The $500,000 Mistake

They say that real estate licenses are like driver's licenses: just because someone has one, that doesn't mean they know what they're doing!  (I trust my fellow Washington D.C. area drivers can relate to this!)

I wanted to share this story with you. This is a true story. This actually just happened in the last few weeks.

I interviewed with some clients wanting to sell their house in the Cross Junction area, which is outside of Winchester for those that do not know. They were open initially on our phone call about the fact that they were a couple of months behind in their mortgage. I said, "Not a big deal."  The amount of equity they had was going to make it so that we could sell the house, avoid foreclosure or any crazy stuff. 

So when we actually sat down and met them, then they were a little bit more open about the fact that, well, they were not just a couple of months behind, they were more like EIGHT months behind. And I said, "Okay... that completely changes our strategy." Because at eight months behind, I was a little surprised that the bank had not already set a foreclosure sale date.

The thing is, once a foreclosure sale date has been set, everything is off: the house is going to foreclose. There is nothing any real estate agent can do. And I said, "Look, we've gotta really hustle to get this done in the next week or two because once that foreclosure date's set, there's nothing else I can do." 

They had enough equity in the home, so we could do a very fast sale, so it was going to work: home could be sold in a week for cash, the bank would never know and the owners would avoid foreclosure while still getting some of their equity out of the home.

I told them the reason we had to move so fast is because the banks do not play fairly. That is just the way the world works. The banks do not play fair. Once they see that you are trying to sell the house (when it's listed publically in the MLS), they are going to foreclose and set that foreclosure sale date immediately to prevent you from selling. And so I said, "Look, we've gotta do a really fast sale without the bank knowing about it." In other words, it cannot go in the MLS. So we have got a market desk outside the MLS using the resources and contacts that I have.

I actually sourced them an offer able to close on the home in a WEEK!

The owners came back and said, yeah ... they just couldn't accept that, they really wanted to go on market to try to make more money. And I said, guys, here's my concern with this: as soon as you list that in the MLS, the bank is going to set that foreclosure sale and then you're done. You get NO money out of this. Even with the fast sale, they were positioned where they could walk away with a little bit of equity - some money in their pocket - without ever having to go on MLS or anything like that. They said, "Nope, Alex, sorry. We're gonna go a different direction." I said, "No problem guys, I wish you the best." 

About two days later, they had it listed with another agent in the MLS for sale. They even got it under contract quickly.

The problem was, about seven days after they went into the MLS, the foreclosure sale was set by the bank, just like I said would happen. And so, the property is still sitting there, technically under contract. I am not sure if that is because they actually do not know that the sale is not going to wind up happening, but the foreclosure sale is already set and those owners (and unfortunately the would-be buyers too) are dead in the water. The bank is doing its thing, and taking back the property, and selling it to somebody else. 

The moral of the story here is, it really does matter who you work with.

I do not get really upset when somebody says that they do not want to work with us. That is totally cool, but it is frustrating for me because I know what the fate awaits those folks who had a free ticket out of the situation they found themselves in. I KNEW what was going to happen.

Sadly, they had another agent who they were friends with and was giving them advice that, frankly, was bad advice. She did not know what she was talking about.

And so, who you work with really matters. It is not an ego play: It is really more about trying to do what is in your own best interest. Sometimes, we have to deliver news that we do not love to deliver. It is not the fun, happy news, but, ultimately, it is the best advice that we can give you. In this instance, it was, "Hey, avoid the foreclosure, avoid the hit on your credit. You're going to walk away with some money. Just not as much as if we actually had time to market it in the MLS and whatever without the bank jumping in to ruin the party." 

It is a classic case. You can lead some folks to water, but you cannot make them take a drink. It doesn't really matter who you work with. If you do not choose to work with us at the Valor Group, again, I totally get it. I hope that you will find somebody who really is an expert at what they are doing and not just a friend who just happened to get their license recently. Make sure that they are an expert at what they are doing, especially within real estate. Even on the foreclosure side of the business, you may have a license in real estate but that doesn't mean that you know what you are doing with foreclosures, or with lakefront property or other specialties. They can be very different markets, very different ball games to play in. You have to make sure that whoever you are working with really does know what they are doing and is not just trying to fake it to make it. 

If we can ever answer questions for you, whether we have earned your business or not, I am more than happy to give you any advice that we have and let you make your own best decision. Thanks so much!

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