Are distressed homeowners making the right decision by walking away?

One of the most talked about subject you read or watch on television today is the housing crisis.  Homeowners walking away from their homes they can no longer afford.  As I was reading an article titled: “To walk or not to walk: underwater homeowners face dilemma”, I asked myself what I would do when faced with the decision of walking away.

The rise in foreclosure filings were first blamed on mortgage fraud and predatory lending practices. That is not the only case any longer.  Here in Florida, folks are faced with lay off’s resulting in double digit unemployment rates and now folks who still have a job, like my husband are faced with less than 40 hours work week reducing their income by 20% or more.  

My parents never owned a home and when my husband and I purchased our home it was our American dream. When we signed the promissory note that states: “I promise to pay” we and most homeowners here in the United States have good intentions to keep this promise.  However, unexpected circumstances such as job loss, divorce, illness, reduced income, relocation, business failure or even death of a spouse can derail the promise once made.

I want to point out that I’m not an attorney and the tips outlined below are for informational purposes and not legal advice.  Please seek the advice from a qualified finance, tax, and legal professionals.

I am a real estate agent working with homeowners every day who are faced with this dilemma educating myself regularly by taking classes, talking with fellow real estate agents and researching available options.  I’m also a homeowner asking myself this very same question, “to walk or not to walk”.

Would I walk away?

Assuming there is a job loss or an enormous reduction in our income. I would not walk away from my home, at least not as a first step!  I have to live somewhere. Making a budget should be the first thing a homeowner should do not only when faced with such a decision but on a regular basis.  People are stunned when they discover they can have an extra $100-$200 a month by eliminating going out to dinner, reducing their cable bill, installing a few energy efficient items to reduce their light bill, and reducing their cell phone bill.

Walking away from your home will result in foreclosure. It will definitely hurt your credit rating by as much as 200-300 points and you will not be able to get another mortgage for number of years.  

What would I do?

First of all, each homeowner has to make the decision by themselves and at their own best interest and while each homeowner’s situation is different here are the steps I would take: 

• I would not ignore the letters from my lender - I would call them immediately explaining my situation and take notes of the conversation.
• I would try to work out an arrangement with my lender – For example, forbearance may be considered by the lender, if a new job is in sight, upcoming bonus or a tax refund.  Tell the lender about it and ask if you could make a partial payment, skip payments and tell them about your plan to catch up.
• I would seek professional legal and financial advice – each homeowner’s situation is different and therefore I strongly recommend that you seek the counsel of an attorney and accountant experienced in foreclosure and bankruptcy.
• If my lender would ignore, not communicate or decline my plea to a workout - I would try to sell my home as a Short Sale.  While the time of a Short Sale process can be long and stressful for the homeowner, the buyer and their Realtors®, they do get approved!

Despite all of the suggestion you hear from relatives or friends, read in the newspaper and online or watch on television; it is ultimately your decision and should be based on educating yourself, your options and discussion with family members. 

Would you walk away?

How to stop Short Sale Buyers from walking away?

More than ever before Short sales likely will be a part of the housing market for years to come.   One of the major obstacles for a short sale to reach a successful closing, the seller’s lender must approve the short sale.  Before it would get to that point the negotiation is only between the seller and the buyer and their real estate agents.

I have and have read that Short Sale Buyers walking on more than one occasion, the major reasons for this the buyers are not committed, uninformed of the short sale process or simply are in fact false buyers.  The Effective Date dictates the timeline of the contract for sale and purchase.  An Effective Date occurs when the last one of the buyers and sellers has signed or initialed the offer or the final counteroffer. In a traditional sale, at the time of the effective date or within days of the effective date, the buyer is required to make a reasonable good faith deposit, follow up with a timely inspection and meeting financing contingency as stated in the contract.  This can also be achieved when there is a Short Sale.

