Dispatches From The Displaced: A Short Sale Realtor Sheds Light On The Housing Crisis

Services for Real Estate Pros with Century 21 Distinctive

 By: katie Saddlemire / March 6, 2009

Are you facing foreclosure, or have you already lost your home? Share a story of how the housing crisis has affected you by emailing submissions+foreclosure@huffingtonpost.com.

Yesterday we heard from Jitendra Kumar, whose temporary financial troubles put him $11,000 in debt. Situations like Jitendra's put 10,000 people in foreclosure every day.

There's another side to the foreclosure crisis: realtors trying to save families from losing their homes. Jackie Crockett is a short sale realtor in the Vacaville, Fairfield, CA area who has seen the hard times faced by numerous families. Despite her own health problems, she considers herself lucky:

"I was one of the first in our area to start listing and negotiating short sales over 3 years ago and helping various clients with loan modifications and 2nd lien write-offs. Unfortunately, the horror stories are never-ending. Plus, we work 4 or 5 times as hard, for about 1/6th of the income. Those of us handling short sales (versus REO - bank owned properties exclusively) are really not in it in for the money, but for our community.

For every short sale listing I've had, I've submitted an average of 7 offers, with only a 50% closing ratio. That is higher than most. The average is 3 out of 10 short sale listings will foreclose before a negotiator finalizes an acceptance. I've had homes ready to close, clients ready to sign, and had the homes foreclosed out from under us. The worst part is, the home usually sells for well below the lowest offer we had submitted.

None of this makes sense. It is frustrating for us as realtors, and heartbreaking for our clients, their families and our community. These are good people, hardworking, caught in a vicious cycle, with really no fundamental understanding of where to turn, who to talk to. When even the lenders and bankers don't know what to do, or how to proceed, what chance do "regular" homeowners stand?

The lenders and bankers treat us realtors as if we are the enemy when all we are trying to do is stabilize our communities by keeping folks in their homes, or getting people into these homes as quickly as possible. It's worn me out mentally and physically. I am preparing for a kidney transplant - my husband is my donor. For all that my husband and I are facing, all the uncertainties, I know we are luckier than most and for that I feel blessed.

Due to the nature of my business, I was in a unique position to take care of our own personal finances when my health started to deteriorate. We very easily could have been one of the statistics, losing our home due to skyrocketing hospital bills, dialysis costs, and lost income. I recently negotiated a settlement with my own 2nd lien holder who will take a very small payoff to "release" the loan. It took months of negotiating, reams of doctor's bills, hospital bills, tax statements, pay stubs, hardship letters, etc., but it was well worth it. Of course, using money from our rapidly dwindling 401 K seems to negate some of the euphoria. I've also called every credit card and set up various payment plans, and auto debit payments that earned us huge interest rate reductions for as long as we need while we're recuperating, and until we are both back on our feet.

I could go on and on about all the horror stories; families being split apart, seniors with no where to go, all the pets we found locked in homes when families would leave.

The pet problems were some of the worst: Neighbors would gasp and ask "how could people do that?" But some had no choice. Those losing their homes are mostly families with children, some were elderly folks on fixed incomes with no where to go. Pets ended up being the least of their problems. Needless to say, we have 5 rescued cats - we love them and hope their owners somehow know they are well and loved.

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Comments (3)

Ronelle Schroeder-Hill
Vacaville, CA

There was a Dateline episode on earlier this evening about the mortage meltdown, and the crazy part is the bank CEO's at the top have walked away with millions.

Mar 22, 2009 05:03 PM
Jackie Crockett
Century 21 Distinctive - Fairfield, CA

Yes - all the "big guys" from CW and the other lenders that were run out of their companies; are now running new companies, and making millions AGAIN - on homes that they originally financed that have since foreclosed!!!  What a scam!  but we consumers and our elected representatives are so out of the loop.....

Mar 22, 2009 05:23 PM
Cherry Pick
Cherry Pick Reo's - Miami Beach, FL

When investing in real estate there are many different avenues to choose from. When deciding which avenue is best for you, it's important to consider the difference between passive-income generating avenues and earned or working-income generating avenues. In fact, in my opinion, understanding the difference between passive income and working income is one of the most important things to consider when investing in real estate.

