Earlier today I got a call from Savvy Sam. Savvy Sam lives down in south Florida but owns a property in Poinciana that he purchased back in July of 2005 and has been trying to sell ever since. He bought this new construction home, sight unseen, with the good intention of selling it for a profit after it was completed. Why not? Everyone else was and heck he only needed to put down $11,000(5% of $220,000). Even though he had never heard of or seen Poinciana, the builder and affiliated Real Estate company assured him that $220,000 was a good deal and that he would be able to sell it as soon as construction was completed for $265,000.
So, based on what they had told him, he figured he could easily turn his $11,000 "investment" into a cool $28,000 profit! Savvy Sam had just immigrated to Florida a few years ago, from Pakistan, so this really sounded like the American dream to him. What a great country! Work hard, make a few sound Real Estate investments and voila....the easy life.
Anyway, when I spoke to Savvy Sam this morning, he didn't sound so excited about this house any more. His house has been on the market since August of 2005 and the price has been reduced numerous times. He started at $285,000 (why not try to get a little extra?) and the listing finally expired three weeks ago at a price $235,000. Savvy Sam is an honorable man and has been making the payments, twenty days early, every month. Today he finally broke. He was very upset and had made the decision to stop making payments and to just let the bank take the house back. Savvy Sam is now Sad Sam.
Sad Sam had called me off of one of my expired letters just hoping that I would have some better news for him. He knew his situation but needed a professional REALTOR® to be honest with him and confirm his dire straights. And dire they are. He owes $210,000 and the house is probably worth $205,000. He has already spent $45,000 on it, with the 5% down and the 20 months worth of payments. He has no money left and his perfect credit is getting ready to be ruined. Sad Sam is very upset about the bad decision that he made but blames no one but himself.
Sad Sam and I spoke for awhile this morning and we have devised a way forward. It's not perfect but it may help him to salvage some of his credit. Sad Sam is contacting my South Florida short sale attorney for advice and we are placing his property back on the market, priced right, at $199,000 to $209,000. Hopefully, I will be able to find an interested Buyer over the next few months. By that time, Sad Sam will be 90 days behind on his payments and the lien holder will consider a short sale. He has two liens but fortunately they are both with GMAC. That should make negotiating the short sale fairly easy. Sad Sam's credit will still be affected but at least he can avoid having a foreclosure. The better of two evils.
Days like this are bitter sweet for me. I mean, I'm a Real Estate broker and my job is to take listings, sell houses and get paid. I'll get a nice check, the buyer's agent will get a nice check, the buyer will get a below market value new home and Sad Sam.....well Sad Sam will get squat. I truly hope we can avoid the foreclosure and I truly hope Sad Sam learns from this experience and it helps to make him a stronger person. I'll do my job and I'll get paid. But I don't have to like it. And that's all I have to say about that. What say you?