There are measures to keep buyers from walking away during a Short Sale:

• Buyer must be committed to a longer waiting period – at least six months
• Buyer must have pre approval letter from a reputable lender
• Buyer must make good faith deposit upon acceptance of contract
• Buyer must make timely inspection after effective date

Sellers should not accept any offers because they are desperate.   The offer must be at fair market value which is determined by an experienced real estate agent who is knowledgeable of the short sale process. Banks don’t want to foreclose, it costs them more than a short sale but they are not willing to approve a Short Sale contract with an unrealistic purchase price.

Have you ever had Fried Oreo Cookies? Most people eat Oreo cookies with milk, I was at the Lakeland Pig Fest and noticed a sign "Fried Oreo Cookie". Interesting concept and worth a try.

I took the picture just before consuming this delicous treat at the annual Pig Fest in Lakeland Florida.

Realtors® and Client Relationships - How is your Relationship with your Client?

Early on in my career when first being employed in sales back in Germany, I always was told by my supervisor: “Der Kunde ist Koenig”, which translates to “The client is king”. To this day, it is stated as my motto on my Active Rain profile.   

After reading Gary Woltal’s blog,  “Why being a little pregnant doesn’t work with serious Realtors®” , I commented on his blog that, “this should be rule number 1, but, yes there is a but, there is always exception to a rule. My exception is with a client that I have known for three years and worked with for the last two years.”  

Actually it goes back three years ago when the family was looking for a home in Lakeland.  With Lakeland being centrally located between Tampa and Orlando and the wife taking on a new position in Tampa, husband employed in Orlando; unsure of whether or not Lakeland would be their new city, I recommended leasing a single family home until they made a decision on when they want to purchase their next home.  During this time, I kept in contact with them send listings of homes within their price range.  In their first year of leasing, every once and a while we have viewed a few homes, however, of the few homes that they liked, most of them were grossly overpriced.  It became then apparent that they wanted to look outside of Lakeland because at the same time the husband was looking into another employment opportunity in the Tampa area which did not develop.  With the uncertainty in the employment sector for both husband and wife and a baby on the way, it became more of a fear to purchase for a while.  The job market had changed again for the wife and for the last six months we have been actively looking and bidding on properties.  Patience, persistence and communication pays off, they are now under contract to purchase a beautiful home in the Orlando area, which is scheduled to close within the next month.  

The reality here is, had my clients purchased a house last year or the year before, they would have had to resell the home resulting in a financial loss that may not be recovered for years to come.

There are more experiences or stories similar to this one I could tell.  When reflecting back to the years of experience in real estate, relying on my instinct, understanding my clients’ needs and expectations, these are the key components of recognizing the true value of Realtor® and client relationships.  When I’m being hired by my clients as their Realtor®, whether as their buyer’s agent or their selling agent, I continue to stay true to my motto, “The client is king”.

Happy Thanksgiving to each and everyone!

I just want to take a moment and wish all of my followers, readers and subscribers a Happy Thanksgiving.  My last Thanksgiving blog I wrote about my first Thanksgiving experience.

This Thanksgiving Day I want to express my appreciation to our servicemen and women who put their lives on the line each and every day for our freedom. Until the last shot is fired...

Dear Veterans!

I am not a U.S. citizen although have been married to a retired military vet for over 25 years now and shared with him the last ten or so years of his military service during the cold war. I've never felt such an outpouring of thankfulness amongst this nation until after Desert Shield/Desert Storm. Luckily my husband was never called upon to fight in front of enemy lines. His service started in 1975 and ended in 1995 in the maintenance field with a short deployment to Iraq.

My husband's dad Charles served in the Korean War in the Air Force. My brother-in-law Charles served in Vietnam, my other brother-in-law Allen served around the same time as my husband Jim. My son-in-law David is serving as a Marine reservist and already had a tour of duty in Iraq. My other son-in-law Andrew graduated from the Air Force Academy and is committed for a few years at least. To my friends who served along with my husband. I'm very thankful for their service.

In addition to my family, I want to personally thank those of you who faught for our freedom in front of enemy lines, families who lost their fathers, brothers, sisters, mothers aunts and uncles, the sacrafices you have done and continue to do so - My heartfelt thanks!