Working Income vs. Passive Income

Working Income: Working Income is buying a house, fixing it, and then selling it for a profit. Or building a house then selling it for a profit. Or my favorite is buying a house, holding it (hoping it will appreciate in value, while losing money every month), then selling it.

Passive Income: The best way to understand passive income is to play Robert Kiyosaki's board game, "Cash Flow 101." To win (get out of the rat race), you have to get your monthly passive income to exceed your monthly expenses. It's a real eye-opener. In his game, the quickest way to achieve this is purchasing cash flowing rental properties. Passive income is income that is earned without you doing the work to earn it. Rental income is a great avenue for passive income.

Here are a few reasons why investing in rental properties are an attractive avenue for investing in real estate:

Lower Taxes: Passive income is one of the lowest taxed forms of income, especially rental income. Uncle Sam likes that you're providing affordable housing and is willing to cut you some slack on the taxes. When you buy, fix, and sell a property, that income is taxed as capital gains and you're going to pay Uncle Sam 25-40%. Also, owning rental properties is a business, allowing you to write off operating expenses of your business.

Depreciation: This is a benefit often overlooked. Owning rental property provides a non-cash write off over the useful life of the property. Depreciation is defined as the loss in value of the property over time due to wear and tear, physical deterioration and age. Residential income property is depreciated over a 27.5 year period using straight line depreciation (or in other words, depreciated by equal amounts each year over its useful life). While your accountant will do the math, the point is, it's a non-cash expense lowering you overall tax liability.

Time: Perhaps the best benefit of investing in turn-key rental properties is that it creates time. Remember, passive income creates time, working income takes time. The problem with working income, not only in real estate but in any business, is you have to keep working to make money. The whole reason why any of us get into real estate is for the life-style it can provide. To me, real estate is a means to and end. It doesn't define who I am. But if done right, it provides time and money to be, do, and have everything I want in life. That's what this is all about. While a measly $200/mo cash flow on a single family rental property doesn't sound as sexy as flipping a house and making a quick $15,000, you have to look at the bigger picture.

For example; if you acquire 20 turn-key properties from Bulk Foreclosure Deals, each providing $200/mo cash flow, that would be $4,000/mo passive income. That money comes in while you're eating, sleeping or surfing on the beach (we have a lot of Hawaiian investors)! Now there is some work you'll have to do, unless you get someone else to do it. Someone has to walk to the mailbox to collect your checks! I get my kids to do it. (There's more to it than that but you get the point). If 20 properties seems too hard to achieve, remember the old saying; "How do you eat an elephant? One bite at a time!" Well, how do you acquire 20 rental properties? One house at a time! We have one client, Darris, who is buying his first rental property from Bulk Foreclosure Deals. His goal is 500 units in 3 years. Wow! He's definitely caught the vision of passive income.

Bulk Foreclosure Deals = Turn Key

When we're asked what it is we do, we often state that we sell "turn-key rental properties." In fact, if you look at our company logo, you'll see a house with a key. So what does turn-key mean? It means, we have a system in place to handle everything from acquiring the properties, to managing the renovations, to providing the tenants and everything in between. While there are many benefits to using Bulk Foreclosure Deals such as our houses are priced right, they have equity, etc., the real value we add is by saving you the time and energy to acquire solid cash-flowing properties. We have a strong relationship with the banks and purchase distressed properties at a discount.The property manager handles filling the units and managing the tenants. As Timothy Ferriss states in his book, The 4 Hour Workweek, "Our goal isn't to create a business that is as large as possible but rather a business that bothers us as little as possible." We have developed a proven system that saves our investors their valuable time. Every now and then we run into the "do-it yourself" investors. We had one investor who gathered information from us, flew down to Ohio, and bought a house. He quickly found out that it wasn't as easy as he thought, especially long distance. If anything, it helped him appreciate what we do.

Before you run out and quit your "working income" J.O.B., consider this; keep your job but focus on building your passive-income empire. Use you earned income to invest in more passive income. Then as Robert Kiyosaki teaches in his book Rich Dad Poor Dad, once your passive income surpasses your expenses, you're financially free. And remember, "profit is only profitable to the extent that you can use it. For that you need time." (T. Ferriss, The 4 Hour Workweek)

Buy Your Bulk Foreclosure PropertiesToday!

Mar 26, 2009 07:10 AM