When I am first contacted by the owner of distressed real estate, I ask them THEIR goals. It is important to establish what they would like to do (i.e. keep the home, walk away intelligently, etc). The next step is that I advise them that there are three issues...
1). Cash flow issues - meaning their monthly money coming in vs, money going out. this is especially significant if the distressed property is an rental property and providing monthly rental income;
2). Tax ramifications...there are tax ramifications to virtually every resolution and these need to be addressed;
3). Credit issues.
I then advise clients to pick the two that are most important to them and then I build the strategy around that.
Then I select the course of action based upon the above choice and the lender, length of time in default, whether the property is NOD or in foreclosure etc
I have found that this analysis helps tremendously because the client can never get too angry because they participated in the course of action and they made a decision. Sometimes they can change their mind - such as when they initially wish to preserve their credit but during the process they decide that it no longer matters.
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