Several years ago, my wife and I had a hard time selling our home. Like millions of other Americans, we were having a hard time finding a buyer. We lived in a depressed real estate market, with many houses remaining on the market for months.
Our desire to sell our home was a choice – we weren’t forced to sell due to an impending PCS move. So we were lucky in that we didn’t have to sell our home by any set deadline. And even though we lost a lot of money when we finally sold our home, we had enough equity that we didn’t have to write a check to the mortgage company when we sold our home.
In short, it could have been much worse!
Options For Homeowners Who Can’t Sell Their Home
Sellers trying to move a house in today’s market may find themselves facing an uphill battle. The current market conditions have forced many homeowners to delay the sale of their home or consider measures they wouldn’t normally have entertained.
Some military members may be in a more difficult position if they are in the middle of PCS move and are forced to make quick decisions about their home.
Even if you aren’t able to sell your home quickly you may have other options. Here are some of the advantages and drawbacks associated with each.
Postpone sale
It can be difficult to sell your house in a buyers market when there is more inventory than buyers. If you have not received an offer or received offers that are much lower than you are willing to accept, you may want to consider staying in your home until the market becomes more favorable for sellers. By living in your home longer you can avoid accepting an offer that is much lower than the value of your home. The drawbacks to postponing a sale include missing the opportunity to purchase a new home in a buyers market or remaining in an area longer than you had originally wished.
Become a landlord
When living in your house longer is not an option, you may still postpone the sale of your home by becoming a landlord. There are many factors to consider before renting your property including the pros and cons of becoming a landlord. In renting your property you may be able to cover all or most of your mortgage payment making it possible to move to your next location without too much additional expense. The downside, of course, is the fact that you remain responsible for the mortgage and other expenses associated with home ownership. Should you find yourself without tenants or other issues tenant related, the advantages of renting your property may be outweighed by the drawbacks.
Short sale
For some homeowners, the sale of their home is not optional. If you are experiencing a financial hardship which requires the sale of your home to meet mortgage obligations, postponing the sale or renting will not solve your financial problems. In this case, you may need to speak to your lender about a short sale. If your lender is agreeable to this option, you would sell your home for less than the amount you owe on the property. With a short sale, you can avoid foreclosure and the negative consequences associated with that process. On the downside, you will have to find a new place to live and your credit may still be damaged by the short sale process.
Carry two mortgages
Some homeowners opt to take out a second mortgage to help during a financial hardship. Others may decide to move forward with their plans of relocating or buying another property and continue making their current mortgage payments instead of selling their home for a lower price than they consider fair. In either situation, it is very important to first determine how much mortgage you can afford and whether or not carrying two mortgages is a viable option financially.
Homeowner’s Assistance Program
Some military members are eligible for the Homeowners Assistance Program, which helps some military members who lost money due to a required PCS due to a BRAC or other qualified event. There are certain criteria which must be met in order to be eligible for this benefit.
Walk away from your mortgage
I don’t advocate walking away from your financial obligations if you have the means to meet them. However, doing a strategic default, or walking away from your mortgage, may become a necessity if you are facing bankruptcy or other financial hardships. This should only be regarded as the last option as it will destroy your credit and make it difficult to be approved for a loan for several years.
Summary – You May Have Options
Obviously, selling your home quickly is the best outcome. But that doesn’t always happen. Particularly in a tight economy or outside of the prime moving seasons (spring and summer).
If you are in the military, I recommend taking time before deciding to buy a home in your area. There are many pros and cons to living on base instead of buying a home. And in many cases it can be a good idea to rent first, then buy.
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