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.
http://www.housingwatch.com/2010/01/25/the-new-mortgage-revolution-walk-away/?icid=mainmaindl3link3http%3A%2F%2Fwww.housingwatch.com%2F2010%2F01%2F25%2Fthe-new-mortgage-revolution-walk-away%2F
Wednesday, January 27, 2010
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 http://elvass.com/
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 http://elvass.com/
Monday, December 14, 2009
Foreclosure a boon ?!?!
Well I suppose there is somebody somewhere who can look at an empty glass and see good things. This is an interesting perspective from an article int he WSJ.
Defaults could end up being a boon WASHINGTON – Dec. 14, 2009 – The increasing willingness to abandon homeownership in favor of renting could, in a counterintuitive way, be an important step in the economic recovery, some analysts say.The U.S. homeownership rate declined to 67.6 percent as of September, down from its peak of 69.2 percent in 2004. Much of the reason for this decline is the number of foreclosures.Deutsche Bank Securities expects 21 million U.S. households to be underwater by the end of 2010. If 20 percent of these homeowners default, losses to banks and investors could exceed $400 billion.While these losses are definitely bad for banks, relief from paying a mortgage makes more money available – an estimated $5 billion a month – for consumers to purchase other things.“It’s a stealth stimulus,” says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate. “The quicker these people shed their debts, the faster the economy is going to heal and move forward again.”Source: The Wall Street Journal, Mark Whitehouse (12/10/2009)
Defaults could end up being a boon WASHINGTON – Dec. 14, 2009 – The increasing willingness to abandon homeownership in favor of renting could, in a counterintuitive way, be an important step in the economic recovery, some analysts say.The U.S. homeownership rate declined to 67.6 percent as of September, down from its peak of 69.2 percent in 2004. Much of the reason for this decline is the number of foreclosures.Deutsche Bank Securities expects 21 million U.S. households to be underwater by the end of 2010. If 20 percent of these homeowners default, losses to banks and investors could exceed $400 billion.While these losses are definitely bad for banks, relief from paying a mortgage makes more money available – an estimated $5 billion a month – for consumers to purchase other things.“It’s a stealth stimulus,” says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate. “The quicker these people shed their debts, the faster the economy is going to heal and move forward again.”Source: The Wall Street Journal, Mark Whitehouse (12/10/2009)
Sunday, December 13, 2009
Superlatives...............Necessary?
I am a huge football fan. I took great note in the selection of this season's best football player. The Heisman trophy supposedly goes to the best football player in the country. As an Alabama fan I was delighted to see the award go to Mark Ingram. However, I have to say that I am not so sure that he is even the best player on the University of Alabama's football team itself. There are some players on that team that are equally superlative. Mike Johnson, the offensive left tackle; Javier Arenas the defensive corner back and return specialist; Rolando McClain the linebacker and certainly the defensive lineman Terence Cody.
There is something within all of us that drives us to recognize excellence. In your job place I would be willing to bet that you have some sort of award function that does such. Over a plate of institutional fish, chicken with vegetable medley some authority gets up to recognize the top spaghetti stretcher of the year. Everyone jumps up and cheers and has a shot of champagne to add to the delusion that this whole rigamerole has some sort of galactic relevance.
I used to be a little league baseball president and I always opposed the selection of All Star teams. That is a very political process where coaches, pressured by parents, offer up their own little player selected as the best they have to offer. We would assemble 15 or so of these little tykes and then go play in a District tournament If you were lucky perhaps you advanced to the next level. Then all the parents got the privilege of cancelling vacation plans and devoting unmeasurable effort to raise the money to make the trip for a week long tourney. If things worked out well perhaps you could come back as State champions, Regional champions maybe even NATIONAL CHAMPIONS.
I always wondered what was wrong with allowing the team with the best win/loss record to go and represent us at the next level. Forget all the political jockeying that goes into selecting the superlative. The problem with this process at all levels and in all slices of our lives is that the selection process is subjective and unfair. Whereas we place people on a stage and applaud them the damage is done to the people who never get to stand on a stage and be applauded. The process is then an overall damaging one because untold numbers of people come away believing "Man, am I a big loser. I was not chosen as shoe lace clipper of the year."
