Realtor Coaching & Training: foreclosure
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Realtors, what do YOU think about homeowners who are doing ‘strategic disposals’ (short sales, foreclosures) of their real estate?
A vast majority selected the option: I think its the best financial move for many upside down homeowners.
After you have read this post, watch the 4 new videos: Harris Real Estate University Mid-Year Real Estate State of the Union videos.
Here are the comments:
1 The banks need to work with these homeowners. They are the ones whose values are getting screwed by thier neighbors who walk or choose to short sale. Most strategic defaulters walk ONLY after they have been told that nothing can be done by the banks or their investors. I see it on a daily basis! It is truly sad what is happening to the responsible homeowners.
2. Are they doing it because it is the “in thing” to do?
3.These people need to be advised to the consequences. Fannie mae already stated that they are going to come down hard on strategic defaults. I believe other banks are going to follow suit. Not only will credit scores be compromised for many years, these people will also have default judgements hanging over their heads which will hinder them the ability to purchase on credit other things including cars, boats, etc. Unless these people have the means to become a cash only consumer, I think it is a bad business decesion to do a strategic default. A better decision would be to ride out the recovery or sell and finance the loss.
4. I’m conflicted.
5. It’s a sound solution to a devestated financial blunder created by the worlds banks.
6.I think it is the best financial move for many homeowners that are facing an imminent foreclosure. It is my job to educate them on the alternative to foreclosure, provide them with a “graceful exit strategy”, but at the same time, assist those that may be able to qualify for some type of home retention.
7. Complicated- adding fuel to fire of housing crisis. Part of me says selfish, making crisis worse. Makes sense financially. Banks mysteriously are allowing it.
8. Some cases it makes good sense and in others I sort of have a moral problem with it. If you need to move to a better area or move for a job its fine, but bailing out because you were stupid and used your home for an ATM and tapped out all the equity, well that is just wrong.
9. I think if we can help them then do it. they have to be willing to do their part as well!
10. I don’t see short sales in the same category with the strategic defaults, if you define “strategic” as the ability to pay, but just not doing it
11. I think it is a personal decission. I really have no opinion for or against. I do have a strong opinion that the banks (servicers, mortgage holders, etc.,) should have gone further to keep home owners in their homes with realistic loan mods. In addition, I am somewhat disgusted that the fed bailed the banks out without any contingencies attached to the money.
12. It’s about survival. It’s about how Congress made sure everybody could buy a house, they bypassed sound economic principles. Those who loaned money may have been forced to do so, but then again they were rewarded by bailouts anyhow. Can we please go back to the Constitution- it proved itself already. The opposite of progress is congress. Poli- is latin for many and tics are blood suckers (politics-politicians). Years ago they were Statesman (loved country more than self)
13. It’s different case by case. If there’s a genuine financial hardship and no other alternative, then yes–it’s time to walk away. But I do encourage trying all other alternatives first (loan modification)
14. Both homeowners and corporations have the moral obligation to live up to the agreements they signed. I would not walk away, but I realize that’s not everybody else’s morals.
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Realtors, what are your primary financial goals now?
Gone are the high flying Bentley aspiring days of real estate…..welcome in a new reality.
After you have read this post, watch the 4 new videos: Harris Real Estate University Mid-Year Real Estate State of the Union videos.
Here are a few of the comments:
1. Retirement fund and bringing in more money each month regularly.
2. invest in my real estate education and postion on the internet
3. Short Sale likely
4. Since 2005, the real estate crisis has been an eye opening experience. In the future i am going to be much more conservative in my risk taking , consentrate on low-no debt, and building wealth through diversivied investments. I will never take for granted the real estate market again.
5. Build a nest egg and pay off all debt including the mortgages.
6. Invest in my education to not only stay up w/all the new rules/regulations and be the short sale expert in my area.
7. Buy Apple! Investing in Jobs…Steve Jobs!
8. Increase my bank account! And be able to buy again, hoping next year, I sold my house top of market and didn’t rebuy because 4 months later when I started to really look for a home the market was just starting to tank…I held back to see what was happening am glad that I did.
9. Hard financial reset w/ respect to a rental property that I am short selling, modifying a loan on my current residence, consolidating debt, and possibly working with a tax expert in the next 6-8 months due to a short sale. But I will handle it!
