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  1. #1
    Join Date
    Feb 2012
    Posts
    3

    Default Trading Negative Equity in a Home Purchase/Trade

    My question involves real estate located in the State of: AZ

    Hi, thanks in advance for any help you can provide.

    In 2008 my parents purchased a home for me on thier HELOC. Puchase price and owed amount were 130000.
    It was agreed I would pay directly to the HELOC and there would be no additional charges other than the fees and interest on the loan from the bank.
    I made every payment directly to the loan, and have paper trail of the payments. From Nov 08' to Oct 10' I payed aggressive extra principal to the loan, over 52k worth (a little more than 40% of the total loan.)
    In Nov 10' we agreed to purchase the home the HELOC was drawn on, under new terms (Amortized 30 year mortgage for 195000 at 4%) and that they would carry the loan until my credit enabled me to purchase it from them. They took "ownership" of the first home and decided to rent it out.
    I started making paymets to the new agreement in Nov 10'
    We are still under this agreement.

    The issue I am having (and I know I might be basically screwed, since nothing is in my name and it's basically my word against theirs) is that at 195000 I am paying what seems to be current market value for the home (Zillow says 180k).
    The home is nice, has been upgraded substantially, but certainly not the 52k worth they are saying was negative equity that both homes accrued and canceled each other out.
    The first home currently Zillows for about 100k.
    Basically it feels like we paid 40% of thier HELOC for them and have nothing at all to show for it.
    We didn't get appraisals in Nov 10', in retrospect I feel we definetly should have.

    Is there any fair way to go about this for both of us?
    Thanks again for any advice or help.

  2. #2
    Join Date
    Oct 2009
    Posts
    158

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    To clarify --

    Parents' own a home. (ParentsHome)
    Parents' took out a loan on their home to buy you a home. (YourHome)

    You (we?) later moved into ParentsHome, which was refinanced by Parents, with you paying their mortgage loan, until such time that you can directly purchase ParentsHome.

    Parents then took control of YourHome -- which isn't in your name? So, Parents own two homes, and you've been basically paying rent.

    Is all this correct?

    Is there a legal questioin?


    As far as market values are concerned:

    Never go by computer-generated estimates of home values. Always contact a real estate professional in your area, as they have first-hand experience on what the market values are in your area.

  3. #3
    Join Date
    Feb 2012
    Posts
    3

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    All homes are in Parents name (3 total).
    I (we referring to my spouse and I) moved into ParentsHome when Parents purchased another home, home has not been refinanced, still has the equity line on it.
    Technically, I guess it could be viewed as rent, more like rent to own because of a credit situation I was waiting to have fall off of my credit. If it was rnt I would not have paid the excess principal to the loan that I did.
    The legal question is, how would a home trade normally be handled? They are trying to take the equity that I paid for Yourhome and give me nothing for it.
    I guess the overall question is, how should this deal have been done to protect both parties interest?

  4. #4
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    It is rent. You are not developing equity, the owners are. If they want to give you some credit for the money you paid or any accrued equity, that's up to them (and would be considered a gift).

  5. #5
    Join Date
    Feb 2012
    Posts
    3

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    I completely understand what you are saying, does a written agreement between the 2 of us change any part of that, or is it still completely up to them to decide any "gift" amount.

  6. #6
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    It might, it might not. Do you have any such written agreement? You said previously it was a "your word against theres" sort of thing. Nothing much matters in real estate transactions unless it is written.

  7. #7
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    Suck up an explain the same numbers to them, you did to us. Hope they care. Zillow is usually close, however, not always accurate.

  8. #8
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    You should have outlined an agreement specifying specific dollar amounts based on amounts paid. Instead, you chose to agree to whatever they said and pay, expecting they would be generous in the end.

  9. #9
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Trading Negative Equity in a Home Purchase/Trade

    It depends on what the "agreement" says.

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