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Foreclosure Vultures

I am truly sickened and disheartened by an offer received today on one of my Emerald Coast short sales. I will alter some basic information for the sake of confidentiality, but will tell you the key points of the story. My sellers, like many homeowners in the Destin Florida area, have lost more than half their income in the past couple of years. They are in sales, (and we know how that is going). They have a beautiful home they built in 2005. They also have three children. In the past year, one of the children was diagnosed with a serious medical condition. As a result, they have been unable to pay their mortgage. Their only mistake was to call me too late. In a higher price range, with only four weeks in a declining market, even after continually dropping the price, we have three days until the foreclosure sale. In the past week, one of my agents was contacted by an individual from Texas regarding buying the house. He had obtained the sellers' telephone number independently and had been conversing with them about his "terms". One was that they not accept any back-up offers if they agreed to his. He even got them to sign such an addendum before faxing his offer. Well, I just received it. The house is listed for $300,000. The offer is for $150,000. The offer states, among other things:

The purchasers are real estate investors who buy and sell real estate for a profit.*****Acknowledged and SIGNED by Sellers _____________________________________________
Purchaser may show the property at any time with advance notice to the seller.
The purchaser is free to resell or otherwise dispose of the property in any manner that is legal
Purchasers may perform renovations to property prior to Close of Escrow.
Paragraph 5 of "Short sale addendum to purchase contract" is deleted and not applicable. No offers shall be submitted to sellers' lender unless this contract is cancelled prior to submittal.

You know what this is? Preying on people in a desperate situation. In my opinion, it is unconscionable.

It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

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Posted by Wendy Rulnick "Its Wendy!" Destin Short Sales on 10/06/2008 06:29 PM

Comments (16)

Short Sales in the ActiveRain Channel

emerald coast short sales, emerald coast foreclosures

Originally posted at: Destin Short Sales- Emerald Coast Florida Real Estate: Foreclosure Vultures

This post has been included in Florida Information Okaloosa County, FL Information
Post is included in group: Foreclosure Help and Prevention
Post is included in group: Sharing Information of Short Sales
Post is included in group: Short Sale REALTORS®
Post is included in group: Short Sales Specialists
Post is included in group: Short Sale Specialists & Pre-Foreclosure Education

16 Comments on Foreclosure Vultures

OCT

2008

Ms. Wendy, they will start coming out in droves. It is unfortunate for some, but it is a part of this vicious cycle.

I absolutely agree with you, Wendy. We don't quite see these extremes in the mortgage industry, however, people acting out of greed are everywhere in this world. I take that back actually, I've seen some pretty sickening mortgage terms in my career.

While I certainly sympathize with the people I have to ask (and with all respect for you) if they waited too late to contact you what can you now offer better than these "investors" (term used very loosely)? Now that second line in your bullet points tells me they have no intention of closing on the property but are doing "wholesaling" the cheap way. I would not agree to line 2, 3 or line 4. If they are legitimate investors that won't matter. The insult to real investors is that these are "wholesalers" who have no intention of closing on the property. HOWEVER, if the sellers alternative is to let it go to foreclosure then what's the problem? If their credit other than their home is okay they may be able to do a HOPE refinance and get the payoff reduced in exchange for future equity recovery. Too many people wait far too long to do anything positive so even the vultures, no matter how pathetic and disgusting it seems to you, have their place. Although the lender needs to know there is a very high likelihood these people making the offer never intend to close in their name. If I were the lender and I saw this I would demand $20,000 earnest. As a "real investor" and lender I despise people who trick uneducated homeowners into worse situations. I don't have much affinity for "wholesales" of that ilk.

It is so sad -

people ignore their problems and put their head in the sand
won't listen when a professional offers help
don't get legal advice and sign anything in front of them
and then are surprised when things turn out wrong.

What happened to personal responsibility? Sellers know they aren't making their payments. They get letters from the bank that a foreclosure is going to happen but they wait until the last minute.

How can we help people if they won't let us early enough?

Wendy, why would your clients even consider that offer? Assuming the "fair market value" of the home is closer to your asking price, the sellers could be making a huge mistake selling at that price. Have they consulted with a tax advisor concerning the possibility of forgiveness-of-debt income, and do they know if the lender will release them from liability on the payoff shortage? They may be better off letting the forclosure go through.

Tim and Pam - It is part of the cycle. It's the arm-twisting that bothers me.

Matt - Yes, and I failed to mention they were afraid to lower their price waiting for his offer. Wasted a week.

Ken - Yes, they waited too long. They didn't even have their house on the market before they called me. They have no money for an attorney. Even "free" legal aid from the Florida Bar wouldn't help them. "Tricking" is a correct assessment. The investor even wrote "$1000 promissory note at COE" as earnest money. I can't respect trickery. Sorry, this really bothers me. Thanks for your thoughtful reply.

Susan - It is the worst frustration. If they had called even a month earlier.... I just shake my head- in sadness, too.

James - They are insolvent. I think it's going down the path of no return, unless there is a miracle.

Wendy, good luck!!! This is a tough one!!! Clients that didn't call quick enough yet they're smart enough (they think) to enter into an agreement on their own (by signing the addendum). Although you're against the gun they do not seem to be giving you an opportunity to do your job. Agreeing to this is an act of desperation on their part without knowing the repercussions.

OCT

2008

It made me sad to read the letter and the post. Good luck.

Sergio - It's hard to help those who don't try to his themselves first.

Gita - l am sad, as well. Thank you.

That is shady. You had it listed while this guy from texas had them sign this?

Wendy, that's a sad situation. Unfortunately, we as real estate agents get painted with the same brush as those investors.

Mike - My agent emailed the investor the offer to sign. He called the sellers directly and told them if they didn't initial a change first, he would not buy their house. He then faxed them the addendum. They initialled it.

Laura - You are probably right. I hope not, though.

This is a bad situation, but I remember these type things happening in the 80's , especically in texas.

OCT

2008

Wendy, you're right....it is sickening. Why is it that one's tragedy can bring out the vultures, just like you say. We've seen post after post on this process of double closings. It's only a matter of time before this practice will hit a brick wall, I'd think.

Lynn - I hope I don't run into a situation like this again. And I bet the practice is going to grow for a while, unfortunately.

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