Here is the latest is a series of occasional articles on “How I Saved a Deal” by NSDCAR members.
By Carol Farrar
2018 incoming President of the North San Diego County Association of Realtors (NSDCAR)
The client thought her situation was hopeless. In her mind, she was at a dead end and there was no choice. No other action was even possible, nothing else made sense. The client believed that “I’m troubled by trouble, I’m completely ruined, I’m wiped out, mine is a hopeless case, I give up.”
She was in her late 70s and her husband had recently passed away. She was devastated in grief. The weight of the world was now on her shoulders and she was ready to throw-in the towel. She told me that her and her late husband had lived in the same house in Escondido for 30 years. The house had seen almost no maintenance for three decades. It was in horrible condition, not a pretty sight.
Plus, with a limited income, she couldn’t afford the payments and was behind by several months. Also, she had little savings in the bank to pay the late payments.
The client thought her only option was the dreaded “F” word: “foreclosure,” followed by a short sale and selling the home for less than what is owed on the mortgage. In some cases, a short sale may be ideal. Typically, before approving a short sale, lenders take into consideration the amount of assets a borrower has and whether the borrower is already in default. Also, while not as damaging as foreclosure, a short sale still can mean that a credit score will take a hit.
However, the message I gave them was: Foreclosure is not imminent because there are always options. I saved the deal by reminding the client that they had options. No matter the price point, condition of the house or financial situation, there are always options.
Sometimes, clients are too quick to jump to what could be a worst possible conclusion. My advice to clients: “You may not be able to control the hand you were dealt, and maybe we’ve made bad choices in our past, but you can still change the way you live your life today by making new choices today. Today’s choices can positively affect the rest of your life.”
So, after meeting with the client and her family members and assessing the situation, my recommendation was to sell the home “as is” in its current state with the understanding that no repairs would be made and the home would remain with its current faults and issues. Forget remodeling for this client because she could not really afford to make any repairs due to her serious financial distress. Also, the vast majority of mortgage lenders insist that a home not have code violations, including structural, health, or safety issues, before lending money for repairs. It’s true that buyers sometimes expect properties to be nearly perfect or they expect the seller to fix it.
In my client’s case, selling home “as is” was a good idea because she did not want to deal with the stress of a drawn-out sales process. So, she signed the necessary paperwork (“caveat emptor,” let the buyer beware). Sometimes, problems can be gifts of opportunities wrapped in disguise.
This story has a happy ending. We received 20 offers and accepted an all-cash offer from a qualified buyer. The client was expecting that “if it could go wrong, it would go wrong.” But, escrow closed in two weeks. We exceeded her expectations. An experienced professional can use diplomacy and negotiation skills to push through with determination on behalf of a transaction. Just like a lifeguard, experienced REALTORS® can use deal-saving techniques when a transaction looks like it’s starting to drown. Today, my client has a clean slate. She walked away with a nice nest egg in her bank account and she lives comfortably in an affordable retirement community in Riverside County.
Carol is the 2018 incoming President of the North San Diego County Association of Realtors (NSDCAR).