HELPING DISTRESSED SELLERS – PART 1 OF 3 PART SERIES

PART 1- FINANCIAL SET BACK

You just lost your job of 23 years. You still have kids at home and a mortgage. You are the primary wage earner of the household and with all the financial responsibilities of your 2 kids and a wife, you have very little savings. Does this sound familiar? Since you are 55 you may have difficulty finding another job quickly. Maybe you had thought about downsizing your home in the future since the kids are close to graduating high school but now it seems imminent to make a quick decision.

Sometimes Life shows up forcing us to make hard decisions.  I learned through my own experiences, not to wait but to act quickly, find the right people to help me and make the needed decision that would work best for myself and my family even though it would be painful and hard to do.

In this 3 part series of how to handle financial set back with regards to  real estate, we will present some scenarios  and offer advice about what you can do.  The 3 parts discussed are job loss caused by a forced retirement, age, illness, or lay offs as one category and then divorce and death of a spouse as category 3 and 4.  Part 1 will address job loss. We will talk about how to manage expectations and tips on how you can best meet these challenges with regards to how to sell your home and/or other real estate holdings.

The fact is losing a job because of illness, lay offs and/or age can be devastating, especially if your savings is not enough to carry you through for at least a year or until you can find employment again. If age is a factor, there might not be another job to replace the one you held for many years. Technology has eliminated many jobs for older more highly paid workers and these jobs are being replaced by younger workers who will work for less money.  If you still have a mortgage on your home, paying that mortgage as well as other monthly bills can be overwhelming or impossible. If you think staying in your home could be an option seek professional advice from your accountant or financial planner.

If selling of your property is imminent then seek  the help of a qualified Real Estate agent. Here are some tips for making that very important choice.

  1. Getting a referral from a professional who uses Realtors in their practice is sound advice. It could also be a family associate but make sure they have experience with a distressed property situation.
  2.  Look for an agent that has had experience dealing with short sales, disbursement of personal property, and has an team of people that can help you. I am talking about, estate sales people, painters, plumbers, handymen, attorneys for legal advice, lenders, etc.
  3.  You also want a Realtor who has compassion for your situation and will work with you in a consultative fashion, give you the time and advice you will need even if it takes a while to prepare to sell the home or weed through other situations that will impact getting it on the market quickly.
  4. Ask lots of questions so you can make quick decisions if needed in order to avoid a short sale or foreclosure. Don’t bury your head in the sand. Take ACTION!

In dealing with these situations, I have found that some people can move quickly and feel good about their decisions while others drag their feet hoping the problem will solve itself or miraculously disappear if they just stop thinking about it. As we all know, problems of this magnitude do not just disappear, they must be dealt with as quickly as possible using sound advice.

Recently I was contacted by a lovely couple who needed to sell their home.  Unbeknownst to me they had been advised by their financial planner to sell their home a year prior to our meeting. Mr. Seller had been out of a job for over a year but was hopeful to regain employment in the industry which he had worked for 30+ years. He was a man over 65 and companies were just not hiring for his particular skill set. Unfortunately in dragging their feet  to sell their home their savings were running low and so by the time we got together it was “we need a quick sale”. We sold their home fairly quickly for a good price which afforded them an opportunity to put down a good chunk of money allowing them to substantially reduce the next mortgage making the new payment very affordable. After finding their perfect home again, we contacted the lender to procure the loan and much to our dismay we discovered they were 30 days late on their current mortgage and had asked for a forbearance.  Forbearance granted by your bank means  you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest does continue to accrue on your loan and is tacked on to the original loan making you owe more when you close out that mortgage. It can also be reported as late pays to the credit institutions which it did in this case. For some homeowners, forbearance in and of itself could be an option to stay in the home longer if you knew that your shortage of income was temporary and a new source of income was on the horizon, but a bad option if you have to sell and are looking to buy again quickly.

