Who Put the Shame in Short Sale?

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795

Who Put the Shame in Short Sale?

Even though the “Lesser Depression” is in full swing and the Housing Bust is old news, I still occasionally run into the sentiment that short sales are shameful. Why? Is this a case of middle class morality run amok?  As a Santa Maria short sale agent, I’ve consulted with many underwater home owners who believe they can "afford" to keep paying their bloated mortgages. However, paying a 2005 mortgage on 2011 wages is tricky indeed. And, when you sit down and review financials, you often discover people are amassing credit card debt on a monthly basis, not able to save for retirement, and have years of deferred maintenance on their home. Some would prefer to go on in this fashion until they reach the door of a bankruptcy attorney. As nonsensical as it sounds, others would rather load their things in the back of a U-Haul in the middle of the night and let the home go to foreclosure rather than stick a “for sale” sign in their front yard. Why? Who put the shame in short sale?

Because I worked as an attorney before coming to real estate, I view  the question of bankruptcy as one of mathematics. Are you in the red or in the black?  And I view a short sale in much the same way.  Interestingly, what is the financial condition of the US right now?  Last I checked, the country’s entire economic system is undergoing a major adjustment. Yet, for some, pride demands that their financial condition should not (seemingly) be affected in these troubled times. I regret that we’ve gone this long as a nation without an acceptable response to the after effects of the housing boom and bust.  I regret that bailing out financial institutions was viewed as vital, yet bailing out underwater homeowners has been and continues to be a low priority. And, I regret that every major effort aimed at the problem of the underwater homeowner seems slighted towards people losing their home and sitting on the sidelines of the housing market. That I think is shameful. However, I do not think a short sale is shameful ... I think a short sale is about math.

Before deciding whether to short sell your Santa Maria home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, andShort Sale Agent. She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.If you stop paying your mortgage, you could lose your home and damage your credit rating.

Copyright© 2011 Tni LeBlanc *Who Put the Shame in Short Sale?*

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 11/12/2011 06:18 AM
  2. Gene Riemenschneider 11/13/2011 04:34 AM
  3. Leslie DeLuca 11/14/2011 01:46 PM
  4. Deborah "Dee Dee" Garvin 11/27/2012 09:24 AM
Topic:
ActiveRain Community
Location:
California Santa Barbara County Santa Maria
Groups:
Short Sale REALTORS®
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shame in short sales

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Rainer
39,398
Michael Singh,Broker
Singh Real Estate - Corral de Tierra, CA

When homeowners sit down and do the math and realize they need to sell there is nothing shameful but what the banks sometimes put the homeowner through is shameful

Nov 13, 2011 04:00 AM #36
Rainmaker
414,607
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Judi - I agree.  I meet so many people that believe they can "afford" to keep making their mortgage payment, but they are amassing consumer debt monthly trying to keep pace.

Wendy - Some would say so that they can do the bankruptcy later.  LOL.  But that is a bit cynical I suppose.  You are right though -- I advise all my short sale sellers to get independent legal advice -- I am only acting as a broker.  They come back with many off the wall things.  I send them back with specific and pointed questions.  It works. 

Judy - I think so.   And, I think it is unfortunate and ignorant especially in these times.

Dagny - It would be nice if there was some real loan modification solutions offered to people so that they could keep their homes.  Until then, short sales are a necessary part of the recovery.

Kimo - It is unfortunate that we don't have much choice when it comes to who to elect.  Ultimately, I think real change will come from people taking to the street, not from Congress.

Nov 13, 2011 06:52 AM #37
Rainmaker
414,607
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Roberta - Yes, it is an emotional experience.  And, you are right, there are often tears at listing and at the end.  But, I hope that the shameful part that people feel gets eliminated.  It's difficult enough without that.

Margaret - Yes, and I also tell short sale sellers that the sooner they deal with the situation, the sooner they will get past it.  It won't be long for many until they can buy a home again -- if that is what they want.

Gene - There is a lot being given away at the top -- that is for sure.

Lyn - I agree.  Glad to hear Suzy Orman is on giving people realistic advice appropriate for the current economic times.

Jim - Yes, banks don't think twice about making sure their operations remain profitable -- whatever that takes.

 

Nov 13, 2011 07:05 AM #38
Rainmaker
414,607
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Fred - Yes, reality will come eventually.

Mike - Yes, I think strategic default is a great discussion.  I find that often defaults that many would describe as "strategic" are not exactly that strategic.  They are often immediately necessary.  I don't understand why people think it is wrong to do the math and make a decision -- it is the same process you go through when you head toward bankruptcy.  I don't offer legal advice on my short sales, I advise all my short sale sellers to get their own independent legal advice.  How do you handle it?

Harrison - Very true.  Although for many a short sale will do the trick.  It all depends on what their complete situation looks like.  They need to go over their entire situation with an attorney and their tax adviser.

Cheryl -- LOL.

Bob - In that order really?  OK I'd have to think about that awhile.

Thanks for the feature Pat!

Michael - Very true.  The current process is very disrespectful to buyers and sellers.

Nov 13, 2011 07:15 AM #39
Rainer
282,595
Jennifer Manchester
Suburban Properties of Charlotte, LLC - Mint Hill, NC
GRI, ePRO, ASP - Broker/Home Stager

Hi Tni:

You give great advice.  It is also very true that the public seems to have the perception that a short sale is shameful, add that to all the mis-information out there and you have embarrased and very confused potential short sale clients.  I think I will start using your explanation, A short sale is about math.