Have a blessed and safe Veterans Day! For those who serve and will be serving in front of enemy lines - stay safe!

Sincerely,

Petra Norris

Is Your Twitter Account Sending SPAM?

The other day I received a direct message (DM) from a local follower, who I trust because they are dedicated to developing a community consensus on Lakeland’s future. The message read “I make money online with google. I learned how here…”link” I clicked on the (SPAM) link; clearly, I was not thinking straight this should have put up a big red flag in my brain…  I even responded to the DM as follows, “I’m always skeptical when it comes to ad like this – does it really work –be honest and how did you go about it”. What was I thinking?

Today, I received a message from my follower saying that their Twitter account has been compromised and to please follow the direction with the link.  I followed the instruction from a good friend Chuck Welch and followed “8 Steps if Your Twitter Account is Sending Spam” to the tee.

If you got caught up with a SPAM direct message from a trusted follower, please take extra caution to prevent spammers from hacking into your account.

Update for the Lakeland real estate market! Currently, there are 1934 homes for sale throughout Lakeland – as of 10/20/09, which remained balanced for the past few weeks. Newly listed homes for the period of October 1^st through October 15^th totaled 185 Lakeland homes recently came on the market. Average sales price of $154,469 or $89.68 per square foot with area Realtors®.

The types of homes and average prices just listed in Lakeland, Florida according to the Multiple Listing Services (MLS) are as follows:

7 condos listed with an average sales price of $112,385

16 mobile homes listed with an average sales price of $96,662

8 Townhomes/Villas listed with an average sales price of $89,521

154 single family homes with an average price of $165,762

The priciest Lakeland real estate just listed is a 2008 pool home located in the Crescent Woods subdivision; featuring 4 bedrooms and 4 1/2 baths with over 4,400 square feet of living space currently offered for $895,000.  On the contrary, the cheapest Lakeland home newly listed is a 2 bedroom 1 bath listed for only $10,000 – just under $15.00 per square foot – located in the Palma Ceia Court subdivision.

Please continue to read for more details by clicking this link

This is truly a video worth watching, it is very graphic but this message serves the true picture of driving while texting and its consequences.

I do want to had this experience that I witnessed just yesterday, which makes this post so relevant for texting or drunk driving.

Just yesterday, my husband and I was traveling I-4 westbound to Tampa when we noticed a truck swerving in the far left lane to the middle lane and back. No one tried to pass and some cars from behind really came on fast. I'm not sure whether the driver was texting or was drunk. To make this story short, I called 911 and told what I witnessed - thank god after the next exit a highway patrol car was waiting for the driver who then pulled the driver over right after the trooper drove got him with his flashing lights - Lives were saved indeed!

Is listing a home with Seller’s potential of Deed in Lieu in Florida worth your time and effort?

I was contacted by my seller about six months ago about listing a home which they bought during the housing boom and now left owing more than the house is worth and can afford.  They also told me they were in contact with their Mortgage Servicing Company for HUD and received an approval for the Pre-Foreclosure Sale Program (PFSP).  Great! So, I thought before reviewing the letter.

After doing my Comparable Market Analysis for this home, I stipulated the home would sell for $75k based on the condition of the home. After reviewing the PFSP letter of their suggested list price, deadline, their incentives to the buyer and seller, and of course the lender’s must net-amount, the sales price stated far more than my recommended list price.  Who in the world submitted to the lender their price opinion?

I took the listing with the lender’s price recommendation to help my seller. Hoping to negotiate with the lender’s negotiator by updating them continuously with my marketing efforts, showing feedbacks, and market analysis with recommendation on price reductions based on the current market.

After multiple price reductions – not enough to generate any offers – I contacted the lender’s negotiator and asked them to renegotiate the listing price. The reply was that the deadline to complete such program is near and the lender would agree to do start the procedure for Deed in Lieu of Foreclosure providing the seller agrees.

Is listing a home doomed for Deed of Lieu in Florida worth your time and effort?