Three blind mice, three blind mice.........blah, blah, blah.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

Lately, as anyone knows who has been reading my Blog, I have been dealing a lot with short sales and pre-foreclosure listings. Since I am not an attorney and cannot give legal advice, I always recommend to these Sellers, that they seek competent legal counsel. Most do. In addition to this, I give them my opinion, about what a short sale may do to their credit and the possibility of the amount of the "short" being treated as income, for tax purposes, and/or being attached to then as a personal liability. I do this, so they will understand, that being foreclosed on or negotiating a short sale should be a last resort decision and will have dire financial consequences.

Anyway, on Saturday, I was out and about putting up signs and refilling a few brochure tubes before the Holidays and bumped into one of my Sellers who is in a pre-foreclosure situation. She proceeded to tell me how she and her husband were getting ready to go look at some new construction homes and were hoping to put a contract on one. What? You are in foreclosure and think you can go out and buy a new house? According to my Seller, she thought that since we were trying for a short sale, that their credit would not be affected and that they could go ahead and place another property under contract. She figured since the Lender was going to get most of their money back, they would just forgive them for not making payments in five months and let bygones be bygones. I was dumbfounded to say the least. But, OK then, good luck with that.

Also, last week, I was speaking with one of my other Sellers. He lives out of state but has a flip that flopped in Poinciana. He hasn't made payments in three months and is also in a short sale situation. He had been pulling equity out of his primary residence for about a year to try and sell the property, he owns down here. Last time I had spoken with him he was telling me that he had already pulled $40,000 and only had about $40,000 left in his house. When we were talking last week he was telling me how tight things are and how expensive it is to send his three children to private schools. Then he proceeded to tell me how he was going to pull the rest of his equity out of his house to pay the children's tuition next year. He's not worried because he knows his house will increase in value and he should be getting a new job next year. So let me get this right. You have a house in Florida that has decreased in value and is about to be foreclosed on. You have already spent $40,000 of the equity in your residence to try and hold on to this house. And now you have come up with the brilliant idea of pulling the rest of the equity out of your residence to pay for private schooling. Well, good luck with that one too.

Folks, believe it or not, there's one more. I have another Seller who is going through a bankruptcy. This should be discharged sometime in March. They too have been out looking at new homes. They told me that builders are desperate right now so they shouldn't have any problem getting into a property because the builders have "in house" financing. Their thinking is that once they sell their property, after the bankruptcy, they won't have any debt so the lenders will be happy to loan them money to buy a new house. I truly feel like I am in an episode of the Twilight Zone.

Two Sellers, with serious financial issues, who actually have no clue that this will affect their ability to purchase another home and another digging their hole even deeper, based on future appreciation, even though they are in the process of losing a house for that exact same reason.

Are folks really that blind? Is their reality clouded by denial? Does financial responsibility mean nothing anymore?

Three blind mice, three blind mice.............blah, blah, blah.

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Comments (61)

Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Stan, No offense taken. You know you are always welcome to voice your opinion on my blog. I do think though in a lot of instances it's not so much greed or stupidity as it is total ignorance about financial matters. This needs to be addressed in our school system at an early age. Our society doesn't help either with all the buy this buy that every where you look. But I agree with you 100% they need to take responsibility for their own actions. I can understand folks making a mistake but not learning from it and doing the same thing again is completely stupid and foolish. And the folks in this post are not even through the mistake they made and are on the verge of doing it again. But I do get paid for helping them out. It's my job. My job is very interesting:)
Dec 28, 2006 12:27 PM
Jeff Turner
RealSatisfied - Santa Clarita, CA
No wonder your wife is throwing a TWISTED New Years Eve Party!
Dec 28, 2006 02:59 PM
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection
I am not sure what the problem is, it goes beyond being naive.  I see people who could have sold the house, for no real reason allowed the property to go in foreclosure.  The saddest I have ever seen was a brother and sister unable to agree on a property left to them. It was foreclosed, they lost everything.  The sister does not own a home and the property is now worth about 1 million.
Dec 28, 2006 03:13 PM
Ken Smith
Suburban House Hunters - Arlington Heights, IL

"Does financial responsibility mean nothing anymore?"

School teaches us nothing but to follow orders and be a good consumer...buy, buy, buy. Until they start showing kids how to save and manage their money the only role model they will have is their broke parents.

Dec 28, 2006 05:32 PM
Kelly Mitchell
The Wine Siren & Agent Caffeine - Napa, CA
TheWineSiren.com Food | Wine | Fab *Napa Valley
Ah.... so these sellers must be from the same pod that bought into those hybrid designer 0 down Zero iNTEREST 3 year ARM's ?  Should be alot more of those space cadets coming down the road...
Dec 28, 2006 06:45 PM
Boomer Jack Boardman & Carl McIntyre, the Codgers
Noted Curmudgeons - Saint Paul, MN

Bryant: Do you have any normal client/customers? Or is this the new "normal? You oughta take your accumulated posts, and edit them into a book (when you do, the Codgers will expect a signed copy!). We're not posting today, but you know where to find the coffee anyway!

Jay 

Dec 28, 2006 09:43 PM
Ron Withers ----Retired Mortgage Professional
Kissimmee, FL

BB,

Hey......I think you may have stumbled across a scenario for a new hit TV Reality Show! Three Blind Mice.. Exercises in Reality and/or Futility. You just have to bounce this idea off Ryan Seacrest and Simon Cowl.

