In 1992 an up and coming real estate investor/agent found himself over his head in the commercial real estate market — $5 Million in debt! He couldn’t pay back the loans for his commercial real estate projects. At the same time many developers were getting out of commercial real estate because the market was collapsing. Not a single banker would negotiate or restructure his debt. His loans were causing him such a headache he couldn’t pay his bills including his mortgage. He had to downsize immediately! So he put his house on the market before serious trouble ensued. But he didn’t try to sell his house. Instead he recognized that his home had value and if he could find a suitable renter, it would allow him to return to his house after getting his financial situation in order. He consulted several colleagues and determined the best idea was to find a tenant that would pay a full year of rent in advance. This strategy would allow him to keep his house, even though he would have to move out temporarily. He called every realtor he could think of and asked if they could knew of a renter who could make a full years worth of payments — up front. Weeks passed when one morning an associate learned about an athlete who had just retired from sports and was between home purchases. The athlete wanted to take a couple years to make her next buying decision. After walking the property the athlete said “I’ll take it. Would you be ok if I signed a 2 year lease?” The investor/agent couldn’t have been more excited. In actuality the athlete liked the home so much she actually stayed much longer. This gave the investor/realtor the time he needed to rebuild his residential real estate business, which at that time was his only source of income. It took 8 years — but he did it! Eight years after he had left his home he was able to move back into his residence which had never gone into foreclosure. Foreclosures are on the rise again. If you come across someone facing financial strife please refer them to this blog. There are more and more solutions available to ease the burden and solve the problem at hand!
The loan modification failed. You’ve shelled out tens-of-thousands of dollars in attorney’s fees. The impossible-to-pay mortgage payment is WAY behind. All the agents of foreclosure (Realtors, Lawyers, Media, Guru’s, etc.) are telling you the same thing: A short sale is your only option. It’s your only way out. So it would seem practical that your next step would be to contact a realtor to list the house for sale. Well — you would be surprised how many realtors I have met that simply focus on “getting the sale” to “get their commission” that they forget the obvious: the homeowner is the client, not the bank. Realtors who focus on the sale typically only focus on “what the lender wants.” If your a homeowner in this predicament remember — TERMS are all that matters to a homeowner in a short sale transaction, NOT price. A homeowner needs TERMS to ease the burden of dislocation. Let’s be real. The homeowner is about to lose their house. It will be potentially one of the most traumatic experiences of their LIFE. What should a homeowner do? This is what I would do — First — I would interview a potential listing realtor. I would ask this simple question: “What terms were you able to get your last short sale client at closing?” If the agent begins to deflect the question with a canned response that is similar to this… “Well with short sales, its up to the lender…” I would RUN. Not walk, RUN! This is a realtor who has NO IDEA what they are doing! So don’t be surprised if they get you NOTHING at closing. NEXT, I would keep calling till I found a realtor that could give me a verifiable deal story. An instance of how that realtor was able to negotiate time or money. Or both. Keeping in mind verifiable means, the agent will give you the contact information of the homeowner they helped. Like anything else, never assume a story is true no matter what you have heard about a particular realtors reputation. Verify everything. Why does this matter for homeowners? It’s like this: This is your LAST chance to get help — you have NOTHING TO LOSE BY SIMPLY ASKING. In addition, you might be surprised to hear what the lender is willing to do to move on in the process. Most recently I met a homeowner who was offered more than 120 days — 4 months — to find a new residence. That’s 4 FREE MONTHS OF RENT! Another homeowner I met was offered over $10,000 by the lender to ease the burden of moving within 30 days! THAT IS WHY TERMS MATTER! You never know until you ASK. If you find yourself in a Short Sale scenario contact me through my blog. I can help!