These sorts of things bother me and are best observed in the crowning of the Miss America pagaent. You are going to sit there and tell me that one dimpled, coiffured, curvaceous, made up, coached and staged female human being is superlative to the hundreds of thousands, even millions of beautiful women in this land of 300 million people? I just do not buy it. Yet millions of people sit and watch the process with breaths held in anticipation of just whom that person is going to be.
The least subjective process that looms before us presently is the crowning of America's best NCAA 1A football champion. Once again, I am an Alabama fan and I am delighted that my team is in a position to become the 2009 National Champion. How rotten is a process that builds some sort of computer formulae and then creates a secret society called the BCS schools. Some are in that circle many others are not. The BCS bowls adamantly oppose the unraveling of this fraternity. Why? Simply stated..........................millions of dollars of revenue. We now have the BCS championship game involving the teams ranked #1 and #2 by this onerous system. Then we have 35-40 meaningless bowl match-ups. At the end of all this we crown a mythical national champion. This has been the case for as long as I have been alive. It is no more relevant than the Miss America pagaent. The answer to all this? An NCAA Division 1A football playoff.
Sports Illustrated has this season posed a national playoff. At the end of this week's issue highlighting Alabama's winning the SEC Championship, they place a little column entitled Wouldn't It Be Fun? They take the top 16 BCS teams and seed them into a two bracket playoff. It goes: In the left bracket: #1 Alabama vs #16 Pitt; #8 Ohio State vs #9 Iowa; #5 Florida vs #12 Va. Tech; #4 Cincinnatti vs #13 LSU. In the right bracket we see: #2 Texas vs #15 Oregon State; #7 Oregon vs #10 Georgia Tech; #6 Boise State vs #11 Penn State; #3 TCU vs #14 BYU. Each winner plays another winner into 4 second round games then winners play in 2 semi-final games and then those winners play for the National Championship. The team that mans up and plays through all the brackets and is left standing is the National Champion. That is exactly the way they do it in Basketball. No one grouses about paper champions in that pursuit. The way we do it now produces a Superlative? I think not.
There is a supplement to the local newspaper that comes out in late summer. It is called Whose Who in Real Estate. How do you get your name into this superlative publication? It is really rather simple. You have to be a licensee of course. Then you have to send a couple hundred dollars to the newspaper and then your name will be amongst Whose Who in Real Estate. It does not matter if you even actually sell anything. What an exercise in smoke and mirrors.
If you need a Realtor ask around amongst your friends as to who they might have used to sell or buy. If they liked the practitioner then it is likely that you will like them. Practicing real estate is not anywhere near neurosurgery. The licensing process weeds out most of the unscrupulous. You cannot have a criminal record and get a license. You can lose that license through unscrupulous enough behaviour, however. Seek someone you know and trust and you will be in good hands.
There is something within all of us that drives us to recognize excellence. In your job place I would be willing to bet that you have some sort of award function that does such. Over a plate of institutional fish, chicken with vegetable medley some authority gets up to recognize the top spaghetti stretcher of the year. Everyone jumps up and cheers and has a shot of champagne to add to the delusion that this whole rigamerole has some sort of galactic relevance.
I used to be a little league baseball president and I always opposed the selection of All Star teams. That is a very political process where coaches, pressured by parents, offer up their own little player selected as the best they have to offer. We would assemble 15 or so of these little tykes and then go play in a District tournament If you were lucky perhaps you advanced to the next level. Then all the parents got the privilege of cancelling vacation plans and devoting unmeasurable effort to raise the money to make the trip for a week long tourney. If things worked out well perhaps you could come back as State champions, Regional champions maybe even NATIONAL CHAMPIONS.
I always wondered what was wrong with allowing the team with the best win/loss record to go and represent us at the next level. Forget all the political jockeying that goes into selecting the superlative. The problem with this process at all levels and in all slices of our lives is that the selection process is subjective and unfair. Whereas we place people on a stage and applaud them the damage is done to the people who never get to stand on a stage and be applauded. The process is then an overall damaging one because untold numbers of people come away believing "Man, am I a big loser. I was not chosen as shoe lace clipper of the year."