Dec 28, 2006 10:47 PM
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
  Are they three blind mice or....? 
Dec 28, 2006 11:04 PM
Suzanne Marriott
Keller Williams Arizona Realty - Anthem, AZ
Associate Broker, CLHMS, e-PRO
Here in Arizona I know of a Buyer who purchased just 2 years after bankruptcy - but that was before they changed the law (last year?).
Dec 29, 2006 01:40 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Good Morning Bryan,

This reads more like TLW''s humor, but it's horror!

The fact that you know that the short or forgiven part of the loan is taxable means you probably know more than most attorneys, about this subject. Your would be clients have a much better chance at finding a knowledgeable REALTOR® than a knowledgeable attorney, when it comes to pre-foreclosure. Not that they have much of a chance at getting good help. These people are already suffering "dire financial consequences"! Your advice does meet my rule "I will not add to peoples troubles!"

Your next mouse is delusional! All true short sales will hurt credit! Most people will already have trashed their credit before  the lender would consider a short sale. A short sale is certainly more desirable on your credit report than a foreclosure!

I added "true short sale" because until recently, I'd never seen anyone use the term "short sale" when there was a substitution of collateral involved. Substitution of collateral is a valid and accepted, even if rare, financial tool. Substitution of collateral in and of it self has no affect on one's credit.

I've had considerable experience with short sales, admittedly with only one notable exception representing the buyer. I find the idea that seems so prevalent that lenders will do short sales to benefit the home owner disturbing, where do people get the idea that they are entitled to someone else's money? Lenders only accept short sales when it's in their best interest!

Your next mouse desperately needs help, to limit his pain, but he probably can't be saved. You're to be commended for wishing him "good luck" and not laughing in his face.

Your third mouse may not be blind at all! Infract the laugh maybe on all those that don't believe him!

I've closed loans in less than a week from all debts being discharged in a Chapter 7 BK, and I've financed many a Chapter 13 BK while still in bankruptcy!

Lenders evaluate risk. Lenders charge more for people with bad credit, but they also take a lot less risk. Oddly, there is a lot more risk loaning to people with good credit than bad, because we require sufficient equity to eliminate any risk from troubled applicants. If they don't have current IRS liens or local judgement any warm body with sufficient equity can get financed.

As I finish this you have 50 comments, many judgmental, many experienced but totally uninformed. Don't these professionals know they are in the people business? Our job is to help people not to throw stones! I recall something about ‘let him who is without sin throw the first stone" I'll bet none of us are qualified.

But, you get extremely high marks for your question "Does financial responsibility mean nothing anymore?" I tried a different approach to the same point Foreclosures are up, Foreclosures are up, Foreclosures are up You got 50 people thinking and commenting I got 2.

Verry well done!

Bill

William J Archambault Jr

The Real Estate Investment Institute

http://www.reii.org

 

Dec 29, 2006 02:59 AM
Harper Team
J Rockcliff Realtors - San Ramon, CA

You certainly live a charmed life.

I hope you are working all of this material into a book.

I actually went through a short sell during the Carter years of 20% interest rates and the bank was great. They sold the place, we called it even, and they didn't hammer my credit. It can happen.

But, I wasn't out looking for a new house at the time. Life is stranger than fiction! 

Dec 29, 2006 03:01 AM
joanne Douglas
Terrie O'Connor Realtors - Ridgewood, NJ
Amazing!  I couldn't imagine taking something as serious as foreclosure & bankruptcy so lightly!  With the choices here being blind or stupid I would say BOTH, and throw in a dash of "it's only money"  problem is that it's OPM (Other Peoples Money) --- I am back to Amazing... 
Dec 29, 2006 03:53 AM
William Collins
ERA Queen City Realty - Scotch Plains, NJ
Property and Asset Management

Bryant,

Thanks for the post. Sad but true, all too many people are completely unaware of options and ramifications, when it comes to foreclosure proceedings.

Dec 29, 2006 04:08 AM
Monica Hubert
Kiefer Realty - Ocala, FL
Okay, I am sure this has already been answered a million times, but could you humor a newbie and explain to me what a "Short Sale" Is? I know it has to do with selling a home for less then you owe on it but how is that Legal? Sorry if this is something I should know, but I won't learn unless I ask :) Thanks!
Dec 30, 2006 12:26 PM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Monika, A "short sale' is exactly what you stated selling a home and being "short" funds to pay the mortgage balance in it's entirety.  The lender has to agree to it. It is was their solutions to avoid foreclosing on the property. The Sellers have to be able to prove financial hardship. Do a Google search on it and it will answer all of your questions. Always ask. There are no dumb questions just dumb answers:)
Dec 30, 2006 12:48 PM
Monica Hubert
Kiefer Realty - Ocala, FL

Bryant,

So the Lender must agree, that is how it is legal? Thanks for explaining it and I am off to Google :)

Dec 30, 2006 12:51 PM
Chris Ward
Eagle Realty - North Myrtle Beach, SC

its amazing what people DON'T know in todays age of information...

 

www.EagleResorts.com

Jan 12, 2007 07:30 AM
Laurie Mindnich
Centennial, CO

The archives are history in the making.  Bind the book.

Sep 12, 2007 10:05 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

BB, You posted this almost two years ago when many had not even heard the term "short sale". Just this week, I had an email wanting to see a condo. I called the "buyer" and while doing my routine questions lik "do you have a home to sell?" Well the one I own is being foreclosed. A short discussion followed and I remembered your blog.

la la hope TLW is feeling up to singing the rest of ".....see how they run.."

Sep 20, 2008 02:12 AM
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Boy...

Have times changed since you wrote this one :)

TLW...ROAR!

Dec 26, 2009 09:32 AM

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