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5 Stages of Grief in a Short Sale

As a former Social Worker I am reminded of Elizabeth Kubler-Ross book "On Death and Dying' and the five stages a terminally ill patient goes through when informed of their life threatening illness.

The five stages she identifies in her book are:

Denial ( this isn't happening to me!)
Anger( why is this happening to me?)
Bargaining ( I promise I'll be better person if...)
Depression ( I don't care anymore)
Acceptance ( I'm ready for whatever comes)

As I reviewed these five stages and relate them to Sellers I have worked with or am currently working with I am drawn to how these same stages are exactly what sellers go through when selling their home in a short sale.

Stage 1 Denial:

Many sellers who are falling behind in their mortgage payment often do not get help or seek help because they are in total denial. They often think nothing is going to happen to them even after the bank has sent them the Notice of Default letter.

Stage 2 Anger:

This is a very difficult stage. Many homeowners remain angry through the Short Sale/Foreclosure process. Reports of homes being trashed and appliances missing are usually the signs of people who have a lot of anger and direct this anger onto the property.

Stage 3 Bargaining:

This is the stage where sellers exhibit a lot of ambivalence. They do not want to loose their home and will do almost anything to keep it. Some sellers will contact their lenders and try to negotiate a loan modification while you are doing a short sale. You have to be aware of your seller in this stage because they are very vulnarble and will sabotage any efforts you have initiated because they have not truly accepted the need to sell their home.

Stage 4: Depression:

Sellers in this stage just stop caring about the house and will withdraw from you as their agent. It is important to maintain contact with your sellers during this stage and give them support and assure them that what they are doing is in their best interest.

Stage 5 Acceptance:

This is when you see your seller come out of their shell and begin to prepare for a life after the Short Sale.

Posted by Jack Lewitz on 03/01/2010 04:21 PM

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94 Comments on 5 Stages of Grief in a Short Sale

MAR

2010

Jack, thanks for the post. I'll look for the book and read it.

How Clever! I think you may have found a new venue for preparing your clients!

I had read the book and was just thinking the very same thing as I walked away from another door where the people confidently told me that everything was all worked out.

Jack - Boy is this the truth. It is quite an emotional ordeal that goes on with the possibility of losing a house to foreclosure and coming to the realization of the options that are available.

MAR

2010

From the desk of David Dee,

Jack, what similarities. Nice analogy. The first part is getting over the denial factor because that tends to the hold up until they come to the realization and face the truth.

It makes perfect sense that distressed property owners would go through these stages. I imagine that divorcing would also apply as well as being empty nesters if you've devoted your life to your kids. When you think about, these stages could be applied to any devastating situation. Great comparative analysis.

Terminally ill patient . . . I went through the SAME five stages just the other day on a deal I'm trying to keep together. Hmmm . . . It was on life support, so I guess that works.

This is good... really good... thanks!

Good Post. I have seen this as a square grid with four vs. five components but did not know the author. Thanks for the valuable concept.

This is very true...My father is in the last stages of a terminal illness - he has been in denial for over two years...The same may be true for sellers - they may not get past denial...

The five stages refer to the way the human mind deals with any traumatic event, be it job loss, or major illness, or death, or financial loss, or death of a loved one. Or sale of a home.

Jack, good catch, seeing the stages apply to home owners entering the foreclosure process. As a stager, I have watched several clients go through them. Recognizing what was happening, and where they were in the stages, helped me help them.

Not all of those clients were at risk of foreclosure. Not all, but a lot just plain sellers are somewhere on the journey when they list their house. That may help explain why some sellers insist on an unrealistically high price and/or insist they don't have to make repairs or improve the 'look' of the property.

Excellent! I must re-blog this!

Excellent post. . based on my experience, I have to add one between denial and anger. . "It's not my fault"

I hear this very often when homeowners are doing a loan modification and the bank does not respond well or they lost the package.

Thanks you for utilizing your experience and bring it to short sales to share with us.

I'm re blogging you!

Yes for many folks this is big hit on their pride. They have never not paid their bills on time, the are ashamed of themselves.

Thank you

Excellent analogy, I will definately re-blog this one, as it is fabulous.

Jack, this is one of those "AHA" Moments in my career. I have been looking for a great analogy and you have given me the answer. I will definitely repost this one. Thanks for sharing.

Interesting analagy of the psychological course of a short sale.

A very apt comparison...I have read that book and passed it along to many people...the resolve of getting to that stage mentally is difficult for many sellers and sometimes sticky at different stages.

Hi Jack,

Wow this is a great analogy...very true and a valuable concept to apply in working short sales.

