The Most Common Cause for Preforeclosure Failure
The 2007 List Issue printed by REALTOR magazine had this to say about pre-foreclosures:
If keeping the home isn’t an option, alternatives include Sale. The lender will usually agree to a specific amount of time to find a purchaser and pay off the total amount owed. The borrower will be expected to obtain the services of a real estate professional to market the property aggressively.
This is pre-foreclosure sale, short payoff or short sale.
If the property’s sales value isn’t enough to pay the loan in full, the lender might accept less than the full amount owed to cut its losses. This option can also include a period of time to allow the borrower’s real estate professional to find a qualified buyer. A pre-foreclosure sale could provide additional funds to pay other lien holders and a few moving costs, which in turn helps out a struggling human being.
But short selling appointments have to be handled very carefully. Once you’ve made contact, be mindful of these next steps. And keep in mind, as Thomas Lucier warns, don’t contact pre-foreclosures in person.
“When on a listing appointment the agent first suspects a preforeclosure scenario, and quite possibly an indicated short sale scenario… it is essential to provide the homeowner accurate information and quickly displace and reign in the seller’s unrealistic expectations with cold hard facts,” says David Petrovick.
The agent’s task is to tell the seller what it needs to hear, not necessarily what it wants to hear. This is Honesty.
At this critical moment, however, as psychology has it, the seller will hear what it wants to hear, and remember what it wants to remember. Most sellers are in denial up to even the 11th hour. So, Petrovick points out, great care and attention must be paid to detail, both in the collection of information from the seller, and in providing information to the seller. Only this way can you avoid making mistakes like overfixing the home or misinterpreting the value of the home or giving the seller’s false hope.
Otherwise you could fail.
Though some may be put off by the predatory stereotype of the coldhearted foreclosure vulture, the reality is far from heartless.
Bankrate.com, quoting Thomas Lucier, says it best:
“Bad things happen to good people. A lot of times, things happen to people that are completely out of their control. I’ve seen it happen, especially with medical bills or companies like Enron that run off with their pension.”