When a house becomes a prison!

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

 Today was one of those days that reminds me of why I do what I do. I am in Real Estate to help people. Sometimes I can and sometimes I can’t, but I can never stop trying. This is a true real life example of some of the problems our elderly have in this country. The names have been changed to protect my Sellers. So I’ll just call them, The Lovelys. Why? Because they are. They are lovely folks who will be turning 80 in January.

The Lovelys sold their house in NY and moved to Florida about 12 years ago. From what I understand everything was going pretty well until they got a big tax bill from the IRS for the sale of their house in NY. It seems they had hired an attorney to handle all of this for them and for some reason a mistake was made and they ended up owing the IRS $50,000. This came up about 1 year after having bought their new house, they were planning to retire in. They didn’t have much money to begin with but were able to put down a good chunk as a down payment on their new home and only had to finance about $70,000. This gave them a manageable monthly payment that they could afford on their fixed incomes. Well, when they got slapped with this big IRS bill they had to refinance their mortgage to pay if off. This made keeping up with the payments more difficult, so at the age of 70, Mr. Lovely had to go back to work.

Well, life being the way is it they encountered several more of life’s difficulties and had to start borrowing money on their credit cards to be able to meet their monthly bills. This went like this for quite a few years until eventually the payments became to much for them and they refinanced their house again to pay off the consumer debt.

Again, life being unpredictable, threw a few more challenges at them and the credit card debt accumulated once more. Let’s fast forward to the boom market of 2004.

Property values increased drastically and their house built up quite a bit of equity. They met with a Realtor in late’04 to put their home on the market. Their plan was sell their home, payoff their debt again and have some money left over to move up to Georgia and pay cash for a place in an adult community. Ahh, paradise! No more bills and Mr. Lovely could finally stop working, since he was then 78 years old. The only problem was they decided to go with Buy Owner instead. This company is not a Real Estate company but a marketing company. For $2,600 they will give you a yard sign, a stack of blank contracts and place your property on their web site. That’s it. They are not licensed and cannot perform the duties of Real Estate. This includes, not being able to give you an opinion on the value of your house. But hey, the consumer doesn’t know this. So The Lovelys, ask them if they think we can get $375,000 for their house and of course the company representative says, “Sure, sounds great. Give me $2,600 right now and I will go get a sign out of my trunk and get you on the web site later this week.” This company is so nice they even mention that if your home doesn’t sell in 12 months they will reimburse your money IF you list with their affiliated Real Estate Company. Ok, so I’m going to jump ahead 12 months.

The house didn’t sell. Big surprise. Even in the boom market a house valued at $269,000 will not sell at $375,000. Anyway, The Lovelys decided, they best get their $2,600 back, so they decide to list with the affiliated Real Estate Company. The Realtor comes over and explains to them, that no, you must have misunderstood, we don’t refund the $2,600 you paid. What we do is reduce the commission to make up the difference. So instead of charging you 7% we will only charge you 6%. And by the way, we think you need to reduce the price to $345,000. Well, The Lovelys, are a little hesitant but really need to sell. That have wasted a year already, with nobody even looking at they house, so they agree. A couple of months into this new agreement they contact me desperate to sell their home and cannot understand why their house has not sold. After a little research, I explain to them that they are overpriced by about $80,000. The Lovelys are devastated. They still have 4 months to go on their listing agreement and if they cancel they have to pay a $2,000 cancellation fee. They have no money. The initial $2,600 was placed on a credit card and they have been using them to supplement their income for several years now.

This is getting really long now, so lets just say after another 4 months they have listed with me at $259,000. Unfortunately, the boom period is over and was way before I took the listing. I have had it now for 60 days and this brings us up to today. Mrs Lovely has been very depressed so I suggested we meet today and let me look at their finances, to see if I can, maybe, come up with an idea, that they have not thought of.

Folks, I must say this was a very emotional day for me. Remember these folks are almost 80. When I first starting going through their debt, I had to fight back tears, then I got angry at the credit card companies and the banks for giving these folks so much credit. Then I got mad at the Marketing Company that took their money. Then I got mad at the Realtor who priced their house $80,000 over market value and caused them to miss the boom period, when they could have sold. Then I got mad at me for not being able to help them out of this mess.

So here’s the situation, in all it’s ugliness. They owe $175,000 on the house. They owe $55,000 in consumer debt. This totals $230,000 debt. Their fixed income is less than $3,000 a month. The house has 2 mortgages on it. The first is a ARM and in March ’07 will adjust from 6.95% to 9.95%. The second is at 13%. Since the Real Estate market has changed, their house right now, max, is worth maybe $235,000. Do the math. Even if we get lucky and sell the house for top dollar, it is not even enough to pay off their debt. Where are they going to live? What are they going to eat? They have no children. They are alone. They are screwed. They are almost 80, with no hope showing.