10. Paying off any debts rapidly. (keeping the wife working and happy.)
11. I am making it, had many many challenges. Too broke to file BK.
12. Work through to a nice retirement within 10 years.
13. I’ve lost alot already, keep getting laid off other jobs, reeducating myself so that I can survive and thrive in this new market
14. Working toward getting all my debt paid off as I can, not spending money on anything not really necessary.
15. staying positive been through this before but not with the economy in the shape it is
16. My practice is focuesed on short sales. They take so long to close and are so labor intesive that it is difficult for me to have time for lead generation. Ive been performing BPO’s in order to supplement my income. However, on January 5th, I received the last large order of BPO’s, They did not pick back up until late April and have been coming in at a snails pace. Perhaps Im doing something wrong and my scores have dropped.
17. Trying to profit in the current cycle, but it’s tuff when they can change the rules anytime they want. I am not a pessimist, I am a realist. To protect oneself, one must look at things how they really are.
18. Maintaining present level and actively growing as others leave the field.
19. Re stablish my retirement account, save money for Europe vacation.
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Thank-you to the 1000′s of Realtors who participated in this years Harris Real Estate University mid year survey. This is part 1 of 5 of the survey results.
Here are a few of the comments:
1. Big government will stick their noses in again and slow the inevitable price delclines til the REO inventory is finally consumed.
2. Too many pre-forclosure homes in front of us. Going to hit hard.
3. Until inventory of forclosures and short sales are depeleted, Home value will continue to drop. HAMP is delaying the foreclosure process which will drag the whole process out a few years but at least will help prevent a flood of foreclosures at one time.
4. I’m glad we have NAR. Thank you for the look ahead possibilities. I am taking “massive action”
5. I believe the remainder of Obahama’s “reign” will somewhat depended on November elections. I anticipate short sales will be the focus. The credit “hit” are homeowners biggest obstacle to cooperate with a short sale vs. throwing up their hands and letting properties go into foreclosure.
6. Nice Caves! We’re in a depression economy. It’s 1929 x 10…and recover is 10 to 15 years away. Invest smart…Share your knowledge and be of service to those who need your knowledge!
7. This was phenomenal information. I am so glad that HREU is out there – these classes have been just the best resource available. Thank you. I plan on taking immediate action.
8. L shape recovery – prices are going to come down again, but not as dramatic as before and will stay that way for at least 6 months and will stager until the unemployement rates improve….strong buyers buyers will be in the market (large downs, high ficos) but they will be offering less because of the market.
9. Based on the flow of data that I have been accessing from my coaches, the videos of interviews, it seems very clear. Bad economy, bad housing conditions, bad unemployment levels, maybe worse, markets reacting negatively, more & more homeowners will scramble to avoid foreclosure leading to short sales & deed in lieu’s…
10. Reasale property will go easy for $30.000-$50.000. down,after banks show them an example…
tighter lending policies, reduced buyer pool, reduced equity, already low low interest rates, dramtically increased inventory, two huge waves of loan resets coming, faltering economy- recipe for disaster. Major changes necessary somewhere or home prices will plummet.
12. scary but true
13. We are seeing higher end homes in Orange County, CA beginning to drop there prices but there are some pockets of Condos and homes that are holding fast on their prices and still selling. I wonder what will happen with the HOA’s though with them being so behind and when the short sales happen and they get paid off most of the extra money goes to the lawyers and not the HOA’s. Will Condo owners be forced into taking care of the grounds on their own?
14. Only take listings that are priced correctly learn to walk away from over priced ones
15. Don’t believe that home prices can go significantly lower without bankrupting nation…
16. Seems like they are running out of houses to foreclose.
17. The high end will see significant price declines.
18. Logic, reason,statistics, supply and demand. This is not fortune telling, but forth telling. Do certain things and consequences will follow as night follows day. It can be solved rather fast if the Govt. would get out of the way and let free enterprises prevail, but then again we are the Govt.aren’t we? All welfare states turn into police states, and all nations are destroyed from within. I pray daily that the American people wake up in time to save this Constitutional Republic.
19. I believe things will get worse before we see recover.
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Yale Professor Robert Shiller (from the S&P Case/ Schiller discusses the uncertainty in housing..
For the growing number of struggling homeowners in this country, more help is on the way. Additional aid from the federal government will begin making its way to them next month — one program would help qualified homeowners refinance their mortgages after seeing their property values fall below the amount they owe, and the other includes another round of funding to help the unemployed or underemployed with their payments.
It’s easy to see the need for such programs. Theoretically, they keep people in their homes and bring some stability to fragile housing market. But the plethora of programs announced since the housing crisis started have largely been failures, suggesting that any effort to fight foreclosures and boost home sales is going to be a futile one.
