By Brad Rachielles
The Seller Prospect That Wanted To Do A Short Sale - Sorry
Subtitle: It Doesn't Work That Way.
Recently, I got all excited and happy when I received a referral call..... thank you very much. The prospect wanted to sell the present home to do a relocation for personal, not business reasons and said "I'm upside down and WANT TO DO A SHORT SALE".
After the general property questions, there are obvious questions that follow such requests:
- Do you know how a short sale works? Reply: "I know all about short sales. I've been watching the market for some time". A YELLOW FLAG came up when the prospect would not listen to an explanation of short sales.
- So, why do you need to sell your home? Reply: I DON'T NEED to sell my home, I WANT to sell my home". It would be nicer for me to live in __________". RED FLAG!
- Have you missed any mortgage payments? Reply: "H _ _ _ No. I make very good money and can afford to continue paying. It just doesn't make sense to me to throw good money after bad since the home is worth so much less". ANOTHER RED FLAG!
- Many lenders are willing to forgive a portion of the loan if you have a reason for.... (interruption) "I suppose you are just like all the others and are going to ask about a hardship? I don't have any hardships.... I just want to do a short sale and get out of here". MULTIPLE RED FLAGS!!! Obviously, I wasn't the first to have such a discussion.
The home was purchased several years ago in a good neighborhood at the peak of the market and the numbers verified that much more was owed than the home was worth. It became very obvious very fast that this homeowner was just trying to work the system. The prospect would not listen to anything that didn't suit her plan. This owner was not a distressed property owner, rather, an unhappy owner looking for a way out of a situation facing so many underwater homeowners.
I tried to spell out his/her options. Apparently, getting professional legal or financial counseling was out of the question according to him/her.... an ego problem or knew what the answers would be?
"You know.... I"M NOT AFRAID OF A FORECLOSURE.... (click.... hung up).
Wow! I'm left with several thoughts. First, dealing with a head strong prospect that "knows EVERYTHING" was quite an experience. Apparently, others in real estate had given advise that was not what this prospect wanted to hear and the search went on for someone that would help work the system.
Had I been able to discuss foreclosures, I would not have suggested a strategic default. Foreclosures are survivable but the difficulty of life afterwords isn't pretty. If it is the only option... so be it. However, I would have said that foreclosures can really damage credit ratings for years, prevent new home purchases, affect job applications and possibly current employment for as long, and can possibly change security ratings in sensitive jobs. According to my CDPE training, a foreclosure is one credit situation that is almost impossible to get rid of. What are you going to say if a job application asks if you have ever been involved in a foreclosure?
Note that homeowners with a hardship, a material change in your financial ability to own a home, you may have choices. Seek professional and trusted financial or legal counsel as appropriate.
BUT, IF YOU ARE TRYING TO "WORK" THE SYSTEM..... Please Don't Call Me!
It Doesn't Work That Way.