I was honest with them. I told them they need to meet with a bankruptcy Attorney to see about getting rid of the consumer debt. Then we need to concentrate on selling the house. I will work for free, if need be, to make sure they get as much money as possible from the sale. Maybe they can get out of this with $50,000. Then, they need to move to Georgia and find a nice rental in a retirement community and enjoy what life they have left. They still have each other and that is what is important.

This story is actually a lot more complicated and a lot more disturbing than this but I’ve run out of space. But please, keep these folks in your prayers.

When a house becomes a prison!

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Comments (49)

Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699

Well, you had me in tears. It just so sad that anyone, much less folks in their age group have to go through something like this. The scam artist and the predetors are out there in force and they just love older folks. It P***** me off!

I too, think that as combined group in Active Rain that we can and should do something to help them out. They are lucky to have you in their corner!  Let Brutus Tutus at those credit card folks ... maybe they'll stop dialing the phone and increasing credit card limits if Brutus takes care of a few arms!!

Keep us posted. Let the Lovely's know that the folks on AR are praying for them and backing you 100%

Oct 21, 2006 05:38 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Gena, the hardest thing about it is the guilt they feel. They are honorable people and have dug a hole they can't get out of. I can't imagine turning 80 and being in this predicament. They just kept hoping that their house would sell and they could pay every thing off. Unfortunately, they were given "false hope" by people not being honest with them about the value of their house. I wasn't able to post all the details because of length but they also just lost $1,000 deposit they had on a place in Georgia.

They trust me explicitly, so I was able to get them to understand that what equity they have left, must go in their pockets and not the creditors. They hate doing that, but it doesn't make any sense to keep throwing their money away on interest payments. At their age it cannot be replaced.  

  

Oct 21, 2006 05:53 AM
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

"The Lovely Gena"

Boy what a memory you have. Like I said we would make a great team.

Sic 'em Brutus! AMEN to that.

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

Oct 21, 2006 06:06 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Hi there, As I read back through the comments, I feel I need to point out. I do not believe there has ever been any fraud or illegal practices from any of the companies involved. The problem is the consumer is not aware of what they are signing on to in most cases. As Realtors we need to really take the time and explain to folks the good and the bad and not concentrate on our paychecks. We are in such an excellent profession and have such an awesome opportunity to use our skills for helping people, not just selling them.

If someone is buying  a house that you just know in your gut they can't afford, then let them know that. We can't decide for them but we can make sure they understand what they are doing. And be honest when pricing a home. Sellers are counting on this money and making plans based on what you are telling them.

Being a Realtor has a great responsibility attached to it. Take what you do seriously. If done with reckless abandon, we can destroy lives. There are real people, mothers, fathers, grand parents, children behind every deal we do. Just try to remember that. Step it up a notch. Make being a Realtor mean something positive to the public.

Oct 21, 2006 06:15 AM
Marguerite Crespillo
Marguerite Crespillo - Roseville, CA
I cant begin to tell you how many of these same stories i could repeat right now.  I have 4 currently listed in very similiar situations....
Oct 21, 2006 09:14 AM
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL
OH MY...
Oct 21, 2006 09:26 AM
Peter Andres - Lic. in FL & NY GRI,SRES,CNE
REALTOR - The Villages, FL
Like Marguerite, I too am hearing a lot more of the similar stories. I think with the gourmet mortgages of the last couple of years, we will be hearing and seeing many similar stories. My heart goes out to each homeowner.
Oct 21, 2006 12:55 PM
Ron Withers ----Retired Mortgage Professional
Kissimmee, FL

BB,

It sounds like a number of options need to be considered in searching for solutions for these folks, including bankruptcy. I used to know and understand the Bankruptcy Code much better before its most recent changes. I know that it has tougher restrictions than before. If that turns out not to be a solution and/or your clients still want to avoid it then I would suggest they consider a good not-for-profit credit counselling agency.  They may contribute some excellent advice and if your clients use them they may be able to negotiate the credit cards down to 0% interest and possibly even a partial balance writeoff. Also, possibly avoiding attorney and legal costs.  Thing is you never know unless you ask or request.

Oct 21, 2006 10:53 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

BB.... even though you went back and read what you wrote.... that you don't believe there was any fraud. It's the next worst thing and should still be considered fraud when someone purposely deceives another in a transcation. Even though this is considered lying or giving false information...or not explaining all the facts and the outcome.