These sorts of things bother me and are best observed in the crowning of the Miss America pagaent. You are going to sit there and tell me that one dimpled, coiffured, curvaceous, made up, coached and staged female human being is superlative to the hundreds of thousands, even millions of beautiful women in this land of 300 million people? I just do not buy it. Yet millions of people sit and watch the process with breaths held in anticipation of just whom that person is going to be.
The least subjective process that looms before us presently is the crowning of America's best NCAA 1A football champion. Once again, I am an Alabama fan and I am delighted that my team is in a position to become the 2009 National Champion. How rotten is a process that builds some sort of computer formulae and then creates a secret society called the BCS schools. Some are in that circle many others are not. The BCS bowls adamantly oppose the unraveling of this fraternity. Why? Simply stated..........................millions of dollars of revenue. We now have the BCS championship game involving the teams ranked #1 and #2 by this onerous system. Then we have 35-40 meaningless bowl match-ups. At the end of all this we crown a mythical national champion. This has been the case for as long as I have been alive. It is no more relevant than the Miss America pagaent. The answer to all this? An NCAA Division 1A football playoff.
Sports Illustrated has this season posed a national playoff. At the end of this week's issue highlighting Alabama's winning the SEC Championship, they place a little column entitled Wouldn't It Be Fun? They take the top 16 BCS teams and seed them into a two bracket playoff. It goes: In the left bracket: #1 Alabama vs #16 Pitt; #8 Ohio State vs #9 Iowa; #5 Florida vs #12 Va. Tech; #4 Cincinnatti vs #13 LSU. In the right bracket we see: #2 Texas vs #15 Oregon State; #7 Oregon vs #10 Georgia Tech; #6 Boise State vs #11 Penn State; #3 TCU vs #14 BYU. Each winner plays another winner into 4 second round games then winners play in 2 semi-final games and then those winners play for the National Championship. The team that mans up and plays through all the brackets and is left standing is the National Champion. That is exactly the way they do it in Basketball. No one grouses about paper champions in that pursuit. The way we do it now produces a Superlative? I think not.
There is a supplement to the local newspaper that comes out in late summer. It is called Whose Who in Real Estate. How do you get your name into this superlative publication? It is really rather simple. You have to be a licensee of course. Then you have to send a couple hundred dollars to the newspaper and then your name will be amongst Whose Who in Real Estate. It does not matter if you even actually sell anything. What an exercise in smoke and mirrors.
If you need a Realtor ask around amongst your friends as to who they might have used to sell or buy. If they liked the practitioner then it is likely that you will like them. Practicing real estate is not anywhere near neurosurgery. The licensing process weeds out most of the unscrupulous. You cannot have a criminal record and get a license. You can lose that license through unscrupulous enough behaviour, however. Seek someone you know and trust and you will be in good hands.
Saturday, October 31, 2009
Would you rather be Appreciated or Depreciated?
Here are some interesting numbers for you to contemplate if you own a home or are considering owning a home. These come to me from a subscription to Trends, compiled by Mr. Don Pickett. He describes the numbers as ballpark however they ring pretty true by my reckoning.
First off let me say that the ownership of real property as an investment has traditionally been built around the principle of equity. You establish equity in two ways. 1) You pay down your mortgage. 2) You hope that your property increases in value over time or appreciates.
Following are numbers reflecting the principle of appreciation over the last 10 years. You will note that the numbers will reflect a % of the year increase in value over the previous year and the average price of a typical home in Leon County in that year.
YEAR............... % CHANGE...................... AVERAGE PRICE
1999...................... 3%
2000...................... 6
2001.......................8........................... $153,664
2002...................... 4............................. 159,481
2003.................... 14............................. 181,191
2004.................... 12 .............................202,835
2005.................... 15 .............................233,826
2006...................... 8 .............................253,546
2007...................... 2............................. 257,874
2008.................... (6)............................ 242,603
2009 (thru Sep) (10.5)......................... 217,214
Once again, we see the application of the law of gravity. What goes up must surely come down. Look at the average price for a home in Leon County 2001 vs 2006. What you bought '01 was worth approximately $100k more 5 years down the road in 2006. What a run.
It has now changed. In my opinion it has changed forever.
