My home is worth what?... Should I walk, and give it back to the bank?

For the past few weeks, I have been receiving phone calls from distraught homeowners.....

It goes like this " Hi Tere, do you have a minute? (they feel they are imposing) I respond, sure what is going on. ( I haven't heard from these friends, colleagues, church members or plain acquaintances for ever. It is usually me making the Hello calls.)

Well, I just "received my home owners tax notice", "Look at my property values on Zillow", "got the appraisal back ,as I am trying to refinance".......

"my house is dropping in price; can you verify that this is true?"

I am happy to do a CMA, and every time I am hoping that this will be the one very stable neighborhood where houses come up for sale very seldom, or people have been there for so long that they own their houses in full.

Unfortunately, none of these friends are in these situation. (Are there any?) I have checked from $100,000 to $800,000 and the news are the same for all of us. I say " I am sorry to tell you that I have to agree with what you have been told" Most of the sales on these neighborhoods have been foreclosures or short sales. In many cases the houses are in mint condition, I have personally visited many with my buyers, and because it is the bank or the homeowner selling in distress prices are 20 to 40% of the value of the property a year ago.

The phone call a couple of nights ago was especially hard, as I sold this family this house in October 2006. In all cases I try to explain to them that it is not jus them, we are all in the same boat. I, also bought a home in October of 2006, and the news for me aren't any better.

A few of these phone calls go to what I really want to talk about next. I tell them that the best, easiest thing to do is to stay put and bear the storm with everybody else. What most of them are thinking is that they want to sell before prices go any lower; well, " do you have money to bring to the table at closing to pay the difference of what it is owed to the bank?"

"No"

Well, then selling is the worst thing that you can do.

Because now their house is worth less than when they bought it, refinancing is not an option. I have been calling lenders to see if there is a loop hole somewhere, but we all know that although the banks took in $800 billion, the money is no where to be found.

Here are a few suggestions that I have gathered and come up with.

•- Accept the fact that your house is worth less than when you bought it. Believe it or not, it does make it easier for me.

•- Sit tight and continue to make your payments.

•- Add on to your home, if you are in need of more space.

•- If you are being relocated, rent it.

I have called other agents, and several lenders and here are some of their suggestions:

•- Sell it and come up with the difference at the closing table.

•- Do a short sale and get rid of the house.

•- Let it go in to foreclosure.

•- Stay put, do nothing.

Do I think any of these makes sense? Only the last suggestion.

All homeowners in this situation must take the following in to consideration.

- Buying at the top of the market and selling at the bottom is the worst thing that you can do with any investment. Yes, your home is an investment. (In my humble opinion)

- A short sale or a foreclosure will appear on your credit. If, by any chance you are laid off and need to go look for a job in the near future, the company you are applying to get a job at will be doing a credit check.

- If you have a job where you need security clearance (something very common in my local area) you will be fired or demoted. I don't know the ins and outs of it, but I know that your career will be terribly affected.

- From now on, you will be paying higher interest rates on any new loans: cars, credit cards, trips etc...

Finally, feel free to call me and ask me to do a CMA ( Comparable market analysis), I will be so happy to find out that you just won the lottery, and the price in your home has not dropped...

PS: Agents, if you have any better responses to these phone calls, I would love to hear them.