 

Thanks again

 

Nov 13, 2011 07:20 AM #40
Rainmaker
902,476
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate

Short sales are about sellers that have to sell or get foreclosed on.  I believe they are the smart ones.  There is no shame is saving your credit the best way you know how.

Nov 13, 2011 12:45 PM #41
Rainmaker
723,329
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Since the financial situation regarding home loans is affecting so many it kind of seems like the stigma is reduced from years ago. This is not an easy problem to resolve since the parties involved have differing objectives.

Nov 13, 2011 04:10 PM #42
Rainmaker
375,566
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Patricia's weekly list sent me here.  I think most people feel shame when they cannot, or will not, fulfill their promise to repay the money they borrowed.  People feel an obligation to fulfill a promise.  I do understand it may be unavoidable, and I think your approach may help them do what must be done.

I had a high school biology teacher whose best lesson was when someone complained that something was not fair, he'd ask mockingly, "Fair? fair?  Who said life was fair?"  I learned more about the idea of "fairness" than about cell division.

Nov 13, 2011 05:20 PM #43
Rainmaker
414,607
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Thanks Jennifer - I really think we need to move forward and past the shame.

Kay - Absolutely.

Wayne - I agree the stigma has lessened.  Working with people who are underwater by hundreds of thousands of dollars -- I think they need to think about the math.

Lloyd - These are different times for sure.  In my view, eliminating this negative equity is a necessary part of putting the economy back together -- which is also a math issue.  I wonder what we would do all day if life was fair?  <sigh> 

Nov 13, 2011 10:55 PM #44
Anonymous
Anonymous

Tni; Great writing skills. Also great piece of advertising for your company, although I would have liked to read an extended explanation of why you don't consider short sales shameful. I don't either. 

Nov 14, 2011 07:59 AM #45
Anonymous
Isaac Bensussen- www.besthomesinlajolla.com

Tni; Great writing skills. Also great piece of advertising for your company, although, I would have liked to read an extended explanation of why you don't consider short sales shameful. I don't either. 

Nov 14, 2011 08:03 AM #46
Rainer
28,148
paul reiter
houdini housing - Gary, IN
I'm "underwater" Big house/Big loan- Big problems w/BofA My plan- Smart lawyer- Stall and delay- While we Investigate and negotiate I'll walk away unashamed O'Well Paul in Chicago
Nov 14, 2011 09:54 AM #47
Rainmaker
229,831
Nathan Tutas
Tutas Towne Realty, Inc. - Davenport, FL
Your Central Florida Real Estate Expert

I completely agree with you. It really does boil down to simple math. For the lender as well as the seller. There is nothing wrong or shameful about settling your debts. If the lender is not willing to settle it then they have that choice. but at some point it's going to have to be settled whether it be a short sale, foreclosure, or the home owner paying and racking up debt. I think a short sale makes the most sense for all concerned.

Nov 14, 2011 11:49 AM #48
Rainmaker
180,172
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

Great post.  I think most people get bad advice about filing for bankruptcy, when a short sale would solve their problem much better. 

Nov 14, 2011 12:25 PM #49
Rainer
83,335
Jayne Clement
Keller Williams Realty - Los Feliz, CA
Los Angeles Short Sale Agents

Well said!  As a Santa Maria short sale agent, you have your finger on the pulse of reality...as you say, it's just about the math!

Nov 14, 2011 12:58 PM #50
Rainer
226,647
Leslie DeLuca
DeLuca Real Estate - Monterey, CA
No One Knows The Monterey Peninsula Like DeLuca

Wonderful information...I think I will repost this one.  So many people are embarassed by a short sale...Not shameful...just makes good business sense.  I have people all the time who want to keep their home that they owe $550K on, and it is only worth $300K....this just does not make financial sense.  If a modification can be done that will lower the principle owed to what the house is worth, great...otherwise...you are going to end up paying way more than it is worth....

Nov 14, 2011 01:43 PM #51
Rainmaker
125,416
Kim Dove
Watson Realty Corp - Jacksonville, FL
Realtor - Jacksonville FL

I think sellers should consider the numbers. That is, do the numbers make since at all? If they don't, then you know what you have to do.

Nov 15, 2011 06:09 AM #52
Rainmaker
508,351
Sylvie Stuart
Realty One Group Mountain Desert 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagsta
Short Sales aren't shameful, they are part of what some of us have to go through right now. Everyone knows someone, even if you're not in the business, that's gone through one. This too shall pass, take care of what you have to so that you can move on and help the community later
Jan 16, 2012 12:33 AM #53
Rainer
71,755
Bas Panch
SCV Home Buyer - Valencia, CA

Hi Tni,

This is EXCELLENT advice! Nothing wrong or shameful with being practical, if a short sale is the best solution for you, there is absolutely nothing embarrassing about it. Keep up the good work as a top Santa Maria short sale agent!

Jul 05, 2012 12:42 PM #54
Rainmaker
158,740
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Tni,  I am late to the party, but am so glad I found your post.  You have done an excellent job of directing the focus to the facts, not the emotions, of a short sale.  I cannot tell you how many people I have talked to who were insisting on creating financial suicide by staying in their home.  I am a lender, not an agent, and I have spent hours trying to show them why and how doing a short sale made way more sense.  Thank you for the clarity.

Nov 27, 2012 09:17 AM #55
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Tni LeBlanc, Realtor®, J.D.

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