Next option(s) after house is not selling on market?

Question

Let us say I have a house which is pretty old and is not in the best neighborhood. I put in on the market, and for one reason or another, even after dropping the price substantially I cannot get it to sell.

What are the available options for me to get rid of the house?

Are there any federal/city government (I am in the U.S.) programs which would buy the house from me?

Update: Let me just give you more details about the situation. This house that I am talking about is where my parents currently live. It is all paid out, and there is no mortgage on it. We decided to put that house on sale recently, but could not convince my mom that the starting price should be roughly around the same as the other houses around. She set the price about 25% higher than the houses on that street. The reason I am posting this is because I might see a situation where only after 6 - 8 months (after multiple reductions of the price) is our price going to be similar to the other houses that are selling on the same street, and after that period, people will be suspicious because the house will be on the market for that long.

Answer 1

EDIT: new ideas based on the full story.

Lower the Price More

I wouldn't worry about the price history. While it is certainly true that some buyers might try to leverage that information against you, the bottom line is the price is the price. Both the buyer and the seller have to agree.

If the initial listing was too high, then lower the price. If that isn't low enough, then readjust down. I see no harm in moving the price down over time repeatedly. In fact, I thin that is a good tactic to getting the most for the house. If you happen to have the luxury of time, then keep lowering that price until it sells. Don't fret how that behavior appears.

You can lower the price as often as you like until it sells. I am not a real estate agent, and I am a terrible negotiator, but I would lower the price every quarter until it sells. You can't go down to fast (a buyer might wait you out) and you can't wait to long as you stated. Also, if you house is priced inline with the neighborhood, you can at least get offers and negotiate.

Buy asking for such a premium (25%) folks might not even make an offer. You simply need to decide what is more important, the selling price or the time frame in getting it sold.

Consider holding it for a while

If you house doesn't sell because the market doesn't support your price, then consider keeping it as a rental. You can do it yourself, or if you are not interested in that (large) amount of work, then hire a rental management company to do it for a fee.

Renting a home is hard work and requires attention to detail, a good amount of your time and much labor. If you just need to wait a couple of years before selling, renting it can be a good option to cover your costs while you wait for the market to reach you.

You should get advice on how to handle the money, how to rent it, how to deal with renters, and the the laws are in your jurisdiction.

Rent it out to a trusted friend or family member for a steal of a deal. They save money, and you get the luxury of time waiting for the sale.

Owner Finance / Lease Option

With a real estate lawyer you hire, get a contract for a lease option or owner finance deal on the house. Sometimes you can expand the market of people looking to buy your house. If you have a willing purchaser will bad credit, you can be doing them a favor and solving your own issue. It costs money and you will make less on the sale, but it could be better than nothing.

Take heed, there is a reason some people cannot get a traditional loan on their own. Before you extend your good name or credit think about it. It is another hassle for sure.

Donate It

This won't help if you have to pay off a mortgage, but you could donate it. This is another tricky deal that you really need to speak with a lawyer who specialize in charitable giving. There are tax benefits, but I would make any kind of a deal where tax deductions are the only benefit.

Short Sale of Deed in Lieu of Foreclosure

This is common enough these days. If you are unable to pay for the mortgage, it benefits you and the bank to get into a short sale arrangement. They bank gets probably more money than if they have to foreclose (and they save money on legal fees) and you can get rid of the obligation.

You will do a deed in lieu or the short sale depending on how the market it and what the house can be sold for. You and the bank will have to work it out.

This will ruin for a credit for a while, and you will not likely qualify to get a new mortgage for at least a few years.

Let the Bank Foreclose

You can stop paying your mortgage, tell the bank and they will foreclose. This is going to ruin your credit for a long time as well as disqualify you from mortgages in the near future. Don't do this. If you are planning a foreclosure, take the time to contact your bank and arrange a short sale or a deed in lieu. There isn't really any excuse to go into foreclosure if you are having problems. Talk to the bank and work out a deal.