To make a long story short because of their prior exceptional credit history and the large  down payment, the lender was able to keep the loan “in house” and make the deal happen.   The real moral here is that the Seller waited too long to make the decision to downsize and then did not seek advice from the Realtor or lender before deciding to ask the bank for the forbearance.  If this had gone on for several months it would have caused them not to be able to get another mortgage for several years.  Another factor to this situation was the necessity for a quick sale. The real estate market is very healthy right now and good homes are selling quickly and for a good money. But what if that had not been the case and market was slow?  We would have had to continue to drop the price on a weekly basis until we finally got a buyer. Can you see how selling under pressure can substantially impact the sellers bottom line.  I certainly understood the embarrassment they must have felt about not being able to make their house payment but know that you need to be able to rely on the professionals to advise you. They do want to help and all information is confidential.

Here are a list of questions you might find helpful to ask when looking for a Realtor to help you sell your home in a distressed situation?

  1. What is a realistic time frame to prepare my home to sell?
  2. How quickly will it sell and for what price?
  3. Will I still be able to capture full market value if buyers know we are in a hurry and need to sell quickly?
  4. Can you help me find other trades for preparing my home to sell and making repairs?
  5. What happens if we cannot sell my home quickly?
  6. What happens if I owe more on my home than I can sell it for?
  7. Will I be able to find a new home to buy for what I can now afford?
  8. Can you help me  find a lender to buy another home?

These questions will and can be easily answered by a Realtor who knows what they are doing, has handled similar situations and cares about you. So Don’t be afraid to ask!

Up next how to handle the sale of properties in a divorce situation.

 

 

 

 

 

 

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HELPING SENIORS MOVE

SIDE NOTE AND A SOLUTION- Last time I shared with you about my experience with my Mom and moving her to a ranch home and handling the objection of moving to a new home. Even though, I think after 22 years of helping people buy and sell homes I know what I am doing and can guide ANYONE to make a good decision, I find out, it is quite different with a relative. Well after a tearful conversation with my mother, I learned, this was not going to be as easy as I thought.
So I will digress a bit and tell you that basically, I told my Mom that a lot of her “stuff” was not going over to the new home. After all since she will be “renting” from me, and I will be maintaining the home I wanted to keep it simple and easy to maintain. The plan was to paint the home all one color, clean and repair any immediate needs of the home and then help her move in. I expressed to her that she did not need to bring all her favorite trees and bushes that currently have taken over her yard, a menagerie of yard art and the pias to resitance, a coi pond.
My brothers and sisters quickly informed me that I had hurt my Mother’s feelings (unbeknownst to me) and she did not understand why first of all that I would not let her own her own home and secondly why she cannot have all the things that she currently enjoys. (These are all the same things that create more work for me and my siblings as well).
I needed to work fast for a resolution with my Mom but was going to be firm about what was going and what was not going to the new home. Some really smart person said once “pick your battles”…you know the ones you can win.
Well guess what folks, I did not win any of these battles.
As Mom and I sat on her back deck she said to me in a solemn and unhappy voice. “If I can’t have the things around me that I enjoy the most…why am I moving and if I don’t own anything anymore what is my purpose for even being here?”
Once I picked myself up off the deck and tried to control my urge to all out ball like a baby, I conceded with some mutually agreed upon rules.
My brother is responsible to maintain the coi pond and no one else is expected to do that job, small starts of the bushes and 1 tree can come over. They will need to be stratigiacally placed in the yard to look asthetically pleasing instead of the jungle look that currently graces her back yard. I did win on the buy over rent objection since she really is not in a financial position to buy at her age. She was also worried about the equity of her home and why she did not get that. I explained that we needed to fix up her home to sell and after thinking about it, if there was any profit left, it could be thought of as some equity in her new home but it would come to me as an offset of my expenses to purchase and fix up the new home.
So there you have it- a real ife experience and the solution to these questions:
1. What happens to my “treasures”
2. How do I begin the process to move and when?
3. What happens to the equity of my home in the scenario of a relative buying a new home for the Senior?
Next up we will address repairs needed for the Seniors current home and Who can I trust to help me through this process?

