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SELLERS' SECOND MORTGAGE

By
Real Estate Agent with One Sothebys International Realty

I've had a listing for several months now & felt that I had a good working relationship with the owners.  While they've given me several price reductions, I felt that we needed to reduce the price again b/c of continuing declines in the market, particularly in their property type. 

The other day, I gave them some new "net" sheets to assist them about the new price..  We agreed that they'd review the sheets & let me know how much to reduce the price (I suggested a $10,000 reduction).  I was surprised not to hear from them yesterday; last night, I read an e-mail the wife sent me.  Evidently, sometime during the listing period, they had taken out another $15,000 against a line of credit.  Their equity, which had been a bit tight to begin with, was now even less.  Since they're counting on their net proceeds to fund their next purchase in the area, they  either get a lesser home (something I don't see them doing) or don't sell (because they can't lower the price).  I now doubt that this listing will end at a closing table.  Lesson learned: have my company's title company run an "Ownership & Encumbrance" report on the sellers (reveals all publicly recorded mortgages, liens, etc. against the property).  If I had done that, I wouldn't have been surprised.

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 Your blingual residential real estate guide. Certified Probate Real Estate Specialist (CPRES) and Certified Distressed Property Expert (CDPE).  Serving Pembroke Pines, Fl.  and surrounding communities.   


Dalia Kibby, PA
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Bruce Davenport
Supreme Lending - Fort Washington, PA
Sr Loan Officer at Supreme Lending NMLS # 2129
We run into something of the same on the mortgage broker side, and unfortunately this is one of lessons that as you learn it cost you money. You need to keep in contact with your client and make sure they don't  borrow. I just pre-qualied a borrower last month and I noticed they had a nice car and a beater. I asked them if they were looking to buy another car and sure enough they were, I asked them to wait until we close to go car shopping. We are closing next week so far no new car. Good luck with this deal but as you say this one probably won't end at the closing table.
Jan 22, 2008 07:44 AM
Adam Brett
The Adam and Eric Group - Fullerton, CA
The Adam and Eric Group, Fullerton's Finest
Now is the time to get tough.  You need to be the expert and tell them what is in their best interest even if it makes em cry.
Jan 22, 2008 08:13 AM
DALIA KIBBY
One Sothebys International Realty - Cooper City, FL
Selling Florida Homes with Passion!

I suggested a new price for the property (a $10,000 reduction from the present list price) when I gave the owners the new net sheets.  And still haven't heard anything about a price reduction.  I'll likely call them by week's end to ask what new price they want to list at. 

Thanks everyone for commenting!

Jan 22, 2008 02:45 PM