Hi folks. It seems like only yesterday that we started hearing about short sales, foreclosures and financing issues. That’s why I was a little surprised when I fouind this post that I posted in December of ……..2006!!!!! No wonder I’m tired.
Lately, as anyone knows who has been reading my Blog, I have been dealing a lot with short sales and pre-foreclosure listings. Since I am not an attorney and cannot give legal advice, I always recommend to these Sellers, that they seek competent legal counsel. Most do. In addition to this, I give them my opinion, about what a short sale may do to their credit and the possibility of the amount of the “short” being treated as income, for tax purposes, and/or being attached to them as a personal liability. I do this, so they will understand, that being foreclosed on or negotiating a short sale should be a last resort decision and will have dire financial consequences.
Anyway, on Saturday, I was out and about putting up signs and refilling a few brochure tubes before the Holidays and bumped into one of my Sellers who is in a pre-foreclosure situation. She proceeded to tell me how she and her husband were getting ready to go look at some new construction homes and were hoping to put a contract on one. What? You are in foreclosure and think you can go out and buy a new house? According to my Seller, she thought that since we were trying for a short sale, that their credit would not be affected and that they could go ahead and place another property under contract. She figured since the Lender was going to get most of their money back, they would just forgive them for not making payments in five months and let bygones be bygones. I was dumbfounded to say the least. But, OK then, good luck with that.
Also, last week, I was speaking with one of my other Sellers. He lives out of state but has a flip that flopped in Poinciana. He hasn’t made payments in three months and is also in a short sale situation. He had been pulling equity out of his primary residence for about a year to try and sell the property, he owns down here. Last time I had spoken with him he was telling me that he had already pulled $40,000 and only had about $40,000 left in his house. When we were talking last week he was telling me how tight things are and how expensive it is to send his three children to private schools. Then he proceeded to tell me how he was going to pull the rest of his equity out of his house to pay the children’s tuition next year. He’s not worried because he knows his house will increase in value and he should be getting a new job next year. So let me get this right. You have a house in Florida that has decreased in value and is about to be foreclosed on. You have already spent $40,000 of the equity in your residence to try and hold on to this house. And now you have come up with the brilliant idea of pulling the rest of the equity out of your residence to pay for private schooling. Well, good luck with that one too.
Folks, believe it or not, there’s one more. I have another Seller who is going through a bankruptcy. This should be discharged sometime in March. They too have been out looking at new homes. They told me that builders are desperate right now so they shouldn’t have any problem getting into a property because the builders have “in house” financing. Their thinking is that once they sell their property, after the bankruptcy, they won’t have any debt so the lenders will be happy to loan them money to buy a new house. I truly feel like I am in an episode of the Twilight Zone.
Two Sellers, with serious financial issues, who actually have no clue that this will affect their ability to purchase another home and another digging their hole even deeper, based on future appreciation, even though they are in the process of losing a house for that exact same reason.
Are folks really that blind? Is their reality clouded by denial? Does financial responsibility mean nothing anymore?
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