Wednesday, January 27, 2010

Walk Away and Forget It

I had a friend forward me a rather disturbing op ed about intentional defaults. The gist of the article was that the financial industry has committed malfeasance by placing people into mortgages that they could not afford. In that the financial institutions have stuck it to us then we should, in turn, stick it to them. We do that by burning our mortgages, sort of like we burned our draft cards back in the 60's to protest the war. The machine is evil therefore we implode it from within by walking away from our mortgages. The beast then has no traction and is destroyed. Honestly, I did read this. I will try and place a link to the article at the end of this post.

I have had clients that I was tempted to coach to that very end. I tried to negotiate short sales with the people holding their mortgages to no avail. The financial institutions were unbending. So what does it hurt if you simply disappear in the middle of the night just as people have run out on the rent in the same fashion? I just cannot, as a licensed professional, summon that anti-fiduciary counsel for anyone.

It is just hard for a 64 year old conservative like myself to give into this logic. Noone held a gun to your head when you signed that mortgage promissory note. You wanted that house really badly did you not? This whole process involves great effort to establish your likelihood to repay. You made a super-informed decision to sign. You cannot blame it on some sort of genetic malfunction within your self. You made a choice. Do your best to live with it.

It sort of falls into the fat gene world. " I am fat because I am genetically ordered in that direction.". Baloney I am fat because I shove more calories down my pie hole than I burn off. I make choices about that. "I got caught having innumerable affairs because I am addicted to sex." Buffalo chips ! You are a creep who does not live your marriage commitments and got caught. You made choices to that end. Pity you? I probably secretly admire you but you got caught Tiger and now you need to pay the piper." I look at pornography because I am just engineered to do so." Bull feathers you like doing it. Every time you make the decision to purchase that video. True it does cause an endorphin rush but face it man, you are a pervert. Get some help.

We live in a society that is married to the concept that we act like we do because we just cannot help ourselves. It is always someone elses fault. My behaviour is uncontrollable because my mommy did not breast feed me. My dad never took me fishing. My uncle was a peeping tom. I was sexually molested as a 3 month old. I remember it vividly. Hockey pucks !!!

People we have an obligation to live by a code of ethics. We repay our mortgages and other obligations simply because it is the right thing to do. If you get run over by a train and can no longer make a living then that is one thing. But to just walk away from something we agreed to do is just flat out wrong. Period.

There are a lot of people hurting in this stale economy that has descended upon us. It may surprise you that the larger percentage of them do not pick up a gun and go out and rob a bank than do. Why not? Because they were raised to be better people than that. The same reason applies to why we just don't walk away. We do all we can to meet our obligation.

Thursday, January 21, 2010

It's important to get it right

I had a client back about a year ago contact me about doing a Broker's Price Opinion (BPO) on their home in NE Tallahassee. They were good friends so I spent about 3 hours rendering the opinion. Banks pay brokers $100 for drive by BPO's. I did the heavy lifting for my friend and really drilled down on it. I felt that I had pegged it pretty close.

I advised them that there was about 30 months of inventory in their subdivision. I pointed out properties that had been on the market more than a year and had to reduce their price $100k or more and were still sitting. A home is sort of like a can of peaches that sits on the shelf too long. Once it sits too long people begin to wonder what is wrong with that property. I advised them to go to market at $429k and they would sell it pretty quickly.

They thanked me and put the For Sale By Owner sign out and priced the house at $510K. After all what did I know. I merely make my living in this business. The house sat and sat. Along about mid-June I got a call from them. Would I please take the listing? I asked what the price was going to be. They said $479k. I told them that was $50k too high. They were unmoved. I told them thanks but no thanks. My wife was a bit embarrassed that I did not take the listing. I explained to her that I had a decision to make. I could take the listing at that price and lose their friendship when it failed to sell. Also anyone and everyone who drove by my sign would question why that broker could not sell that house. He must not be very good. Or I could risk making them mad and losing thier friendship right at the front end by refusing to take it. I chose the latter course. They chose a very successful and effective broker to market the home. It went to market at $479k.

I happened to think of them a few hours ago and I checked on the status of thier listing. It has been almost a year since they spoke to me. They recently reduced the house to $429k and will most likely sell it at that price. ( Update: The house sold and closed 2/26/10 for $392k)

The absolute most important thing you do when you move your property onto the market is set the price. Our market is very, very price sensitive. Get it right from the beginning. Listen to the expert and make it happen. That is what we do to earn our commission check.

Visit me on the web at