Helping Seniors move

As we continue through this Series and in an effort to help your loved ones make the transition I offer Objection # 2: Where is my next home?
Certainly not any easier than the elimination of a lifetime of “treasures” discovering where the next home will be can be very challenging. Are they going to buy, rent, go to a care facility? All of this will depend on the state of their finances and the state of their health.
I am actually getting ready to move my Mother to a new home. She is 83 years old and has been living in a split entry home that has a lot of stairs. She has fallen several times lately and seems to be having a hard time with balance. I am scared about her falling down or up the stairs and really hurting herself. Recently, I was able to purchase a small ranch home for her and here is how I worked it out since her finances are limited but she can afford to pay me rent. We will be doing some updating to her current home to get it ready to sell. She will continue to make the mortgage payment on her current home until we can sell it and then the equity from this home will be applied to the new home which will help offset my outlay of cash. If your Senior has a home that is paid for, this can be even more attractive. One great aspect of it is for her to no longer own a home. First, I will never have to worry about medicaid taking the home as payment for medical services if that were to happen. Secondly, it is affordable for her and practically maintenance free since I will be doing exterior and interior maintaining of the home as a rental. Third, it gives me an opportunity to own an investment property which should grow over time and hopefully do better than the stock market. I can sell it or continue to rent it once Mom is no longer here.
So that is one way to help with a move, but if your Senior needs some type of assisted living, there are wonderful facilities available all over Lee’s Summit and Kansas City. We can make some suggestions on some of the local retirement communities.
It is the best idea to be exploring these options before you sell the loved ones current home so you know they can feel at ease that they will not be homeless and begin getting use to the fact they will be moving from the old homestead to a happy new home. Change is hard for most of the older generation and having a well thought out plan with time frames will set expectations and help them transition easier to the new place.

New Series-Helping Seniors Move

As a side note, in our last publication we talked about the process of eliminating “treasures” in the Seniors home which is definitely a first step and my take a long time to accomplish. I have had clients call me out 2 years ahead of time to talk about what they need to do to sell their homes and get rid of items they will not need in their future home. They will often begin this process long before they have decided where they want to ultimately move to just because they know there is a lifetime of “stuff” to deal with and their current home is becoming unmanageable. So to digress just a bit, As the elimination process begins to take shape in order for the Senior to feel stable about a place to live, you will probably want to start exploring Senior housing communities, rentals or a new ranch in a quiet neighborhood. Whatever that looks like for your loved one, make sure this quickly becomes part of the “eliminating process” so that they can be excited about their new living quarters and it will help propel them into action to make the change.

NEW SERIES: HELPING SENIORS MAKE A MOVE

At some point those of us who are considered “Baby Boomers” will be faced with a move or transition to different housing or new lifestyle. To add to that many of us have parents who may need to make a move right now, because their homes are too large and require too much maintenance. In this New Series: Helping Seniors move, I want to introduce some tips and strategies to help our loved ones and ourselves make that transition and prepare for a future home.
I will present these as objections so it will be clear as to what the problem and is and then a solution.
Objection #1. I know I need to move but my “Treasures” are overwhelming. How can I move into something smaller and still have room for all my “Treasures”?
I am defining “treasures” a the lifetime accumulation of stuff, memorabilia, furniture of old, collections, pictures, clothes, books, other family member’s stuff, items not really being used but still living in the home.
Solution: If you are a relative of this loved one, you are the best person to help them begin to sift through and eliminate personal items that most likely have not been used in years. If the Senior agrees, you can ask other family members to come and take things that they would love and cherish giving the Senior piece of mind that someone will actually continue to care about these personal items.
Estate sales are a wonderful way to eliminate unused and un-needed items as well, but before we even get to that point, you will have to convince you loved one that this is the time to move before, the home falls into disrepair or the loved one falls trying to climb stairs. You will need to be compassionate about their needs taking baby steps at first to insure they will be well taken care of.
Stay tuned for more about How to Help Seniors Move!