I can't tell you how many times I've heard a distressed seller say just that. "I want to keep the house." And yet, everything they tell me about their situation says that they can't. If you hear these words, know that your client is in DANGER!
Its time to sit your client down and have a very serious and honest talk. This is NOT the time to sugar-coat the discussion!
My company, EZShorts.com, has completed over 400 short sales, but that means we've probably talked to nearly 1,000 homeowners who are behind on their payments. And some CAN keep their house. Don't get me wrong. But if you tell me you aren't working, and don't have any employment lined up, a loan modification is NOT going to work!
Over the years, I've identified three major "dangers" when I hear those words. By knowing and understanding what they are, you, as real estate agents and brokers, can talk openly and honestly with your client and hopefully get them in the direction they need to go, which is typically a short sale (or just a regular sale if there is equity).
1. They will buy into loan modification scams. I've seen this happen. I know of one investor in my community who charges clients $500/month just to stall the foreclosure and let them live in the house for "free". Clients will do this because they believe that job is just around the corner. But even if they find one, by the time they do, they've piled up so much arrearage, the lender still won't do a loan modification. Not only that, but should they do one? If they add $10k to the end of a loan, they've essentially added $10k to the amound owed on the house. If the house is already underwater, was it worth it just to stay in the home? Desperate people do desperate things. Don't let your client act desperately!
2. They will declare bankruptcy. Don't get me wrong. Sometimes they should declare bankruptcy. But only if their other debts justify it. People trust attorneys to give good advise, but, unfortunately, attorneys often give advise that is best for the attorney. The fact is, a bankruptcy will not save the home. It is a delay-tactic (see #1 as to why this does not help even if you get a job), but ultimately, that house note is going to be taken out of the bankruptcy as it is security debt. When it does, that lender is READY to foreclose, and the arrears have piled up so high that saving the home is out of the question. So what did your client gain by declaring bankruptcy? They've spent some money on an attorney and are now saddled with the same problem PLUS a bankruptcy on their credit report.
3. They will wait too long to decide to sell it. I can't begin to count the number of times I've had clients disappear to "figure out a way to save their home" only to return a few days before their home is auctioned. In many of those cases, it was too late for us to help and they were foreclosed on.
The talk you will have with these clients is not easy. Telling someone that their best (and really only) option is to sell their home... the possession they've loved and worked so hard to get is one of the more difficult things we have to do as real estate professionals.
But in the end, your clients will thank you for the "tough talk".