Contact me on the web at http://elvass.com/
First off let me say that the ownership of real property as an investment has traditionally been built around the principle of equity. You establish equity in two ways. 1) You pay down your mortgage. 2) You hope that your property increases in value over time or appreciates.
Following are numbers reflecting the principle of appreciation over the last 10 years. You will note that the numbers will reflect a % of the year increase in value over the previous year and the average price of a typical home in Leon County in that year.
YEAR............... % CHANGE...................... AVERAGE PRICE
1999...................... 3%
2000...................... 6
2001.......................8........................... $153,664
2002...................... 4............................. 159,481
2003.................... 14............................. 181,191
2004.................... 12 .............................202,835
2005.................... 15 .............................233,826
2006...................... 8 .............................253,546
2007...................... 2............................. 257,874
2008.................... (6)............................ 242,603
2009 (thru Sep) (10.5)......................... 217,214
Once again, we see the application of the law of gravity. What goes up must surely come down. Look at the average price for a home in Leon County 2001 vs 2006. What you bought '01 was worth approximately $100k more 5 years down the road in 2006. What a run.
It has now changed. In my opinion it has changed forever.
Contact me on the web at http://elvass.com/
Sunday, October 11, 2009
Humility in a Waiting room
I worked for a pharmaceutical company for 30 years, 1972 to 2002. For pretty close to 20 years I carried a bag as a detail man. I called on physicians in their offices. Accessing physicians in 1972 was much less challenging than 2002. That is why I moved to the Public Affairs sector of the company as a Government Affairs Manager along the way. Anyway as you can imagine I spent a lot of time in physicians waiting rooms hoping for access to the prescriber. I facetiously used to tell people that I was a professional waiter.
I was waiting to see Dr. Rick Damron at what became Medical Group of North Florida. It was 1986 in October. The fall baseball classic was underway. It was right around 5:30 in the PM. I had been waiting about an hour. There was an old man sitting across from me so I struck up a conversation with him. He seemed old to me. I was 40 years of age back then.
The subject quickly turned to baseball. The Mets and the Red Sox were in the Series. The night before a Red Sox player, Bill Buckner, had allowed a ball to roll between his legs allowing the series to go to the 7th game. The Mets would ultimately win the Series. Buckner has been the subject of derision and vilification ever since that night. I was a Winthrop Park Little League head coach at that time. I was careful not to draw the old man too tightly into analyzing the elements of the previous night. He was out of his league. After all I was a head coach. What was he? I was soon to find out.
The old man had been sort of quiet as I shot my baseball accumen across the room to him. He was responsive and seemed to be interested in my observations. I could also tell that he has preoccupied with his wife being back in an exam room. As I continued to blather on, the door to the hallway aligning the exam rooms opens and out comes Dr. Damron.
I thought he was coming out to give me a couple of minutes to pitch my latest product. Instead he moved directly to the old man. This is what he said: " Mr. Barber, I read your column all the time. I have even listened to games you have broadcast back in my youth. Could you possibly give me your autograph for my father? He is a big fan."
Dr. Damron then headed back to the exam rooms. As he exited he turned to me and said,
" Sorry I can't see you today. I am running behind." I bid farewell to the old man and in a complete state of embarrassment I was happy to get out of that medical complex. I am not the quickest study on earth but it dawned on me finally who the old man was.
He was Red Barber. He was one of the most respected baseball minds in America. He had been the broadcaster for the New York Yankees for a little better than 10 years. He also did the same job for the Phillies and I think the Dodgers. He wrote a weekly column from right here in Tallahassee called From the Cat bird Seat. That column was syndicated and appeared weekly in major newspapers all over the country. Some 6-7 years later as I was working in my front yard an ESPN news crew stopped in front of my house, while I was doing some edging, and asked how to get to a particular address. I asked them where they were heading and they told me to Red Barber's house. Red Barber had just passed away.
I reflected back on my earlier experience with Mr. Barber. He had been so kind and patient with my infantile observations about the baseball game. Had I been in his shoes I would have curtly dismissed someone like myself. Imagine the restraint I would have had to have suppressed were I him speaking with someone like me. " Do you have any idea who I am? Do you think that I am intrested in your weak opinion about the World Series? Why I have been the play by play announcer in several World Series games."
I was humbled and he was a perfect example of humility. That lesson taught by example has stayed with me to this day.
