Virginia Real Estate and Musings

"SORRY, WE CAN'T HELP YOU.  GOOD LUCK."

SOMETIMES YOU JUST CAN'T HELP.  Those were the last words of a conversation I had with a "prospective home buyer" last evening.  I received a telephone call from a lady at about 6:00 p.m. Sunday.  That's not the way I usually end a conversation with a consumer.  Telephone calls from consumers are welcomed and usually generate conversations about the area, homes for sale, price ranges, financing, transportation, and more, whatever comes up in the conversation relating to home buying and the consumer needs or questions.

LOOKING FOR "PROGRAMS".  The conversation with this particular consumer started out with her questions about "down payment and closing cost assistance programs" in an area in my market.  This consumer had compiled a list of potential "programs" that would subsidize her purchase.  Not a problem for me because I spend a lot of time staying on top of local home buyer assistance programs.  I went through the programs for which she might qualify with a general description of the criteria. 

After about 15 minutes, the conversation turned to actual listings of homes for sale.  This consumer wanted to keep her mortgage payments to the same amount or less of her present rent payments.  That would qualify her for a price range of about $175,000.  "There are several homes in that price range in the area you inquired about".  

"Wait" she said.  "I don't want to pay that much.  What about the homes listed on your web site for $50,000 or $60,000??  I'm looking for a real deal. "

IS SHE LOOKING FOR A HOME OR A DEAL?  I explained to her that homes in the price range of $50,000-$60,000 were generally only suitable for rehabilitation or cash investor buyers.  She then said in an accusatory tone, "Well you have them on your web site."  To which I explained that ALL homes listed for sale are in the search database of homes for sale on my web site.  I also explained that many homes listed for sale are suitable only for cash or investment buyers because they need extensive repairs and financing under the various programs is difficult if not impossible. 

I get calls from many consumers who wrongly believe that they can get a "steal" on a property these days, get it financed through a "program" and have a lovely home with no repairs at a very low price and no buying competition.  WRONG!!!  Usually, once we examine a listing or two or go through the criteria for the first time home buyer programs, they understand that they don't qualify.  I have a lot of patience with consumer callers because I know that they truly do not understand the real estate market. 

"WELL, WHAT ABOUT THIS ONE?"  She gave me an MLS# which showed a listing of a $59,900 home for sale that clearly stated in the BROKER/AGENT REMARKS "Cash or 203(k) only".  Once I explained that these properties could not be financed under simple financing models, she then said.  "Well, what if I wanted to purchase a home listed for $80,000 and put down $40,000?"

To which I replied, "If you have that kind of cash, I don't know whether or not you'd qualify for the 'first time home buyer program about which you inquired."  Truth is, I don't know, since the question has never been presented. 

HER TONE BECAME MORE ARGUMENTATIVE, giving me a clue that this telephone conversation had turned into a debate replete with hypotheticals.  Since I work in the real world and don't deal with hypotheticals, I decided to bring the telephone conversation to an end. 

"I DIDN'T SAY I HAD $40,000.  I SAID WHAT IF I COULD PUT $40,000 DOWN?", she said with more than enough antagonism.  It appeared that this caller was simply going to challenge every explanation that I gave her for why homes in extremely low prices are not candidates for subsidized financing, first time home buyer programs where property condition dictates "cash only or rehab loans". 

It also appeared that the conversation had turned from the difficult to the impossible.  So, I just replied,

"SORRY, WE CAN'T HELP YOU.  GOOD LUCK." 

Later, there was a message from the same caller advising that I should "get out of the business" since I have a bad attitude. 

As Kenny Rogers said, you just have to know "when to hold them and when to fold them". 

I get calls daily from property owners in my Destin FL area who want to do a Short Sale.  These are the bullet points from my qualifying conversation with them:

• Your lender will want to know what your hardship is. What has changed from when you first took out your mortgage until today -where you can no longer keep up with the payments?   If it's not loss of income, unemployment, relocation, medical expenses, divorce, mortgage rate increase or similar, then you probably don't qualify for a Short Sale.
• Is your monthly net income less than your total monthly expenses?  Include mortgage payments, taxes, insurance, food, utilities, child care, alimony, credit card, auto loan, etc. We're not talking vacations, pet grooming,  tennis lessons and child's birthday presents!  (Yes, I've actually had some of my sellers think those are basic expenses.) Your mortgagee wants to know you are living in an austere manner to try to make your mortgage payments. If not- you probably won't be approved, as I discussed in Qualifying The Short Sale Seller. 
• Do you have a substantial balance in a non-retirement savings or checking account?  If you do, be prepared to give some of it to your lender.  For example, if you have $12,000 in savings, your bank might ask for $10,000 as a cash contribution at closing if they approve your Short Sale.  Even if you don't have much, they still might ask. I want you to be prepared for that. 
• Is there a second mortgage, and if so, is it in collections?  When your note goes into collections and is being handled by a third party, such as a law firm, be prepared for more stringent Short Sale terms, a greater cash contribution and/or promissory note. 
• You may be asked to sign a Promissory Note.  Ideally, you won't, but if so, most Short Sale lenders will ask for some monies to be paid back at 0% interest over 5-7 years.  It may be as little as $5,000.  Be prepared.
• Have you been making your mortgage payments?  If so, know that some lenders won't approve your Short Sale. Why should they?  They have 20,000 files before yours from mortgagors that cannot pay, and you are paying.  That doesn't mean you won't be approved, for example, if you are taking funds from your retirement or charging basic expenses, or getting cash advances from your credit card to make payments.  Be aware, however, that not making payments will affect your credit.  It's a personal decision for you to make.
• Have you received a Lis Pendens or  Summary Judgment notice from your lender?  If so, please contact an attorney for legal advice.  If you already have a foreclosure sale date, we don't have much time.

As you can see, this qualifying conversation can branch out into many directions, but it is critical to get it right, and inform your seller at the start, before ever beginning the Short Sale process.

It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR     Rulnick Realty, Inc.

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Short Sale Pre Foreclosure Help.

Specializing in real estate sales, short sales and foreclosures on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.  Call toll-free  1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Copyright © 2008 By Wendy Rulnick. All Rights Reserved. *"I Want to Do a Short Sale" Says the Seller* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity.

This blog, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice.  The information provided is for educational and informational purposes only.  It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information. 

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