Dealing With Homeowners Who Are In Trouble

By
Real Estate Services with RJ Smith Realty Real Estate Solutions
I went to a presentation yesterday on Short Sales and Foreclosures presented by two attorneys.  While I did not get much help on working with buyers on short sales, which is what I was hoping for since I am primarily a buyer's agent, I got a better understanding of the complexities of these situations from the homeowners perspective.  What are they going through and what is in their best interests?  I know that there are soooo many of these situations all over the country today.  We as real estate professionals will be facing them more and more as we move out of the current real estate upheaval and on to a more sane realistic one.

When an agent is approached to sell a home by someone who appears to be in trouble, some agents will ignore warning buzzers and present a regular Marketing Plan to the homeowners. Some sellers will tell you upfront there is a problem and some will try to hide it from you out of embarrassment or even anger.  It is important for you to know there is a problem before you can provide the professional services you are to be paid for.  Dig a bit deeper with the sellers if you notice that they are anxious or unclear about their reasons to sell.  There is nothing worse than having a ready willing and able buyer for a property at a price that the bank won't accept and you can not deliver clear title.

In the past, I have heard agents trying to negotiate with mortgage holders who have not gotten through to the right person in time.  I was days away from a closing with buyers when the house was pulled out from under them because we could not find the right person to talk to.  I not only lost the sale but I lost the clients as they were so turned off they decided to stay renters rather than continue.

After hearing the complexities of everything that can affect a sale I believe the best we can do is to get advice from an attorney who can delve into the homeowners full financial picture and offer options.  In NY the bankruptcy laws may be used to allow your potential sellers to keep some of the equity in a house if there is any available.  Also there is a way to guarantee your payment at closing as a real estate agent if a bankruptcy is approved by the courts.  

Perhaps there is a way to work with the banks to restructure the loan to keep the people in their home.  Some of you may say "Hey wait a minute I don't get paid unless the house sells" but those happy people will return the favor by referring others and by using you at some point in the future.  When you do things like this you gain a reputation as a caring individual.  

A word of caution against getting too involved with the lives of these unfortunate individuals.  It can bring you down if you let it.  Try to refer them to someone who can help them with the whole issue that they are facing, such as an experienced bankruptcy attorney, and be there to help with the real estate part only.  It is always good to be a resource but if you try to be the source you may end up burning out, or worse, in trouble for practicing law or giving financial advice without a license to do so.  

Keep Smiling and Keep Selling (Just Make Sure Your Sellers Are Able To Deliver Clear Title)

I'm Paddy Pizappi - Work with Me and You'll be Happy!
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Groups:
ActiveRain Rockstars
Club Chaos
Hudson Valley Real Estate and Mortgage Professionals
Realtors®
Selling Soulfully
Tags:
short sales
foreclosures
bankrupcy

Comments 24 New Comment

Ambassador
326,214
Paddy (Patricia) Pizappi
Real Estate Associate Broker Hudson Valley NY
RJ Smith Realty Real Estate Solutions

Good point Gary.  I think sometimes Realtors can get in over their heads in these situations.  I don't want to have anyone coming after me with any violation that could cost my license. 

August 20, 2008 08:32 AM
Ambassador
326,214
Paddy (Patricia) Pizappi
Real Estate Associate Broker Hudson Valley NY
RJ Smith Realty Real Estate Solutions

Hi Cristal, I think most can do a decent job if they ask for advice and make sure the sellers and buyers know the score.  I feel frustrated by the buyers side of things and would rather avoid too but I will do what I need to do for my clients.

August 20, 2008 08:36 AM
Rainmaker
932,045
Greg Nino
Houston, Texas
RE/MAX Compass, formerly RE/MAX WHP

Paddy,

Interesting Blog. No two short sales are alike & none of them are any fun or financially as rewarding as a regular transaction.

I like to think I'm helping folks when I do this. My gift and demonstration to the consumer that Reatlors are worth their weight in gold! We are worth what we make! Sometimes a this type of effort is rewarded in the form of a referral.

I got royally screwed just recently. FULL PRICE CASH offer and the effin bank TURNED IT DOWN! They said the STILL wanted to foreclose even though foreclosure was 20 something days away! The offer was maybe 10% below comparable sales!

unreal.

August 21, 2008 01:54 PM
Ambassador
1,377,805
Michael Thornton
Home Inspector - Nashville, TN area - 615.661.0297
Complete Home Inspections, Inc.

Although I do not get into the short sale side of it, I found this interesting reading Paddy, Thanks...

August 22, 2008 05:32 AM
Ambassador
326,214
Paddy (Patricia) Pizappi
Real Estate Associate Broker Hudson Valley NY
RJ Smith Realty Real Estate Solutions

Sorry you had a bad situation Greg.  It can be very frustrating to loose out especially when you know it was a good deal for the bank too and they just don't get it.  

Thanks Michael.  Have a great Friday 

August 22, 2008 05:35 AM
Ambassador
326,214

Paddy (Patricia) Pizappi

Real Estate Associate Broker Hudson Valley NY
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My blog will deal with working with buyers, my life as a mother of 3 teenagers and how to fit real estate into the other aspects of my world. I will also speak on volunteer efforts to assist my community
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