Home prices have shown few signs of sustained recovery. While the S&P/Case-Shiller Home Price Index showed a 1% rise in June from May — its third consecutive monthly increase — the index’s committee chairman at S&P warns that it’s nothing to get too excited about as other more recent data on home sales and mortgages point to fewer gains ahead. Purchases of new homes in July fell 12.4% from the previous month to an annual pace of 276,000, the weakest since data began in 1963, according to the U.S Commerce Department.
Not even record low mortgages rates have boosted home sales or enticed a debt-weary public. Of course, this doesn’t seem much of a shocker. Experts say home prices – which have fallen by more than 30% since 2006 — are still inflated by 15% to 20% in many areas.
So why try to prop up prices any longer with federal programs? Is it time to simply let prices freefall, clearing the way for a genuine correction of the real estate market?
It’s true that there are plenty of reasons to keep prices from falling lower. For one, a further decline would put more mortgages under water, adding to the litany of foreclosures and the worries for banks. And falling home prices would probably fan worries about deflation, which could send the overall economy into another tailspin — further depressing everything from wages to sales to consumer confidence.
Source: Fortune
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Watch this video….its not all bad news for home values….a few notable bright spots around the US…
Prices of U.S. single-family homes gained more than expected in June and rose in the second quarter, reflecting the lingering boost from homebuyer tax credits that ended in April, Standard & Poor’s/Case Shiller home price indexes showed on Tuesday. The effects of buyer tax credits have largely filtered through and home prices will be hard-pressed to sustain these gains with unemployment still near 10 percent, economists agree.
“This is the last hurrah for the tax credit,” said Gary Shilling, president of A. Gary Shilling & Co. in Springfield, N.J. “The data we’ve seen for July suggests considerable weakness in both sales and prices.”
The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.3 percent in June from May on a seasonally adjusted basis. The rise was better than the 0.2 percent increase expected by economists polled by Reuters, though slower than the 0.5 percent rise in May.
Unadjusted, the 20-city index gained 1 percent following May’s 1.3 percent jump. In the year, prices rose 4.2 percent, surpassing the Reuters forecast of 3.9 percent.
“Given the way home sales collapsed in July and given the boost in housing activity across the board in the second quarter, it’s clear this may have been the calm before the storm,” David M. Blitzer, chairman of the index committee at S&P, told CNBC.
Agents, remember this video is talking about JUNE home sale/ home value numbers….NOT July. In July (as you know) the home sale numbers fell off the cliff. Its obvious that the buyer tax credit does work to motivate buyers and as a result sellers are able to sell for slightly higher prices.
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Interesting analysis of the housing market worth reading…
HREU students knew this (new) crash was coming. It wasn’t a surprise. What IS a surprise is how seemingly unprepared our industry is for the long slog real estate ‘recovery’.
Fact is, its going to take decades for the lost trillions to be regained in terms of home value. AND its likely that entire parts of the US will never regain (or appreciate) again. Don’t believe me? Ask any agent in the mid-west about property values. In Ohio (where Julie and I sold real estate) homes often sell for the same IF NOT LESS than they did…..5…10…even 20 years ago.
Accepting this means our industry needs to embrace the new real estate paradigm. Watch the videos we created for you that explain with will happen next for housing and what you must do now.
Soft demand for existing homes pushed up inventory to a record 12.5 months of sales and easily broke the previous high of 11.3 months scored in April 2008. By this basic measure, the price of homes may reasonably be expected to fall at the most torrential pace seen during our four-year-old crash.
Yet you will see only the most tepid warnings of this risk as described by the mainstream media with results released today being worse than the most pessimistic forecast of economists surveyed by Bloomberg News. Please review the chart (above) and note that it is in record territory for the history of months-of-inventory for sale.
“I expect double digit months-of-supply for some time – and that will be a really bad sign for house prices,” said Bill McBride of Calculated Risk, commenting on the biggest one-month drop in sales ever.
Today’s stats are the first release of existing-home-sales data that gives us a view of buyer demand without the hugely popular down-payment prop from the federal government. Please note that inventory in units was comparatively benign with little change from June (Please see units for sale above.). We estimate the excess of units on the market as 1.1 million of the 4 million for sale.
Prices for residential real estate have been flat since August 2009, but they have fallen 34% from their peak in the summer of 2006 (based upon the 120-year series by Case Shiller). Not one commentator I reviewed on today’s stats explained that the perils of the American housing market have deepened dramatically since the killer crash let up and paused a year ago.
New risk factors now include a flood of negative equity. Foreclosures in progress are at a record level. Fourteen percent of mortgages are behind on payments — about 7.7 million borrowers or, more starkly, one in seven. Please note that inventory for-sale plus the 7.7 million delinquent borrowers is a number which is massively larger than the average unit sales of 480,000 a month (Please see “X” in the chart above towering over “Z” – monthly sales).
