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., 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.”

Click Here to Leave a Comment Below 5 comments
Jim Churchill

It does not matter who the realtor is that is marketing a foreclosed property does to market it. The banks are not willing to accept take most offer that buyers are willing to make. There will be millions of homes going into foreclosure within the next two years. The only thing that can be done is that the government freeze all variable rate loans so that the homeowner continues to pay the same payment and stop the re-casting of all MTA loans for the next five years. Of course this will not happen because no one cares until it touches them personally.

Gary Elwood

[The banks are not willing to accept take most offer that buyers are willing to make.]
Thank you for the comment Jim. Good thought. Do you think this is true across the entire nation? Or just your market? I’m interested in knowing.

Ruby Zuniga- Century 21 Citrus

Hello all, I believe that this is going on everywhere. I’m in the Los Angeles, San Bernardino and Riverside County Area. I have a listing in the S.B County and a listing in the L.A county. The Homes pre-foreclosures are not moving? Why? Agents don’t want to waste their time. They will rather take buyers to a Normal Home where their commission is guaranteed.

Gary Elwood

Thanks for the update on LA, SB and Riverside county areas. You say, [Agents don’t want to waste their time. They will rather take buyers to a Normal Home where their commission is guaranteed.] Just curious, If a buyer’s agent helps his client buy a preforeclosre he won’t get a commission? And what about listing agents? Is there anything they can do to entice buyers? Thanks for the input everyone!

Ruby Zuniga- Century 21 Citrus

The banks will pay a commission, but it is usually reduced (below current rates)and of course it is then split 50-50 with the buyers agent. The banks are still making it very difficult to sell “short sales”. They take very long to approve the deal, usually 3 months to get an approval. We have a lot of inventory, buyers want to be in their home 30-45 days and of course agents would rather get paid 6,7 or 8 percent commission within that same time frame.


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