What to do if your home unsold for more time

When your house won't sell: Walk away or sell too low?

The house is unsold after three years. Should the owner sell it super cheap or give it to the bank?

Q:I've had my house on the market for three years, starting with a regular real-estate agent and, lastly, talking briefly with one of those "we buy houses" people who seems a little shady. Should I sell to one of them, let the house go into foreclosure or keep dropping the price and hope someone takes it on the conventional market? I am getting desperate.

A: Sorry to hear of your protracted plight in real estate. First, while the "we buy houses — fast closing" people are typically legitimate businesses, they pay only rock-bottom dollar. For example, expect only about $60,000 or so on a $100,000 home these days with them. Ouch! You don't say how much equity you have in the house, but it is unlikely you will recoup any of it in such a scenario. Don't forget you'll need to get a big enough sum to pay off the existing mortgages and any liens against the house. Those "we-buys" tend to get money on very short-term notes from hard-money lenders who charge high interest rates and usually lend on the expected value of a house, post-repairs. So those investors will need to flip the property pretty quickly, often to another investor.

Instead of going that lowball route, you could sign a new listing agent to market the place as a "motivated seller" property, signing a short listing agreement while impressing on the agent that a quick turnaround is a high priority. You'll still face folks trying to steal a deal, but if you price the place right, you might at least get into a multiple-offer scenario where your low, low — but not giveaway — price is met or even exceeded. At present, you should be able to negotiate a commission that's a trifle lower than the standard 6 percent

Sadly, sometimes a foreclosure is the only viable option for many well-meaning sellers these days. But I would first urge you to contact your bank to work out a short sale, which means selling your house for less than the mortgage balance, or try making other arrangements. Realistically, though, short sales can take a long time and have high failure rates. Offering a deed in lieu of foreclosure to the lender is faster than a short sale and carries about the same possibility of you being pursued by the lender for the difference between the sale price and what you owe, known as a deficiency judgment. In a deed in lieu, you are contacting the bank and stating that you can't continue to make the payments and believe foreclosure is imminent. This at least saves the lender the expense and time of foreclosing.

You are in the same boat with a lot of folks these days. But don't give up, and don't give away the farm.