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Should I Stay, Or Should I Go?

By Jared Hokanson

Real Estate Broker/Owner with Hokanson Realty & Jared Realty Group

August 18, 2010 06:10 AM

In light of an interesting conversation I had with a short sale lender today, I wanted to throw this out there for discussion, what do you tell your clients when they ask if they should continue living in the house they are trying to short sale? Should they stay or should they go? This particular lender told me that because the homeowner had vacated the property, that it was considered a "non-owner occupied."

Medford

I explained to him my clients desire not to live in a house that they couldn't afford the payments on and that they were trying to do what the felt was the "right thing," that is, not continue to occupy a home they could not afford, but that they had owner occupied the home and had never rented it out.

What do you recommend to your clients when they are considering staying or moving from their home and trying to do a short sale?

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Many want to rent while they can before the Short Sale hits their credit report.

Aug 18, 2010 06:16 AM

Richard Dolbeare

Inactive - Wailuku, HI

Living the Hawaii Lifestyle

That old question "why jump out of a perfectly good airplane" applies here as well, why leave a perfectly good home?

Aug 18, 2010 06:17 AM

Lori Bowers

La Quinta, CA

The Lori Bowers Group

We do not like vacant homes here. We feel it is better for them to saty in the home and maintain the home.

Jim Hale

ACTIONAGENTS.NET - Eugene, OR

Eugene Oregon's Best Home Search Website

Jared,

This is a serious legal question and should be referred to a real estate attorney. In Oregon, if my clients were considering moving out of their home prior to completing a short sale, I would be adamant that they seek legal advice.

Sometimes I come along after they have done so, but if they are still there, they need to know that moving out is not jsut a budget or moral question.

Rex Schofield

Realty Executives - Peoria, AZ

Selling New and Resale since 1981!

Jared, as an agent showing property I prefer vacant. As the listing agent the property is the responsibility of your seller until it is sold or foreclosed on so we must consider the possibilities. vandalism, theft of fixtures or even worse. Of which after 30 days or so of being vacant their insurance company may no longer pay any claims. Also take into account they have to live somewhere and if they cannot afford the payment and will not make the payment why pay rent while this property sits empty. I say keep the house presentable and accessible and stay until they are no longer responsible for the condition of the home. Sell them all! Rex

Aug 18, 2010 06:21 AM

Jared Hokanson

Hokanson Realty & Jared Realty Group - Medford, OR

Your Home Sold, GUARANTEED!*

Lenn - I do hear that sometimes. In visiting with several local property managers, they have mentioned that many of their new tenant applications have been people that are in a pre-foreclosure situation. Several of them have said that they will adjust their deposits for the rental unit with that potential tenant to make up for the increased perceived risk.

Aug 18, 2010 06:28 AM

Richard- I haven't thought of it that way before! Thank you for your insight.

Aug 18, 2010 06:29 AM

Lori- It can be a lower expense to the lender for maintenence of the property with the homeowner in the house taking care of it. I think the question in a lot of lenders minds is, what will it cost if the homeowner doesn't leave nicely? Will they "gut" the house, or will it cost more to evict or give cash for keys.

Aug 18, 2010 06:32 AM

Jim - Like you, I always recommend to my clients they get the appropriate qualified professional and financial advise. I'm a real estate agent, I help people buy and sell houses.

Aug 18, 2010 06:34 AM

Rex - I agree, its always easier to show a vacant property from a buyers agent perspective. I get asked insurance questions quite a bit too, now that you mention it. I always encourage my clients to keep insurance on the property for their own protection. Sometimes they have let it lapse and the lender does their forced insurance policy, which I encourage my client to visit with their insurance agent and any other qualified professionals to find out the implications of that.

Aug 18, 2010 06:40 AM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

I try to get my clients to stay in the house for the exact reason you have come across, but in my experience, I'm with Lenn, everyone of them is trying to get in to a house before their credit is destroyed.

Aug 18, 2010 07:17 PM

Todd - Its kind of a double edged sword that way, there are definately two ways to look at it.

Aug 19, 2010 03:16 AM

Fernando Herboso - Associate Broker MD, & VA

Maxus Realty Group of Samson Properties - Clarksburg, MD

301-246-0001 Serving Maryland, DC and Northern VA

I tell them that squeezing the last possible benefit from their house is allowed. . it could be worth potentially thousands of dollars in their pocket

Aug 22, 2010 12:22 AM

Should I Stay, Or Should I Go?

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