Jack, as a former Social Worker, I have to agree and see similiar stages in sellers. Sometimes if we are lucky we meet them before and can keep them engaged in the process. But, the emotions are similiar.

Beautiful Jack. And spot on. I can tell when talking to potential sellers how easy of difficult the deal will be by where they are at in this process. I definitely prefer they be in stage 5 if at all possible. If they are not there yet then I need to help them reach this point.

Very good post - we get involved in trying to make the process result in a closing and forget about the impact on people personally -- one of those life events that changes you forever. I'm re-blogging as well.

Jack, excellent analogy. The same processes of grief apply whether to losing a loved one or a home.

I have found this to be very true. The agony of a short sale/foreclosure can be likened to the 5 stages of grief.

Jack...

This is great, and it applies perfectly. Very crafty and ingenious post.

Jack, this seems obvious upon reading it but you're the very first person I've seen make the comparison. Excellent post.

Being aware of which stage our sellers are at can only help us in getting them out of the trough and back to a meaningful life.

Thanks for this.

That is indeed a wonderful book!! As for short sales, I am SO SICK OF THEM! Most never close and the clients just don't get it -

Short sales done well as a sixth stage that is not death buy optimism for the future. I do short sales despite the work because the look of gratitude on a person's face, priceless. But also from the can I monitize front, the most loyal clients you will ever have.

Hi Jack,

Great post and you are absolutely right...thanks for sharing. Maggie is right it's obvious when you read, but never have but the two and two together.

Thanks - Cindy

I want to thank everyone for their positive comments to my blog.

I feel I must respond to BarbaraJo who said she is "SICK of THEM" referring to Short Sales.

I think maybe I should revise this post as it relates to US as Agents. We too go through the same Grief as our Sellers. We deny the market has changed, we are angry that we can not close our deals, we bargain with ourselves and say we'll do better on the next deal when we loose out to multiple bids, we get depressed when we do not have enough business, and finally we must just accept the fact that this is going to be our business for the next few years.

Jack, very well said. i work almost strictly with some sort of depressed sale here in Florida. Todd

Jack,

Great in site to the emotions that someone in the position of a short sale feel.

Thanks Jack. I worked as a counselor and as soon as I saw your post I knew it was a great analogy. I think that having a background in counseling actually helps in this business. It also helps to have someone that you as a Realtor can go to be it a coach, therapist, etc. to speak to of your frustrations about dealing with people with so many frustrations as in a short sale. I just closed on one yesterday and my client was having a panic attack at the closing table. He wound up going to his car and decompressing but for a moment I thought he was gonna blow.

The many hats we wear as Realtors!!!!!

Thanks, I appreciate this information. As I am currently working with a short sale seller

Great post. It's important to know the frame of mind of the person you are dealing with.

Grief comes in many forms, not just death. This is reminder for all of us when faced with life's challenges.

I find that the same cycle applies to older sellers who may have owned their home for 20-30-40 years. Even though it is most often not a short sale for them most are having trouble accepting what has happened to their retirement nest egg (of which their home is often the biggest part), so they go through all of these emotional stages when trying to list it. For these people it is not just a paper loss, because they owned the place and it had a certain very real "value" in their minds.

Good post and one that I too will reblog.

While this is an interesting parallel, people need to remember that short selling and foreclosure is not akin to death. They will recover, they will move forward, and they will get over it. In some cases it's very positive to have the burden of debt removed.

Good Job Jack in relating the two....

I will defenitely look in to reading that book.

Great Post Jack. Keeps you in mind of what the seller is going thru. And the agents as well.

Excellent, great job relating. Losing your home can be the equivalent to dealing with a death for many. I always try and be sensitive to others feelings, but we have a job to do also.

Hi Jack- being a RN, I could totally relate to Elizabeth Kubler Ross's teachings. It is important that we as realtors can relate to just how stressful these life changing events truly can affect our clients!

Thanks for some great insight into a very frustrating and depressing situation, not only for the sellers, but for those who represent them as well.

Nice blog. I can relate to it.

I loved this post, but especially your comment (#30) on the comments.

Thank you Jack! Great to have this for perspective when we see our clients mood swing during the course of a short sale.

Well said.

I tend to get my short sellers at stage 4, depression. Sometimes they are crying when they call me. I can see stage 5 ahead in the future for them, but they are unable to see it. So, I listen to them and let them cry on my shoulder. Then we move forward. I think you have to take this step with sellers. It's part of the process.

What a great post. I think losing your home is like a death of a dream for many. Thanks for posting!

It's very true, glad you phrased it like this. It is very depressing for most people, including the agents involved.

This is an excellent post because it is the truth. If sellers could get past the denial stage and start trying to get a short sale done before the bank takes the property back, they would be much better off.

