It had been over a year since I had talked with Joe and Rita. I had met them at an Open House on RODNEY in the PIEDMONT_NEIGHBORHOOD in Portland Oregon. I remembered that Rita was a type A personality backed by a Let's get Going attitude. I also remember from last year that as much enthusiasm as they had the opposite was true financially. A year ago I had sent them to my lender TAMMY_WITTREN of Northwest Mortgage. Tammy is very good at sitting people down, analyzing there problems and structuring a game plan for them to follow.
As Rita began to speak I sensed that something was up. With a little prodding Rita began to unravel like a ball of yarn. Both Rita and Joe had been so impressed with the work done by one of my rehabbers a year ago they were certain they could do the same. They had called Tammy and true to form Tammy did give them a game plan to follow. They just chose not to as it looked like it would take to long. So they went out on their own and found a FSBO to purchase. They had been working on it for about 6 months and asked if I would come over and take a look. I agreed.
When I arrived I was greeted with a Horrible sight. This is not the house but might as well have been. Both are Fixer uppers. I tried to be positive but everything I seen indicated that they had bought a major Money Pit. Not the worst thing in the world, that of getting a little in over your head. However the Seller was now threatening to foreclose on their contract of sale. They had put up their Cars and household possessions as collateral. They also only had 2 weeks left to the deadline. I advised them to see an attorney as there was nothing that I could do for them. They were totally buried in this house.
A month went by and Joe called. After beating around the bush for a while he said that they had lost the house and their cars. The Seller had felt sorry for them and let them keep their personal possessions. Rita was too embarrassed to call but they wondered if I could come out to their home for a talk. It turns out that they also had purchased a home just after they had bought the Fixer on Contract. The Home was of course leveraged beyond belief but they were not sure of the payoff amount.
They had borrowed from several family members enough money to buy the home from the bank using a no-income no-doc loan. Their theory was that they would pay off all of the family members and buy down the Second mortgage to make the payments more reasonable. Big problem was they had not been making the full house payments. Just making enough to keep the bank at bay while they continued to poor more and more money into the Money pit.
After arriving they took me though the home and we discussed market values of the home. I left and returned the following evening armed with a full market analysis. A review indicated this house to be worth between $240,000 to $248,000 with 20 very relevant comps in the same subdivision.
Rita's first question was how much will I charge to sell the home. I told them of my commission amount and asked them if they had received a payoff amount from the lender that I had asked them about the previous evening. Yes Rita responded. But I want to talk more about the commission. I said fine what questions do you have? She said I don't want to pay more than ( X ) for the commission will you work for that? I smiled and politely said , No are there any other questions. Joe moved the conversation by asking about what type of marketing did I have planned.
After spending so more time on the presentation I once again asked if they had those payoff figures. It turns out that they owed a total amount of $270,000 and that the payoff letter was also a foreclosure notice. I looked at them and asked if the new what a Short Sale was. They did not. It means Rita and Joe that you have no equity in this home at all. The question about the amount of commission I charge is irrelevant. Rita was not one to give up. She said to me it is relevant. We are the homeowners and we want to sell the house so we should be able to negotiate our sales fee.
They finally got the message when their lender after talking with me set them straight. I presented the market analysis to the Lender. I listed the home and we were able to sell the home for $245,000. The bank forgave Rita and Joe the difference and let them walk.
