Friday, June 15, 2007

There Was This Guy Banging On The Door… Inquiring About Lis Pendens Foreclosure Action On His Home(Second)

With time ticking away, Bobby called Ralph the Realtor to come over right away with the plan of selling the property on a “short sale” basis and put this nasty business in the rear view mirror. Ralph laid out the plan. To lay the groundwork to go at the lender, Bobby would need to prepare a tight and accurate family budget to prove to the lender that there was zero blood in the turnip to be squeezed. Bobby shared with Ralph the entire loan documents, the mortgage note, mortgage, mortgage statement with all the contact numbers and account number. Ralph completed an updated sales market analysis and made recommendations to Bobby on how to position the home to sell quickly. Bobby had not made any mortgage payments for the past four months and had limited funds to move to other living quarters with his sons, Brian and Mitchell. Ralph wanted Bobby and the boys to pack up immediately and remove all clutter from the closets and garage. A $50 storage unit was rented to store the stuff that was going to be kept. A garage sale was scheduled to sell all items not to be retained and raise a few bucks. Ralph and Bobby discussed freshening up the entryway with fresh paint and painting the master bedroom with a more neutral shade, which had a wild color and would be a distraction for most buyers. The carpets were shampooed and foodspots removed. Some potted flowers and plants were purchased at a local flea market to pick up the front of the house. In the meantime, Ralph was in contact with the lender and was engaging them with the “short sale” proposition. The lender already had three or four Broker Price Opinions in hand to further bracket the price. After a week of negotiations, Ralph received a verbal agreement from the lender to proceed on the sales plan. Ralph would receive nothing and would assign over all escrows for taxes and insurance. Ralph and Bobby checked with a local Real Estate Attorney to make sure they were avoiding any current and future land mines.

With the property spiffed up and clutter now in storage, the home was in good condition to show. In the agreement with the lender, the net to the lender would include a buyer incentive to pay up to $5,000 of buyer’s closing cost and prepaids. The listing price was set at 5% less than comparable properties with seller help on the closing costs. Ralph, got Bobby and the boys to go ahead and move into a townhouse apartment complex that was close to the boy’s school and Bobby’s work with the apartment community offering a move in special waving the deposit with one month free. The garage sale had generated just enough money to make it happen. Bobby was a good salesman, and in spite of everything was continually meeting his quota numbers and was on track to earn a bonus in a few months.

At the second open house, Ralph had an offer, which was a few thousand less than the list price. The incentives of buyer paid closing cost and prepaids were making a big difference. The buyers had already been pre-qualified with a mortgage lender letter in hand and were ready to close in two weeks. The fact that this home was vacant and immediate occupancy was possible made a big difference in the sales process. After a few days, the lender accepted the terms and took a little more of a hit to their bottom line net. Even though they had lost $40,000 other lender’s statistics show that in this current market place the loss could have been in the $60,000+ range without someone like Ralph getting involved and time running on and on.

Bobby had done his homework and after being assaulted with a parade of “investors” and “foreclosure specialist” then settled on a known professional, Ralph the local Realtor who had demonstrated his skills from prior experience. Anyone facing this foreclosure situation it is not uncommon to be filled with emotion and cloudy thinking. To gather all the facts, consult with market experts that have a license to protect and then coupled with seeking legal advice will go a long way of solving this situation. Open and continuous communication with the lender will serve to make this an easier experience. There are many lenders acting in a proactive way to keep homeowners in their homes IF it can be done. In Bobby’s case, he could only sell and get out. When a “short sale” is not possible, a deed in lieu of foreclosure, or just walking away is better than having the Sheriff set one’s stuff to the curb. That may be the “Ultimate Reality Show Experience”.

Bobby and the boys, six months after the sale are doing ok and the ex-wife is sending some child support. Bobby’s bonus came through and the process of rebuilding his credit history is underway. Little league and karate classes continued for the boys and school was going pretty good as well. Bobby was thankful that he had researched and called Ralph. It was the answer for this situation and Bobby and the boys were able to get on with their lives. Note: A knock at the door may not be an opportunity for owners.



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