THAT is a very under reported fact. Homeowners who are upside down are making the financial decision to do a ‘strategic disposal’ (Short sale or foreclosure) of their property. Watch the new video that exposes how big this problem will be.
The risk doesn’t stop at one-of-seven behind on payments. The cure rate on delinquent mortgages is effectively zero once the loan goes to 60-days late. A record 4.63 percent of borrowers are in foreclosure. Intermingled among this mayhem are approximately 13 million homeowners who have no equity or negative equity. They would make nothing from the sale of their house if they could sell it. Or they would have to write a big check to sell. They are prime candidates for strategic default. One occasionally sees whispered warnings of a tipping point with default achieving a cache as was once given to hula hoops or pet rocks or station wagons.
“You end up in a home-price-depreciation death spiral,” Laurie Goodman told the Wall Street Journal. She is senior managing director at Amherst Securities Group LP and considered a guru on mortgages.
Other risks include massive imbalances between the exaggerated value of debt assets (mortgages) used to buy homes and the current huge fall in the value of property. Property values have fallen FIFTEEN TIMES further than the balances of mortgages. A recent report also called attention to the fact that even after a 34% fall, property values today are higher than they have ever been in any prior bubble excepting for the current one that we are in.
Many believe that in most parts of the US homes will continue to lose value until:
The monthly cost of OWNING = the monthly cost of RENTING. As long as it makes better financial sense to rent vs own there will be legit fears about further depreciation in property values. DEFLATION is the problem.
The huge number of late payers proves that home prices remain too high with our current unemployment of 9.5% even if affordability has skyrocketed and interest rates have plummeted.
Demand has held up surprisingly well given the awful scary facts just recounted (See chart above for actual unit sales released today.).
We are in a battle to the death and only fools rush in to this market. Wise men run for the hills. My suggestion? Rent. Don’t Buy. If you own, sell. Then wait out the storm. We live in interesting times. Don’t make yourself a statistic of them.
I disagree. IF you OWN your home…as in OWN IT…not a mortgage debt holder…you are in great shape. Fact is, you need a place to live…you will always have a housing expense. Even when your home is paid for, property taxes and HOAs must be paid. OWNING with no debt is the way to be. Unfortunately, that is not possible for most of American.
Source: housingstory.com
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Everyday we get free coaching call requests from current and future Harris Real Estate University students who are deeply confused about how to deal with homeowners who want to do a strategic disposal of their home(short sale or foreclosure).
We get it…its a truly confusing issue. Is a strategic disposal an ethical or even moral issue…..or is it simply a contractual issue?
Here’s the thing…as agents its not our job to play moral police.
Its our job to help homeowners (and buyers). AND in this epically distressed real estate market its our MORAL responsibility to help homeowners avoid foreclosure. If that means providing a strategic short sale for your homeowners…so be it.
The goal must be: Fewer Foreclosures.
Watch this video..share your comments. If you don’t agree with this video..tell us why.
More and more commercial real-estate companies are doing what many indebted homeowners would like to do: Walk away from mortgages on properties that are now worth a lot less than they paid for them.
Today’s Wall Street Journal highlights three major developers – Macerich, Vornado Realty Trust and Simon Property Group – that have recently decided to default on mortgages.
When companies do this, no one bats an eye–it’s just “smart business.”
When ordinary homeowners think about doing it, meanwhile, the mortgage industry and government begin moaning that a mortgage is more than a business contract. It’s a social contract, in which homeowners have a “moral obligation” to pay.
That’s bunk. An individual mortgage is no different than a corporate mortgage. If corporations are allowed to walk away from mortgage obligations without feeling shame and guilt, then individuals should be able to do so, too.
The contract homeowners sign when they take out a mortgage spells out exactly what happens if the homeowner stops making payments on the loan. The lender has the right to foreclose on the house, taking the homeowner’s downpayment with it. In addition, the borrower’s credit rating will usually get destroyed, and, in some states, the lender can come after his or her other assets to recoup the capital the lender has lost.
Those are big penalties. They provide a major incentive for the borrower to continue making his or payments. And that’s why the lender, a corporation, put them in the contract.
Importantly, the lender voluntarily entered into the contract–and it did so because it thought doing so was a smart business decision. That it actually turned out to be a lousy business decision is not the homeowner’s fault. It’s the lender’s fault. And the borrower, who is already feeling plenty of pain his or herself, should not have to bear the burden of guilt and shame on top of everything else.
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