BUY AND BAIL - DISTRESSED HOMEOWNER FEELS REALTORS ARE TO BLAME

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

Calling all Realtors - What follows is a segment of a blog response to a discussion on the concept of "buy and bail". The words below were written by an unnamed person who is obviously an underwater owner.  It is important to know that to many, Realtors and Bankers are the cause of everyone's financial distress.  But one has to wonder, if our American Citizenry has a mindset like the author below, where would be this country's future?  With capitalism comes responsibility.  One of the great benefits of capitalism is the right to take a risk and be rewarded or penalized for taking it.  Bankruptcy is one of those benefits of American capitalism - but using bankruptcy has its penalties as well. Blame is in my opinion, un-American.  Responsibility is the American way. 

For example, if the author below made a quick $200,000 profit on his home, would be blame the lender?  No, he would be rewarded for his risk taking. 

Blaming Realtors or lenders is like blaming your stock broker for executing a stock trade and taking your a loss because of it.  It was you that decided to take the risk, and you will profit or loss because of it.

Here is the post (somewhat shortened) that appears on Trulia:

What's the difference between someone who "buys and bails" and someone who simply can't afford to make payments on a property any longer - or someone who recognizes a bad business deal for what it is?

Most of the negative responses are from agents. Why? One, they feel some degree of obligation to put on a good face. Because reality is *they* probably told *you* what a great deal you were getting when you bought the home that is now $100,000 underwater. I want to hear ONE of them say "I cautioned my buyers that the market was at a peak and they could be looking at being $100,000 underwater in a couple of years."

Second, short sales and foreclosures put a glut of property on the market. When prices drop, commissions drop. As it stands the average commission is only about 60% of what it would have been on the exact same house 2-3 years ago.

There are plenty of us "in good company" who paid high prices, who have paid that mortgage every month knowing we could buy twice the house today for what we *still* owe.

I paid $345,000 for my home in 2005. It needs a lot of work - probably 50-75k. We've already put about $10K into it in repairs. We've paid off $60K on the mortgage and we've paid nearly $80K in interest. And yet, we'd STILL need to come to the table at closing with another $30K PLUS more for an agent.

Our income has grown so we can afford to buy a second home and bail on this one, because at this point it is a money pit that we've dumped far too much of our future into already.

To all you righteous Realtors - you're not thinking about the good of anyone but your industry with your advice. Shame on all of *you*.

Copyright 2010 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660      end_of_the_skype_highlighting  RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  New Website www.Florida-Counsel.com

See our easy to understand articles at:

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Anonymous
CJS

Um, the above post was pasted from Word... sorry, it looks like Activerain doesn't support direct pssting like other blogs.. here's my comment in text.. sorry!

When shaping an opinion about something it is natural to approach it with a point of view filtered by our own experiences, biases and character traits.  Being an upfront honest "capitalist" I think your post comes from a rather altruistic view of business and may be a bit blind to some of its dirty underbelly.  You're a straight forward no muss no fuss kind of businessman.  I'd find it hard to believe you'd ever intentionally mislead a client for personal gain.

That's the key.  Intent.  When contracted for services whose best interests does the servicer intend to prioritize - theirs or their clients?  In an Adam Smith view of capitalism business is like a Chinese Buffet - a self-serve all you can eat first come first serve.  Legal and ethical factors often have as much effect as the velvet ropes the restaurant hang to form orderly aisles (that most duck under or walk around). 
Capitalism should never be used to absolve a service provider for using unethical or litigious means to close a profitable deal.  That's analogous to a Catholic Priest absolving someone of their sins.  I know that wasn't how you intended your post to read - but trust me there are those who will interpret as such.

Is it OK for a realtor to show clients houses managed by their brokerage simply because they don't want to split commissions with another brokerage , or show prime deals only to close associates knowing they could get a better price for a client if pushed harder on the open market, or "do their client a favor" and get an appraisal bumped up to make sure a loan closes?  What of mortgage brokers changing terms at signing?  If caught discrepancies get blamed on "clerical errors".  How many homeowners are victims of "clerical errors" simply because they were naïve enough to think that nice polite man or pretty young lady they've contracted to provide them a service put the client's interests first?  Naïve? Yes, but no less and certainly no more at fault than their service providers.  The list of scams, shams and penny squeezing plans fills volumes.

That said, any failed situation is analogous to a failed relationship.  Fault is a promiscuous insatiable animal that loves to sleep around.  Few are ever faultless.  I wish at times I could take back some of my boneheaded mistakes, but I'm a better person for having learned from them.  The person who wrote that letter is bound to repeat errors in his judgment that got him in that position.  It rings with a tone that sounds like he's learned nothing and would rather lay blame - not learn - from the experience.

There are realtors, brokers, bankers, lawyers and homeowners that pushed the ethical boundaries that broke the flood gates.  Blaming them will do no good.  They already know who they are.  Don’t offer them a means to assuage their guilt with that “all in the name of capitalism” out!  Guilt is one of the strongest motivators to evolve emotionally.  Let's hope they accept responsibility, realize there are lines you do not cross and mend their ways so something like this never happens again.

Jul 04, 2010 04:52 PM #2
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

These are the scenarios that drive me absolutely crazy! In my opinion this person should NOT be allowed to do a foreclosure! If you can afford another house then continue making the payments on the one you have - I just don't understand the thinking behind this.

Jul 13, 2010 01:33 AM #3
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Richard Zaretsky

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