Recently, a homeowner whose house was for sale and in the foreclosure/short sale process, came to me with a question.
"We are not getting any money out of this sale," he explained, "and we built this home from scratch. Why can't we rip everything out of the house and sell it, like in a big garage sale?"
First I asked him to clarify what he meant by "everything". His list of items included
the hot water heater,
the above ground swimming pool,
the built in bar and grill on the patio,
all the appliances,
all the light fixtures,
the ceiling fans,
the outdoor garden lights,
the custom window coverings.
He said he'd be happy if he could even get a few hundred dollars out of it. Unlike many homeowners, he wasn't angry or doing this to be malicious - he just wanted to get a little money out of his foreclosure.
I understood his point and sympathized with him. Foreclosure is an emotional, frightening process and for many, it is completely out of their control. Why should those expensive curtains, plantation shutters, and bar that he built with his own hands just sit there? Why couldn't he strip his property when it's in foreclosure and sell it all off?
But no, it's not ok. In fact, it's fraud.
When a homeowner takes out a loan, you promise to keep that property in good shape. You're not only promising to make payments. The asset that your lender has a lien on includes everything attached to it.
And if that doesn't convince you, how about this? In Arizona, back in February 2010...and I'm sure there are more examples, but this was one I could readily find...a homeowner was arrested for stripping his foreclosure house of some appliances and the a/c.
So, let's pretend that time in the slammer doesn't bother you, or you really don't believe the bank is going to go after you. You're still potentially hurting yourself. In my client's case, I reminded him that he was still hoping to do a short sale, which would hurt his credit a lot less than a foreclosure would. A home that lacks flooring, heating, plumbing, etc. is un-mortgage-able. Even removing interior doors will prevent buyers from being able to get an FHA loan (interior doors can't even have holes in them! Evidently it's a fire hazard). Why cut out the vast majority of buyers over a few hundred dollars?
Furthermore, stripping a home not only hurts the lender, it brings down the value in the neighborhood, which harms the neighbors. It also hurts the next owner of that home, who has to repair the mess before they can even move in. If you can even GET a next owner of the home!
So before you encourage your dog to pee on every carpet, before you take the hammer to your stove top, before you offer your entire kitchen, including the flooring, on craigslist for $1000, before you smear unmentionable things on your walls (yeah, and I've seen all of these!!) think to yourself - is it worth it??