Once they understand there are many in this situation - at all price points - it becomes less difficult.

In this market more than ever we need to be strong for our clients to pull them through some difficult times. "MSW" isn't a bad "designation" to have these days Jack! Your clients are lucky to have you.

Good analysis and good graphic -- its a rocky road for all for sure.

Wow - this is a great post and so true. I have my first seller involved in a short sale right now and he's at the anger stage. Very good info.

Good post. I don't think we see "acceptance" all that often in our short sale situations though. Denial lasts quite a long time.

Yes, denial seems to be the longest & most devastating phase. I have had sellers deny so long the bank locked them out of their home & I never heard from them again. *I also never saw my sign or lockbox again either!*

Our job is to not sell, but provide PERSPECTIVE. Good Post...

Wow, you are so right. I know about the 5 stages of grief but had never thought about relating it to people in a short sale.

GREAT metaphor. I have used it myself and it is very accurate. It actually applies to any sale where the seller must accept that they aren't getting what they want.

MAR

2010

Great observation, Jack. I agree with you. I find that during the listing presentation it's an emotional roller coaster ride that I ride on right along with my prospects. It is very sad to hear about their hardship and the reality that this home purchase is not working out.

The only thing that keeps me going is that after 'acceptance' is reached, and we've discussed what needs to be done, the look of relief on people's faces. So often the major part of the worry was not knowing. Not knowing what to do. Not knowing of their options. Not knowing how to move forward.

There is satisfaction in first listening and then presenting a way out, being part of the solution.

Thanks Jack

I am getting used to doing short sales and I'm not going to take any more easy outs by buyers. I'm off grief and dying and stages. I'm making a committment to myself today right this minute. No more eassy outs. Your post just reminded me who the problem is. It's always me.

Kieran

What is sad is that the large banks don't call short sales "Distressed", only the Foreclosed homes or REO's are considered "Distressed". I wish they could sit down with me at these Listing Appointments to see just how "Distressed" their borrowers are!

You use an interesting analogy, and it works in much of the process. There are great benefits to a short sale that can change the steps you list, particularly if the agent can get full forgiveness of the entire debt at the end of the process. In other words, the analogy would change to someone who recovers from the life threatening disease. To see more on getting a full satisfaction of the debt, instead of just a release of the deed of trust to allow the sale to close , go to www.CreateAShortSale.com .

I think it is interesting that you are a former social worker. The students I teach who have a desire to rescue their clients do much better in their short sale practice. The agents who are just looling for another source of income have more trouble with all that it takes to succeed in short sales. It looks like you have the right attitude and training.

Thanks for the post.

Thanks Jack for sharing.... ..I love your post and it's great to share with my client's who have to go through this right now. ... It's a difficult road for these client's but once they know that we are their to help them during this time, they will always come back to us and also refer us to their friends.

Excellent post! Short sales can be extremely emotional for the seller and communication and understanding are critical.

Good points. I think most agents get frustrated with short sales (are they really "sales" as most fail, perhaps we shoulod rename them "exercises in futility"), and most agents don't know about recourse and non-recourse loans, and why lenders decide what they do. I mean, c'mon, what did those people do with the $500,000 cash they got from a cash out refi 3 years ago. Hint: check out the late model cars in the garage, the new RV, the boat, the vacations, etc.

Now, we the taxpayers are backstopping these people. I think agents best leave these sales to attorneys (have them look at it first).

This is the best short sale article I've ever read. Buyer agents need to be aware of these stages too, especially if they've never done a short sale. And buyers do too for that matter. Most buyers can understand the seller is losing their home and how sad and frustrating that can be, but then don't understand why the seller won't maintain it or pay for repairs.

Thanks Jack. I read Kubler-Ross's book years ago and you are "right on" comparing it to short sales & foreclosures...very perceptive of you.

I had a client who was past due on several payments, we at last got a short sale offer but he went for a loan modification and did not take the offer against my advice. It has been several months ago and now the home is being advertised for foreclosure. I was hoping he could stay but it is not looking that way.

Painful and true! I have a seller who sends me sad, depressed emails every night (possibly due to drinking). She's completely alone and I'm very concerned about her.....when you are in "it" it's hard to see the other side.

Thank you so much for taking the time to outline the 5 stages for helping a short sale client. I am beginning to see almost half of my listings as short sale's. I appreciate any tools to prepare them for the process. Thank you for adding to my Real Estate world today!

Good analogy!! I agree, and I like it! So true - these poor folks have such a rough adjustment throughout the process..

Thanks for sharing! WOW how many situations other than short sales can this be applied to?! Think about it! Plan to reblog!