I was waiting to see Dr. Rick Damron at what became Medical Group of North Florida. It was 1986 in October. The fall baseball classic was underway. It was right around 5:30 in the PM. I had been waiting about an hour. There was an old man sitting across from me so I struck up a conversation with him. He seemed old to me. I was 40 years of age back then.
The subject quickly turned to baseball. The Mets and the Red Sox were in the Series. The night before a Red Sox player, Bill Buckner, had allowed a ball to roll between his legs allowing the series to go to the 7th game. The Mets would ultimately win the Series. Buckner has been the subject of derision and vilification ever since that night. I was a Winthrop Park Little League head coach at that time. I was careful not to draw the old man too tightly into analyzing the elements of the previous night. He was out of his league. After all I was a head coach. What was he? I was soon to find out.
The old man had been sort of quiet as I shot my baseball accumen across the room to him. He was responsive and seemed to be interested in my observations. I could also tell that he has preoccupied with his wife being back in an exam room. As I continued to blather on, the door to the hallway aligning the exam rooms opens and out comes Dr. Damron.
I thought he was coming out to give me a couple of minutes to pitch my latest product. Instead he moved directly to the old man. This is what he said: " Mr. Barber, I read your column all the time. I have even listened to games you have broadcast back in my youth. Could you possibly give me your autograph for my father? He is a big fan."
Dr. Damron then headed back to the exam rooms. As he exited he turned to me and said,
" Sorry I can't see you today. I am running behind." I bid farewell to the old man and in a complete state of embarrassment I was happy to get out of that medical complex. I am not the quickest study on earth but it dawned on me finally who the old man was.
He was Red Barber. He was one of the most respected baseball minds in America. He had been the broadcaster for the New York Yankees for a little better than 10 years. He also did the same job for the Phillies and I think the Dodgers. He wrote a weekly column from right here in Tallahassee called From the Cat bird Seat. That column was syndicated and appeared weekly in major newspapers all over the country. Some 6-7 years later as I was working in my front yard an ESPN news crew stopped in front of my house, while I was doing some edging, and asked how to get to a particular address. I asked them where they were heading and they told me to Red Barber's house. Red Barber had just passed away.
I reflected back on my earlier experience with Mr. Barber. He had been so kind and patient with my infantile observations about the baseball game. Had I been in his shoes I would have curtly dismissed someone like myself. Imagine the restraint I would have had to have suppressed were I him speaking with someone like me. " Do you have any idea who I am? Do you think that I am intrested in your weak opinion about the World Series? Why I have been the play by play announcer in several World Series games."
I was humbled and he was a perfect example of humility. That lesson taught by example has stayed with me to this day.
Friday, October 2, 2009
One In Four
Do me a favor. Go outside and stand across the street from your home. Weather is nice should not be too strenuous. Now look at your house and the three other ones adjacent to yours. Got that picture? OK, now think about this. One of those three neighbors next to you is a financially distressed property. They are in some phase of Lis Pendens. They are headed to foreclosure. Perhaps you, yourself are one of them. Takeaway message is that there are a lot of people hurting out there.
Statistics are that 1 in 4 are in trouble. They have somewhere in their past had a mortgage broker or banking official sign them up for an interest only loan, an adjustable rate mortgage or refinanced them at 125% loan to value (ltv). Your house was worth $200,000. Some mortgage company, perhaps by e-mail, said to you we are going to refinance you at 125% LTV. Going to give you a great rate and send you a $50k check to do with whatever you want. It just sounded too good to pass up. You did it and now the value of your house has eroded to $125k. You owe $250k on a house worth half that much. What are you going to do? You cannot refinance. You have no equity. You cannot sell it because people can buy houses all around you for $100 to 150k.
Now throw in the loss of a job. You put in a call to your lender. What can we do? Can we sell it short? Well we will assign a mitigator of some kind to your case and see what shakes out. In the mean time send us all your recent bank statements, three years of tax returns and find a Realtor who will work for 1% because no way are we, the bank, paying them the going rate for commission. And, oh by the way, whatever loss we take on the sale of your house you are going to sign a note for at 12% interest.
