Sarasota Real Estate Owners Fight Foreclosure Fear!
Sarasota homes for short sale turn into foreclosures for TWO tragic and mostly unnecessary reasons!
If you or someone you know is facing foreclosure in a state with RECOURSE, please pay attention. In Florida (one of the 24 states with recourse), walking away from a property will NOT remove the problem. In fact, property owners in Florida who walk away (forcing banks to foreclose) increase risk of debt collectors pounding on their door for up to TWENTY years.
Foreclosure is NOT an option!
Unfortunately, avoiding foreclosure is NOT easy, quick or simple. Nearly every one of the 130+ short sales with which I’ve been involved as list agent, buyer’s agent and/or short sale negotiator has involved ISSUES. To be clear, I NEVER have encountered an “easy” short sale, including 2 personal short sales on investment properties.
2 (more) issues cause property owners to cringe in anger & frustration.
SHORT SALE STRATEGIC PLAN REQUIRED!
If you are facing foreclosure, you have much more stress in your life than a house “problem.” Chances are, you have lost your job. Money is tight and sleep is deprived. You’re a nervous wreck.
The last thing you need is to be troubled with trying to avoid foreclosure or knowing which/what questions to ask all the “experts” lining up to help you.
What I know is that with everyone I’ve helped (including me) each person recovers from this nightmare. They find work. The horror turns in to a bad dream.
You do NOT want to be the person who picked the wrong people to help you, forcing you into foreclosure when these wrong people steered you in the wrong direction.
These wrong people will not be on the hook for a huge $90,000+ deficiency, as debt collectors bang on your doors, not the doors of the people who misinformed you – or the people who really did not have the experience to help you.
With that said, the #1 main pitfall your short sale turns into foreclosure is poor valuation. The bank’s valuation person (unintentionally) inflates the value of your property beyond what any buyer will offer to purchase. The bank’s valuation person either is a realtor performing what is called a broker price opinion (BPO with emphasis on “opinion”) or appraiser who may or may not be a local appraiser.
In fact, last week an appraiser from Tampa – which is 60 miles north of Sarasota – called me for access to one of my listings. To complete the assignment for the bank, this out-of-town appraiser (who couldn’t possibly know our local market let alone the valuation issues inherent with this property) is tasked with getting the value right.
If I used electronic lockboxes, the appraiser would not have called me for access.
If I had ZERO or limited experience with short sales, we never would have realized the importance of paying for our own appraisal at listing time…completed by a very experienced (and LOCAL) appraiser in advance of the bank’s valuation.
You see, banks submit valuation requests to “brokers,” (middle men so to speak) who hire “local” people to value a property.
For no logical reason – NO LOGICAL REASON – most banks refuse to pay more than $50-$80 for a valuation report. Therefore, most property valuations are completed by real estate agents who mostly have lost their real estate businesses and who are happy to get paid $50-$80 bucks /bpo.
Truth is, real estate agents are NOT trained to provide valuations. I repeat, real estate agents are not trained to provide important valuations – that is, a “CMA” or comparative market analysis is not a broker price opinion. I fully realize my colleagues earning their living by doing “bpo’s” don’t appreciate my brazen comments. Still, I stand behind this comment 100%.
Though appraisers are not perfect with valuations, at least they are trained to provide valuations; real estate agents are NOT trained.
Still, banks (in a desperate attempt to save a few dollars) regularly lose TENS of $1000s of dollars on each property in order to avoid paying a trained appraiser his/her $325.00 fee. Banks prefer to pay $50-$80 instead of $325.00.
This is reality.
Further, many valuation people (both real estate agents and appraisers) do NOT want to talk with the listing agent about the property. They don’t want to see LEGIT roof repair quotes; they don’t want to know WHY the property has sat on the market for months despite many price drops. They don’t want to know that REAL issues materially affect value.
They fly in for 5 minutes, snap a few photos & disappear to their MLS database to find “comps” and make adjustments.
They don’t adjust for the roof issues that a buyer’s inspector will discover, reflected in buyer’s reduced offer to purchase.
They don’t adjust for noise from I-75 behind the house because they never stepped outside to hear what potential buyers hear when considering the house to purchase.
Fortunately, many real estate agents and appraisers DO listen to the listing agent. These people doing the banks’ valuation work want to report accurate value. They’re not afraid of being influenced by a listing agent’s weak support of value…that is, the listing agent who says it will cost about $20,000 to repair the roof problems though list agent has no roof repair quotes from at least 2 local licensed roofing contractors.
Bottom line: it is the list agent’s responsibility to help prove value to the bank’s valuation person who (most likely) is not familiar with your property and your neighborhood.
The #2 pitfall your short sale turns into foreclosure is that homeowner cannot/could not prove hardship. Once again, it is an experienced listing agent’s responsibility to HELP a property owner understand the “short sale package” and HOW a bank determines/confirms hardship. Inexperienced real estate agents dangerously ignore this critical aspect of short sale approval.
For sellers who fail to prove long-term hardship, the bank typically will demand payment, either promissory note set up on monthly payments or lump-sum payment at closing. If seller cannot or will not agree to a payment plan, the bank will foreclose, leaving the seller in Florida (a recourse state) to face debt collection attempts for up to 20 years and credit showing a foreclosure. To get short sale approval with no deficiency payment requires experienced short sale experts, hardship & some good old-fashioned luck.
Sarasota homes for sale facing foreclosure need to know the 2 most prevalent issues forcing them into foreclosure or HUGE deficiency…unnecessarily!