Jack,

This is a very good analogy! It is exactly what the Sellers go through. I just wish they'd skip a few steps and call me SOONER!

I think you have it right on. It can probably apply to other people that have to sell to, like age or health reasons.

Great post, Jack, thank you!

I believe that most of home sellers do not see the problem arising early enough.

Home sellers don't know the reality of the RE market and what all the steps and hurdles they have to go through a short sale. No matter what I always try to briefly inform home owners about the short sale and let know that a short sales may be a rescue from a foreclosure. I also advice them that it needs time to complete and must have all the paper work ready. Just in Case.

It is like an early diagnosis.

REALTOR Timo
CRS, GRI, e-PRO, Diversity

Jack, I really enjoyed your perspective. So true!

Sad to say, but I have a seller about to close on a short sale that is losing his house partially because he lost his spouse to cancer and subsequently her income. Talk about a double whammy. Just breaks my heart. To add to his misery, his only son, moved out of the house because he couldn't bear to be there when the house sold. The son is upset over losing the house where all his memories of his Mom are. Sometimes life is just not fair.

Jack- I think that the views that you have shared with us are true on many fronts!! There are some amazing parallels!

Thanks for sharing. Most people do feel better when they give up the burden of trying to make ends meet. Once they list the home they are at least taking control of their lives and moving forward, rather than going around and around. I have a tough time watching, so many people in stress.

Jack, this is great. If one looks at the diagram of the stages of grief, stage 6 is "return to meaningful life". Always remind your grieving short seller that there IS life after they must sell their home. While it can be frustrating and challenging for agents, remember why we do this. If you can help someone successfully move past this difficult time in their life, they will be a client for life once their situation changes.

Having just returned from my sister-in-law's funeral services due to pancreatic cancer and continuing to represent buyers on not one, but three short sale escrows, I can certainly identify with everything you are talking about in this post.

I took a class on this subject years ago thru my church and found it so helpful. However, I never made the connnectin between losing one's home and death, but it is a DEATH. It's the DEATH of the AMERICAN DREAM (for the seller). Their home represents home ownership, memories of the past and hopes for the future.

But let's also not forget that it's often the DREAM of a new family ... a family that is now ABLE to go for the AMERICAN DREAM and make their own memories and plan for the future.

And the beat goes on ................

Oh my -- there are similar emotions for the buyers who wait and wait and wait and wait... only to find out he 2nd lender won't agree even thought they will be wiped out.. just because they can stop everything.

MAR

2010

Great observation, Jack. We as Realtors also go through those stages as we work with our Short Sale clients. There is a lot of handholding because of the emotional roller coaster they are on. Thnaks for posting!

MAR

2010

Super comparison. I've read that book. It is certainly applicable here.

WOW! What a GREAT Analogy!

Elizabeth Kubler Ross is a GREAT Author and you are GREAT Too for making the comparison to our business.

There already is a TREMENDOUS amount of grief in our business (that Sellers have NO COMPREHENSION & that is our fault and our job to educate them).

Gotta get to work ;-) Joy

MAR

2010

There may even be a sixth step. Beyond acceptance, when then are then selling the house. I have encountered more and more sellers who are so gracious to agents and buyers alike, in telling all they can about the house, and making the buyers feel comfortable. Takes a special kind of person to do that, but they are out there, and I'm glad to have met them.

It's so very difficult for sellers to overcome the emotional attachment they have to their homes - and not not just short sale clients. Sellers who are moving for happy reasons often go through similar stages of "mourning" the loss of their beloved homes too, typically without even realizing it. These feelings are often hard to recognize and even harder to understand because they're happy about the move they're making. I believe the sellers who are unnwittinglyexperiencing these emotions are often the ones who sabotage their own home sale success by overpricing, making the home difficult to show, refusing to leave for showings, etc.

MAR

2010

Jack..This is a wonderful post..i must thank Pat Kennedy again I would have missed it if not for her...

HELPFULHANNAH

Excellent post. Unfortunately in stage 2, they are often angry at their agent! Either to one who helped them make the purchase or the one with the listing. This anger can easinly be misdirected and cause a difficult transaction.

MAR

2010

Hi Jack,

Great post-I usually see them at the Depression stage when I am showing their house to prospective buyers.

Jack, great analogy! I think I have a few clients in various stages. This really helps! Thanks for the post!

JUL

2010

Excellent post on short sale grieving process! I've been teaching this same thing to my investing students for a few years. This is the reason why we send a 6-part letter series to those in foreclosure, because sending just one letter usually catches distressed sellers in one of the other phases of non-acceptance.

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Jack Lewitz

Evanston, IL

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Jack A. Lewitz

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