This blog from Valerie Swanson, a fantastic Realtor in the San Diego area. I think it's very important for a lot of people to read, especially homeowners that are in Notice of Default. She makes great points for homeowners who need to HEAR what the professionals are advising them, about their home and their future financial situation. Especially in California where the laws will soon change and short sale homeowners will be charge for deficits in their tax bills.
It's Time to Pull Our Heads Out Of The Sand!
As always, comments have been disabled. If you'd like to comment, please head over to Valerie's original blog and comment there. She deserves all the credit.
Recently, I met a gentleman in one of the neighborhoods that I work in. As I approach his house to deliver an open house invitation for a home in the neighborhood his body language was noticeably guarded. He more barked his question, rather than asked me how he could help me. Since I’m in this particular neighborhood often I’m familiar with the public records, including the NOD’s (notice of defaults) and auction homes. So I knew this homeowner was in default on his mortgage and had been for about a year.
[Side note: I don’t openly share this knowledge during casual conversation. The last thing I wish to do is insult a homeowner or make them think I’m some kind of stalker real estate agent. But, I do make sure I’m aware of market conditions in the neighborhoods where I work.]
I stretched out my hand to give him the benign open house invitation and he relaxed as he realized I was not there to “convince” him to sell his house, or remind him how miserable his life must be since he hadn’t been paying his mortgage. Reading his body language as I approached, I can only imagine how inundated with Realtor letters and drop-by’s he must have been over the past year. We made a little small talk and he asked me a few questions about the house I was holding open; thanked me and I went on my way.
Although our exchange was brief, as I continued to walk the neighborhood I thought about him and his situation. I wondered if he ever bothered to read the information that the other Realtors had been leaving him or if they went immediately into the trash. I wondered if he knew that time is running out to short sale his home without the worry of a huge tax bill or a deficiency judgment in California. I wondered if he even knew that he had more than half a dozen alternatives to foreclosure.
He is not unlike so many other homeowners. No one likes to deal with devastating financial crises, but ignoring it only makes it worse. From his initial body language, I could tell that he was not open to hearing what a Realtor had to say, but I admit it makes me sad to see this. Because, I can see he’s probably heading down a deep and dark financial path that maybe could have been avoided or at minimum, lessened. A head in the ground is not a financial strategy, yet I see a lot of homeowners using it as their financial action plan of choice.
I tell this story in hopes that it will encourage a homeowner in this position to at least look into their potential options. There are tax protections in place right now that make it possible to short sale a home without paying taxes on hundreds of thousands of dollars in forgiven debt. Also, in California there is a new law in place protecting certain homeowners from a deficiency judgment from second lien holders. But, both of these protections will expire. It takes time to sell a house in a short sale, so don’t plan to leave it until the last moment when the auctioneer is knocking at your back door. Here is a sample timeline of a short sale.
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