I've contacted the out-of-state investor several times and asked if he was interested in selling a property I discovered they had a $100k mortgage. In the condition it's in it's probably worth $30-$35K at best. As I have my license I can't do a short sale, but asked if he was interested in selling as a short sale. He was, but not at the price I was offering and wouldn't sell as a short sale. The home is currently vacant and is in no condition to be rented. I asked him what is he going to do with the property and he said wait. I'm not wasting anymore time, but wonder why would someone not just cut their losses.
I've found that most reasons have to with pride or wishful thinking. You may as well bang your head against the wall, that'll get you the same headache as trying to figure out irrational property owners.
The simple answer is because he can. Most home owners believe that there house is worth more than it really is that is not unusual in fact it is probabaly every seller I have ever talked to. A short sale will hurt his credit and if he could afford to the mortgage why would he do that?
He owes $100k does not want to sell and the house needs repairs. there is nothing to look for there. If it was owned free and clear then seller financing would be the obvious offer to make but. From my experience is that if they are not motivated then we have no business talking.
This a house right across the street from me, vacant and the back yard faces the lake. the highest selling house on the street was a new construction right next to it that does not even fit in the area. It sold for $110k. This houses has is in very bad condition. only worth about $40k as-is and the owner says, "I won't take less than $90k this house is TRUE lake front property". He has rented it twice in 3 years and the tenats dont last 1 month. I offered seller financing at $65k with $5,000 and he countered $85k with $25k down. In his mind he believed the value is in the lake and the truth is it does not. the area is a rental market somewhat urban and college area mixed.
At the end of the day he is stubborn and does not want to budge so have to let them be.
Is this a real question? People don't cut what we perceive as their losses for all kinds of reasons. Some rational, some not. I'm in CA so I encounter the belief that property values will go back up to 2007 prices every day. Some areas, for sure. Not the desert town where the crappy $20K property sold for $100K at the top. Without easy lender money, that game will never happen again.There's also a math problem. People think they are not taking a loss if they can sell for what they paid. But they won't count the cost of improvements, the interest, taxes and expenses they paid for 10 years.
Some people pretend that negative cash flow isn't happening. Some people see their negative cash flow as an advantage on their taxes. Some people will never do a short since it will negatively affect their credit. This is a big one. Some people really care about and need their credit. Running negative on an upside down property is the price they are willing to pay.
If you're an agent, how do you deal with the credit concern? It's not like you can say it doesn't matter. It matters less for the people who already trashed their credit with missed payments. But what do you say to someone who has never missed a payment and has perfect credit? The account will get reported as settled for less than owed. That's a ding. Hard to gloss over that.
@Manny Cirino Manny this is an out-of-state investor, not a homeowner. From the tax records it appears it was a settlement in a divorce or either he bought out his ex during that time. I guess if he can maintain the mortgages/taxes, it's ok, however, in the meantime he gives investors a bad name by not taking care of the property. I noticed it first because the windows were out and someone was boarding them up. Turned out it was one of the good neighbors because there were notices from the County code enforcement, but the county couldn't/wouldn't do anything. The rest of the street and area are good, so this would be a perfect buy. Like I mentioned, not wasting in time on this anymore, just curious.
i'm new to this, but they aren't a motivated seller. the end...but that all can change with time...so maybe keep following up every month or so...maybe over time you can wear him down, build some trust or respect and maybe try a subject-to or lease-option, ....wait you said its in bad shape? oh never mind then, its a ugly house, not a pretty one :). still try the trust/respect route. Eventually he'll sell at a loss or hold it until its not a loss anymore...put simple: YOU don't need to understand him. YOU are not your customer. maybe he's got more money and doesn't mind the payments.
I will see my Psychology professor friend from college during lunch in a few minutes. If I were to ask him why people act thus way, he will question my sanity. If I'm lucky, he'll only ask me the old question about 'why do male dogs lick their ____.'
Answer: Because they can.
Trying to figure people's real motives is pretty difficult. I go for the obvious ones and try not to waste time with the others, however...
I spent an hour on the phone with a crazy woman yesterday. No, not my girlfriend. She says she's the person in charge of her mothers estate but her Daughter is the administrator (?). She just got out of incarceration for who knows what. Now, I can tell you with certainty that she'd tell a lie when the truth would sound better and in the first 5 minutes of the call my BS detector was fully deflected and straining past the red into the "no reality check" range, but I continued to ask her questions. For an hour! So, who is crazier; her or me?
Some do, some don't; some will, some won't. Better get busy.
And sometimes, things do "come back", and waiting is the best strategy.
I know a lot of folks who did short sales in my area a few years ago are wishing they waited....
@rick: what counties of California do you work? Northern or southern or bay?
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