Sellers miss out, as buyers find opportunities

In arm, First-Time Buyer, forclosure, foreclosure, home sellers, loan reset, mediation, miami, miami beach, modification, mortgage, option-arm, real estate, Tax Matters on October 19, 2009 at 8:32 pm

Yep! The market has changed! Actually, it is still changing as I type!

First, there were complaints about buyers being on the fence and not committing to making an offer.  Any offer!

Now, we find that buyers are searching through limited inventory -“Limited inventory?! Are you kidding?!” you say?

Well, when one considers the properly priced and properly handled inventory available…one may argue buyers are in fact, searching among a very limited inventory since the rest, is not even being considered!

Where are the discrepancies these days? It seems, everyone is a bit to blame.

Lenders: slow to approve short sales. Some argue they may even be looking forward to a foreclosure. I’ve heard that some lenders are looking to get what they can, write off the shortage or pursue the borrowers in court, all the while seeking to collect from insurance companies, re-collateralizing to a new borrower post-foreclosure in the hopes of recovering most of their original investment or losses over the life of the new loan, and even by selling the deficiency judgment or new note to investors. Those who feel there is an underground conspiracy by lenders to hold back since they know they have these and maybe other options, feel this is a peculiar aspect of our market today. Then again…pure speculation – until proven otherwise true.

Realtors: Professional Realtors (members of the National Association of Realtors who adhere to a strict Code of Ethics), who are also additionally trained in handling distressed property sales like CDPEs, who are able to handle the process for sellers, buyers and investors continue to be punished by the perception stemming from those who are not able to properly service buyers/investors or sellers of distressed properties. Too may of today’s agents are still in “avoidance mode”, still wondering why their offers on short sales or REOs are not being accepted. The same can be said for those who attempt to help the seller and submit improperly completed packages to the lenders for approval and wonder “what’s taking so long?!”

Attorneys: Often, even attorneys get caught up in the moment and attempt to chew more than they can swallow. By heavily promoting themselves looking for volume, they just find ways to stretch the inevitable for sellers who later face a madder than mad lender. After all that time, legal hoops and all the expenses, when they end up taking the property back, they often end up costing these home owners more than they bargained for. Attorneys who are fair will typically work to help their client, and make a nice living along the way. These attorneys will actually seek to mediate the case, seek a modification (voluntary/friendly or otherwise, depending on the result of a forensic review of the borrower’s documents to see if there were any violations by the lender), and even have a few good Realtors in their team who can help sell the property (via short sale). All this while seeking to avoid foreclosure, bankruptcy and even a deficiency judgment against the borrower whenever possible. If the latter three cannot be avoided, the ultimate goal of foreclosure avoidance should be sought, allowing the borrower to move on with the least amount of damage and scars possible, while still generating fees or even billable hours, depending on the complexity of the case.

CPA: Sellers often fail to also consult a good tax magician. Not one who is going to get them in further trouble, but one who understands the different ways available to a home seller who cannot avoid receiving a 1099C for the “phantom income” they must report as a result from the forgiveness of the balance due on the original debt. Having a tax professional who understands how the sale of the property and the resulting 1099 will impact you and how to massage your income and expenses so that you can avoid paying taxes (notice I said “avoid” NOT “evade”), is paramount in the process.

Sellers: Ah! The sellers. Herein lies one of the ultimate culprits in today’s market. 70% of those who end up in foreclosure often do so because they failed to consult with the proper professionals or even with any professional at all. A good attorney and CPA are of utmost importance in a seller’s team if he/she wants to avoid further problems after the sale. Listening to their qualified Realtor is also important. Handling a short sale can be complex even for the trained professional, an unsurmountable task for the untrained agent. Listening to a Realtor who has the training and tools to get your property sold and help you minimize the damage is most certainly worth his/her weight in gold. Typically, all costs associated with the sale of the property, are also picked up by the seller’s lender. This means that these sellers have nothing more to loose when they seek a consultation and hiring of the right professional for the job of selling their home. So, why are so many avoiding this critical affiliation? Beats me!

There are however, those sellers who may not qualify for a modification or short sale or that, because of their line of work, getting out from under this headache could cost them their career if their credit is affected or marked in any way. These sellers are in a tighter bind and more than any other, must actively seek field professionals who can help them through.

Mark Twain said that: Luck, Is When Preparation Meets Opportunity. There are plenty of buyers seeking opportunities and plenty of sellers missing out. Don’t let the lack of information or preparation cause you to miss out.

Remember how people who require a delicate surgery or face an uncommon illness seek the advice of doctor after doctor until they find just the right one. The same may be true of a specific electro-mechanic when faced with that difficult fix (electrical repairs being among the most difficult for most regular mechanics to detect).

Similarly, you must seek the right attorney, the right CPA and the right Realtor that can help you with your special situation.

If however, you own a property free and clear and yet, insist in selling at 2005 prices and will not listen to reason, you will only frustrate yourself out of the market. Buyers today will not find you when searching online or while working with a Realtor who has pre-qualified them and knows how much home they can afford (and yours is not it). Even if they happen to find your home while driving around, one phone call to get some basic information (including your price), and you’re crossed off the list for sure!

To avoid missing out on the opportunity to sell now however, get a second opinion, and even a third or more if you must. Whatever you do, do something! Above all, listen to the advise of professionals and make an informed decision.

Lastly, for those sellers who are hanging on, waiting for the market to recover…I have ‘not so good news’. According to an article recently published by the Miami Herald, you may not see that price you want (what you may now owe on your home), for as many as 10 years or more. Actually, many believe that, because of interest rates and resetting loans, ARMs and Option ARMs will increase the number of foreclosures for 2010-2011 beyond today’s numbers.

Then of course, one must wait for the employment situation turns positive (as in better than not loosing as many jobs or even neutral), inflation to remain tame so that buyers can continue to afford homes and interest rates also allow homeownership or refinancing and help generate a stronger consumer confidence.

All this, a balanced budget, a lower trade deficit, a stronger (or at least, not an even weaker), dollar, conflict resolution with Iran, Korea, Afghanistan, hec…even Venezuela, and we may actually enjoy a steady recovery that will allow sellers to finally brake even from their 2005-2006 high loan balances a few (10+?), years from now.

In short, I’ll say it again…missing out on today’s buyer’s market (notice it is no longer a seller’s market), may prove costlier than you think. Seek and you shall find, they say. The truth will set you free they say.

If that is the case, the sooner you seek the truth about how to help you through your situation, the sooner you will begin your own recovery, and in turn, maybe even help our national recovery.

Your pithy comments welcomed!

If I may, let me suggest sellers also call the Real Estate Information Hot line I have created, where you can listen to a special recording on ‘Costly Home Seller Mistakes’ at 866-520-SAYL (7295) and dial extension 9009 (calls from within the USA or Canada only).


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