Now put yourself on the other side of this scenario. You are a buyer. You have a little money and a decent job and credit rating. You may even have a loan commitment letter from the lender. You are licking your chops to go buy a foreclosed property and/or a short sale. You find one. You have a Realtor who has asked you to sign an agreement that you will pay thier side of the commission when and if the bank refuses to pay them. You find a property you love. You sign a contract offer and your Realtor delivers it to the Sellers agent who in turn delivers it to the lender. Then the dance begins. The other Realtor puts in a call to the lender asking them to consider the offer. 1-2-3-4-5-6 weeks go by the lender has not returned anyone's call. Why? Because they are inundated with similar requests. Oh they have also cut their staff to the bone. You forgot that the recession was all across the board. Six weeks has turned into 6 months. You have tired of the dance, however, you signed a legitimate contract that binds you to the will of the lender.
Short sale turns into Long-Long sale. It is most likely going to cost you extra money because, guess what, the bank ain't gonna repair ANYTHING. Your Realtor gets out of the business because all they are doing is spending money driving you around, paying MLS fees and all the other operational costs. The bank is probably going to refuse to pay them their commission anyway. They have to find a job waiting tables, driving a cab, something that can provide them some cash flow. So you are left on your own trying to figure out this nightmare you have started.
Choose your battles wisely. Affiliate with a Realtor who has the experience and staying power you need. These are troubled times we operate in. Is it going to get better soon? Who knows that it is not going to get worse? The Feds cannot bail us out ad infinitim. You might want to reconsider chasing the foreclosure or short sale. There is a lot of risk associated with the bulk of them.
Visit me on the web at http://elvass.com
Statistics are that 1 in 4 are in trouble. They have somewhere in their past had a mortgage broker or banking official sign them up for an interest only loan, an adjustable rate mortgage or refinanced them at 125% loan to value (ltv). Your house was worth $200,000. Some mortgage company, perhaps by e-mail, said to you we are going to refinance you at 125% LTV. Going to give you a great rate and send you a $50k check to do with whatever you want. It just sounded too good to pass up. You did it and now the value of your house has eroded to $125k. You owe $250k on a house worth half that much. What are you going to do? You cannot refinance. You have no equity. You cannot sell it because people can buy houses all around you for $100 to 150k.
Now throw in the loss of a job. You put in a call to your lender. What can we do? Can we sell it short? Well we will assign a mitigator of some kind to your case and see what shakes out. In the mean time send us all your recent bank statements, three years of tax returns and find a Realtor who will work for 1% because no way are we, the bank, paying them the going rate for commission. And, oh by the way, whatever loss we take on the sale of your house you are going to sign a note for at 12% interest.
Now put yourself on the other side of this scenario. You are a buyer. You have a little money and a decent job and credit rating. You may even have a loan commitment letter from the lender. You are licking your chops to go buy a foreclosed property and/or a short sale. You find one. You have a Realtor who has asked you to sign an agreement that you will pay thier side of the commission when and if the bank refuses to pay them. You find a property you love. You sign a contract offer and your Realtor delivers it to the Sellers agent who in turn delivers it to the lender. Then the dance begins. The other Realtor puts in a call to the lender asking them to consider the offer. 1-2-3-4-5-6 weeks go by the lender has not returned anyone's call. Why? Because they are inundated with similar requests. Oh they have also cut their staff to the bone. You forgot that the recession was all across the board. Six weeks has turned into 6 months. You have tired of the dance, however, you signed a legitimate contract that binds you to the will of the lender.
Short sale turns into Long-Long sale. It is most likely going to cost you extra money because, guess what, the bank ain't gonna repair ANYTHING. Your Realtor gets out of the business because all they are doing is spending money driving you around, paying MLS fees and all the other operational costs. The bank is probably going to refuse to pay them their commission anyway. They have to find a job waiting tables, driving a cab, something that can provide them some cash flow. So you are left on your own trying to figure out this nightmare you have started.
Choose your battles wisely. Affiliate with a Realtor who has the experience and staying power you need. These are troubled times we operate in. Is it going to get better soon? Who knows that it is not going to get worse? The Feds cannot bail us out ad infinitim. You might want to reconsider chasing the foreclosure or short sale. There is a lot of risk associated with the bulk of them.
Visit me on the web at http://elvass.com
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