Moving is expensive. You have to pack up your home, dispose of things you don’t want anymore and hire a moving van.
Then, you have to pay for your new home. Renting a new home often requires a security deposit and first and last month’s rent.
If you have pets, a disability that requires certain accommodations, other household members with specific needs, or a location that you have to live in – finding and paying for a new place can be a nightmare.
At this point, you might just want to throw your hands up, leave everything behind and just walk away. You will hear some people say that you should just “walk away” from a home that is underwater or distressed. This sounds easy enough, but in reality, even if you’re comfortable letting the bank foreclose on you, “walking away” and renting a new place is not always as cheap and easy as it sounds.
I recently helped a client who knew she wanted to get out of her house but couldn’t afford moving costs. Her home had massive repair issues and she was extremely underwater. The electricity wasn’t working and she was ready to say goodbye to the home. She had no equity in the property and was ready to walk away. The only problem was – she didn’t have funds to help her with moving expenses. While she had a regular job, the bulk expenses associated with moving were preventing her from resolving her housing issue – she didn’t know how she’d pay to move.
When she came to me, it was clear she needed to do a short sale with her bank – Mr. Cooper (formerly Nationstar). A short sale accomplished a few things for her. It helped her resolve her debt issue with the bank – she sold the home for less than the home was worth and got the bank to agree in writing to waive the remaining amount of debt she owed. Most importantly though – Mr. Cooper agreed to pay her $3,000 in relocation funds to help with moving expenses. Following the closing of her short sale, Mr. Cooper cut her a check for $3,000. She stayed with a friend for one week following her closing, cashed her check and then was able to cover the security deposit and rent payment for her new home. Within four months, she was out of a bad situation with a deteriorating home and into an affordable rental.
So, even though some of the big government-backed relocation incentive programs have ended, some specific investors are still approving relocation incentives as part of a short sale negotiation.
If you are someone who would benefit from a relocation incentive:
- Make sure that you (or whomever is negotiating your short sale) include a request for a relocation incentive on the preliminary settlement statement that accompanies your short sale package.
- Ask for a high amount ($5,000 – $10,000) to leave room to negotiate.
- Make sure you continue living in the property until closing. If you move out of the home prior to the closing of the short sale, you may not get approved for a relocation incentive.
If you are ready to exit your underwater property and want to discuss whether a relocation incentive may be on the table for you, call me at 425-654-1674.