At Starbucks with a fellow real estate agent who's always been fairly successful. Lives in a nice gated community, has a Mercedes, two other properties - one on the lake, the other a rental condo in town. She tells me business is slowing down more than expected. While volume seems up, prices are down, everyone wants that fifty cents on the dollar house so you're out showing dawn till dusk. Many foreclosures in lower price ranges are priced according to condition with some having the copper plumbing missing, heat and air units stolen, neighbor kids have used a property for a clubhouse, sewage back up makes smell unbearable to view the property and the beat goes on. You have to show a lot of properties to find one that's acceptable.
Meanwhile back at the ranch, this agent has got to jettison the rental condo, the condo fees either will go up or there will be an assessment to cover non-payment by some of the residents who are going into foreclosure and have already moved out! This agent informs me that she just lost a great tenant who was moving back home and that attempts secure another renter haven't worked out because of lack of credit worthiness. She hates to have to mail back the keys, but with everyone doing it, the bank will understand and while her credit score will be dinged, it will be more comfortable for her and she'll be able to continue to pay for both houses and cars. If something comes up, the CDs, IRAs and bonds are there for backup.
I ask her to go back a few steps. What makes you think the bank will be so benign? Why will the bank merely take back the condo, ding your credit and give you a hug? Don't you realize when you go to a loss mitigator at the bank after you miss a few payments that you'll have to hand in your tax returns and when they see that you're both still earning, have money in the bank and other assets and can still make payments that you'll either have to continue paying or liquidate some assets. Where did you get the idea you could just jingle mail the keys back to the bank? The bank is going to go over your financial information like no tomorrow and they have your social security numbers and can do the research, trust me. Once it's obvious to them that you can make your payments, it's just a drag for you but not financially impossible, you'll have to break your promise to the kids, not go to Disney during spring break and keep paying your mortgage. You will have a financial autopsy the likes of which you have never seen. She looks at me incredulous and says "you're such a downer, that would never happen. Let's change the subject."
Physician heal thyself.
RE/MAX Paramount Properties 678-595-5286 Direct
Or 888-940-0074 Toll Free Office
Atlanta Real Estate & Atlanta Homes for Sale 
Jim, it is concerning that someone in our field can be so nonchalant about losing a property. Yes, reality can be a downer, can't it? I hope your colleague thinks about your comments and gets herself some assistance from an objective outsider.
Hi Jim~ It is too bad that so many people think that this is the answer. It isn't that easy to just walk away from financial obligations, but so many people are doing it! Couldn't they just garnish their wages?
Why is it that Morgan Stanley can get away with this then... http://tinyurl.com/yjxj7l6 ? Didn't they have the means to keep paying?
Kathryn Acciari - CDPE - REALTOR® - Sturbridge MA Real Estate Connection (RE/MAX Professional Associates) How can they advise someone else when they cannot see how to handle things correctly for themselves? I have a rough time with this.
Owensboro KY Real Estate Specialist Vickie McCartney, Broker, ABR (Maverick Realty) If the bank accounts are still with the Bank they can attach them. There are loads of consequences and they may vary state to state. The problem at some level boils down to the individual. I have lived very conservatively all these years, and by the Grace of God have weathered this storm OK so far. Others have gambled wildly recklessley and their attitude is "So what? Next!"
Charles - Wow Charles, that is a great link! Thank you for sharing.
Jim- I read your post and was amazed by the indifference of the agent you were talking with. I know that part of my amazement is the cultural difference. I don't own a home in a gated community, let alone 2 additional properties, so I look at the deed in lieu of foreclosure process a little differently. I see families that have had a series of unfortunate events, namely jobless and declining values, create a situation that they can no longer carry their payments. Some are able to successfully sell their homes via the short sale process, but there are others that aren't. These are people that are giving up their family home and certainly don't have their 2 other homes to sleep in at night, as they drive off in their Mercedes! I think a good response when she stated that you were a downer was that perhaps she should visit a homeless shelter and see what happens to real people they have to turn their homes back over to the bank! Wow, does that fire me up!
Interesting perspective she has Jim. I'm not surprised though. It appears there are alternatives to just walking away; maybe she should take a look at your suggestions.
I would say this Successful agent has no clue. Unfortunately many agents or REALTORS don't understand the implications.
Change the subject? WOW....not open to the truth either.
I showed a 975K home yesterday, originally 1.6M
I asked the listing agent to explain the hardship to me, as just because the market has changed if they have tons of assets, not sure it will get through.
Jen Olson (First Weber Group Realtors) Jen, I have loads of conversations with many folks in real estate and I really had to go upside down with this and change all the details. It is very representative to what occurred and why it occurred in the last few years in real estate.
Many friends of mine went out during the boom and way overextended themselves thinking the gravy train would never end. They have mansions, they borrowed equity to get 2 new "Benzs!" Some even purchased multiple properties they would rent and wait until the market doubled again and sell! It is galled "Greed!" It is sad that many are now totally upside down and realized what happened, and others are totally indifferent, and it is not their problem! Those are the folks that scare me!
Colorado Springs Realty Patricia Beck (Re/Max Real Estate Group, GRI, CDPE) I doubt the person wanted any other insights than her own.
Missy Caulk-Ann Arbor- Realtor(R)- Ann Arbor Real Estate (Keller Williams-Ann Arbor) ((((MISSY!)))) The Irish had a saying years ago "Clueless!" I totally agree, but it is a self imposed state of mind for some. They like living in a state of denial.
Its a sad state when one from our own profession goes the route of handing back the keys. Would be interesting to know just how she has counseled her clients in the past and present. Guess the Mercedes means more to her than her reputation.
Martha Brown Annapolis and Anne Arundel County RE (Long & Foster Real Estate, Inc.) I guess for some in life it is all about stuff. I prefer to be around those persons that have real ideals, and morals and have the substance of character to practice what they preach.
That is disheartening. This type of outlook would probably be the first to yell if we tax payers are to pay to bail out the banks, etc. (which you know we will eventually have to pay the bill).
Joan Snodgrass Tri-Lakes Realtors, Shell Knob, MO (Tri- Lakes REALTORS) Joan for some in life, the mantra is "It's al about me!"
Jim,
Jingle mail is quite common these days and that obviously has dulled many property owners into taking the matter lightly, not really thinking through what repercussions it can bring.
And SHE is the reason the taxpayers (you and I) will be paying dearly for the bank bail-outs.
Oh me, oh my! Shameful way to think especially since she is an agent and should know better.
Esko Kiuru - Las Vegas NV Mortgage Consultant (FHA, VA, Conventional, Refinance, Jumbo) It is a big process with a lot of ramifications. It cannot be entered into on impulse.
Carol Culkin (Houlihan Lawrence Realty) Yep! People like this really make me sick.
Irene Tron (FC Tucker/1st Team Real Estate in Valparaiso, Indiana) It is very sad!