I still have been thinking about this yesterday and today. Last night, I wrote a blog on something similar to this.Well...one of my comments in my blog was like your example, in a certain way. Not the main topic.  Rules that aim to cut the risks on 'exotic' mortgages!!!!!

Oct 22, 2006 02:44 AM
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699

Preying on the Senior is abhorrent. A dear of mine who lives with her mother who is in her 70's and has selective memory receives phone calls and junk mail daily from credit card companies and Lenders offering junk. When the daughter leaves, she is having the phone answered by the telephone company which will determine if the call can actually go through or not (nice feature) and having the mail sent to a P.O. Box so that the other family member can pick it up and go through it with his mother. This is all out of fear of the predators!

I say let Brutus Tutus out of the backyard and let him attack!

Oct 22, 2006 03:35 AM
Susan Trombley
Trombley Real Estate - Wake Forest, NC
Broker/Realtor, Raleigh, Cary, Wake Forest, Youngs
once again those years are to be the best and it sounds like horor. I was so sad reading that story. I have no respect for others who take advantage of others.
Oct 22, 2006 04:09 AM
Michele Connors
The Overton Group, LLC Pitt & Carteret County - Greenville, NC
Your Eastern North Carolina Realtor

If they have no children (or estate) what if they just pass on from this home -using Homestead protection ...will they really have a debt to pay?

What is their health like- I am sure they are in angst as their generation certainly knows a dollar is hard earned..

Church or investor group to buy out then rent back to them ?

just rambling- hate that the elderly get taken advantage of. My grandma (widowed and alone) lives in Palm Beach Gardens and has been considering dropping her HO Ins and take the risk because she cant afford it..Sad.

Your story is certainly something worth public awareness..problem is the vultures out there will present some gimick to the ones that dont have guidance like your sellers who have you looking out for their best interest.

 

Oct 22, 2006 10:47 AM
Leigh Brown
Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC
CEO, Dream Maker - Charlotte, NC
This makes me want to throw up.  God bless them, will be praying for a solution to work out!
Oct 22, 2006 01:17 PM
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

"TO WHOM IT MAY CONCERN"

I have been working on this problem with The Lovelys today.

I hope to have a solution in place within a few days.

Turns out our idea is just a little more complicated than we expected. Please stay tuned. Keep those boxes checked!

Will put things into motion as soon as I can. Then I can release you from box duty. LOL SEE :>

Gratefully,

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

Oct 23, 2006 08:25 AM
Noel Padilla
J. Luis Properties, Inc. - Kendall, FL
CDPE
Unbelievable......salesman people hate: insurance, cars, real estate....not necassarily in that order. Now I know why so many doors get slammed in my face. This industry really needs to get rid of scumbags like this so the rest of us can make an honest living helping prevent situations like this. God Bless all those who are involved helping this poor couple out and hopefully enjoy what little life they have left.
Oct 24, 2006 01:18 AM
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

TO ANY ONE WHO WOULD LIKE TO HELP THE LOVELYS.

PLEASE FOLLOW THIS LINK,

THERE IS SOMETHING WE CAN ALL DO TO INSURE

THESE ELDERY FOLKS GET OUT FROM UNDER THE HOUSE

THAT HAS BECOME THEIR PRISON.

Gratefully,

Broker Bryant and The Lovely Wife. ROAR!

Oct 25, 2006 08:29 AM
Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents
Wow.... Words just cannot describe how they must feel. I can see why you would be upset, and I would too. This is how we the salespeople get the bad name, but then again we have people like you and some on AR that shine through. I'm following up with the next post!

Thank you for doing what you need to do.
Dec 21, 2006 12:16 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Loreena, The Lovelys have now started the bankruptcy process and I have taken their home off the market until the legal process is complete. I met with them this week and printed off this post with all the comments and gave it to Mrs Lovely. She was really really touched by the out pouring of support. It made her day.
Dec 21, 2006 12:21 AM
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
I'm afraid a friend of mine is going to find herself in a similar situation. I have her house listed and it's not really overpriced, but the only houses that are selling are the ones that are priced below the competition, not even with it. She's struggling to make the payments each month and will have a balloon payment next year.  She may have to let her house go into foreclosure.
Sep 01, 2007 10:53 AM
Kelley Eling
Fathom Realty Group - Sonoma, CA
Realtor Extraordinaire
I think a LOT of people are either IN this position or WILL be in this position.  It's not something people like to talk about until it's too late.
Sep 02, 2007 04:04 AM

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