Not So Crazy

Real Estate Broker/Owner with Waterstone Realty

"Michael, why are you helping people stay in their homes?  Isn't it your job to help people relocate by assisting with buying or selling their home?" 

In the last year I have gone on many listing appointments.  At these appointments it is usually the same thing.  People want to sell but owe too much on their home.  What if you can't afford your payments?  Now I said before and I'll say it again, My #1 Goal is to help people stay in their home.  That doesn't mean that I don't sell real estate anymore.

If people can't afford their homes what do they do?  Well, before a few years ago you had 2 choices, both usually ending up with you leaving your home.  When people faced hard times and went through foreclosure or bankruptcy, how did the sale of their home reflect on the surrounding area?  Every time that we sell an REO (foreclosed on property) we have to price competitively compared to the surrounding area.  That means if the REO home in mint condition would usually sell for $100,000, the real estate agent in charge of the sale will list it at $90,000.  Now what happens to a neighborhood when this happens over and over again?  That's right, your home becomes harder to sell for the price you want, or even need.  In fact, now the comparables you are basing your price on (the same way appraisers base appraised value) will be those foreclosures. It's not fair, I know.

Now we have a new option if you can't afford your payments because of a hardship.  We in the business call it a short sale.  Few real estate agents will do this type of transaction, and it isn't fun.  A short sale is selling your home at market value.  If you owe more than what it was sold for, the bank actually will forgive your debt.  They would rather you call an agent like me than face the humiliation of foreclosure.

The after math of each: 

Foreclosure:  They advertise your name in the paper, evict you, and throw all you stuff in the street.  Embarrassing to say the least.  Oh, and 100-150 points off your credit, stays on record for 7-10 years. 

Deed-in-Lieu of Foreclosure:  The owner gives back the property to avoid foreclosure.  This is the "nice foreclosure," and affects your credit the same way.  The biggest thing is the bank is a little nicer to you since they don't have to go through the paper work hassle.

Bankruptcy:  100-150 points off your credit, stays on record for 7-10 years.  Some people think that by claiming this they can keep their home.  It isn't always the case, and be sure you check on this proficiently.

Short Sale:  40-50 points off your credit score, stays on credit report for 1 to 2 years.  You are the seller, and act as such.  You negotiate the deal and sign the paper work.  The owner takes control, but still interacts with the bank as a third party to approve the short sale.

By keeping people in their homes I am trying my hardest to keep property value, yours and mine, up.  I am not only working for the family who is having hard times, but also Bob and Sue Cleaver down the street who's biggest investment is their home.  I'm working for everyone when I help these individuals.  We will have a little bounce back, and I personally have come to accept that.  The more people I can help the better your and my property value will be.  Don't keep me a secret.