Foreclosures, Short Sales and the Embarrassment Factor
- There is an innumerable amount of foreclosure transactions that are currently taking place that never should have been foreclosures in the first place. What do I mean about this? It is called the embarrassment factor. We, as humans, have emotions. Many, if not all, are tied to pride. Pride is what drives most people’s day to day activities. I’m not going to get into the deep emotional aspects of our psyche; what I want to talk about is what this has to do with the current housing market.
- I know of transactions that become foreclosures because the homeowners waited too long to get help. They waited because their pride got in their way and did not allow them to ask the right questions on where to go next. It has happened to people I know and work with. What it takes to make informed choices starts off with taking emotion out of the equation and getting to the issue at hand. When a household runs into roadblocks, loss of a job, divorce, and worse, death, sometimes the bills get out of hand. It is to be expected and normal that the bills become secondary. It is important for this household to know that they are not alone. Like I said, in these cases, and many others, this is to be expected and normal. They should not let the idea of pride cloud their judgment on how to get help.
- Secondly, it is important to know that when the bills pile up and go unpaid, the clock is ticking. It starts without a care for your feelings. When humans suffer a hardship of some kind, we often feel like we should be given a grace period. After all, “I just had a horrible thing happen to me, so I am calling a time out.” In these cases, the people involved think that they have time to figure it all out. The reality is, the creditors want their money whether you’ve had a bad day or not. They start the clock immediately.
- The good news is, if you have suffered a hardship, the creditors will soften the blow. They are allowing what are considered loan modifications. For example, credit card companies are giving breaks on rate increases. Banks, in some cases, are letting people skip a month or two and adding that principle back into the loan to help out in troubled times. And, most importantly, mortgage companies are allowing what is called a Short Sale. A Short Sale is a type of loan modification that works this way. If the house is worth less than what is owed on it and the lender feels that a hardship is worthy, the lender will, in most cases, take the difference off of the principle balance at sale. One has to remember that the clock is ticking. Waiting too long could turn this possible Short Sale into a foreclosure. It is complicated, and is it necessary to have an expert take the seller through all of the steps involved. Fortunately, those experts do exist. Sellers in this situation need to look for a real estate broker that has a designation proving that they are an expert in this field. That designation is the Certified Distressed Property Expert, or CDPE. I happen to have that CDPE designation. I can help.
- Foreclosure numbers have stayed high and are creeping up once again. If something isn’t done, 2010 will prove to be the Year of the Bank Owned Property. The number of foreclosures can be lowered if the proper steps are followed for Short Sales and loan modifications are successful. If we can get people out these sticky situations, this market will be the stronger for it. Contact me for details.
- Jeff Hansen, RE/MAX Professionals
- jeffhansen@remax.net
