. Selling the property is only the easy way out that will make you lose more. Hold and take your time to invest and rent it out.
There probably isn’t iron pipe under a slab. It could happen but unlikely. Get another estimate. That plumber doesn’t want to work
Rent out a room.
Use that income to fix the roof.
Get a second opinion about the pipes.
Or you can pick up a side hustle to pay for repairs because like you are aware, the interest rates are nuts and you’ll get screwed if you try to sell now with a distressed property.