Why sellers let their house go into foreclosure

Question

I am dealing with someone who is about to get foreclosed on and then says they will just file bankruptcy, I am offering to pay her note off and then some to move but a couple of years ago the guy down the street bought his for more than I am offering them so they think they should get the same thing and they agreed that it needs 20k of work so by the time I buy it and fix it I am even on the house. I told her why would I buy a house that I am not going to make anything on? And they said they was not going to sell their house that cheap. So my question is why do people do this? I know you can't fix stupid either!

An Nguyen · Answer

You can do market analysis at the time the guy down the street bought his house and condition. Then, compare her house at the current market, and get the differences. You also need to show her the benefit of selling the house to you vs foreclosure. The seller is unhappy because she will lost the house and try to get something more. However, if she understand the situation and you explain to her pro vs cons, she may change mind, if not, move on.

David Dachtera · Answer

@Chip Chronister,

Some folks are just so bitter over their situation they don't think clearly. There's such a culture of blaming everyone but one's self for one's situation they just need to "show them" to do that to one, even though it's one's own fault. Some folks also get into a similar feeling after job loss, divorce, etc. resulting in foreclosure.

You're right, of course - you can't fix stupid any more than you can fix those bound and determined to trash their credit and their finances. Foreclosure is bad enough, especially when it's avoidable. Adding BK on to top of it is ridiculous - BK doesn't stop foreclosure, it just stalls it temporarily.

JD Martin · Answer

I don't bother continuing conversations with people like that. You can't fix stupid. One of the houses I own came from a foreclosure. One of the neighbors told me that the people who had it let it go into foreclosure because they couldn't get the basement to stop flooding. No one bothered fixing the gutters or cleaning the mud out of the drainage culvert, which turned the basement into a desert. The cure for the problem cost less than a grand, and they ended up walking off on 5 figures of equity. Dumb.

Shannon K. · Answer

I have also had people tell me "I don't want to bother, I'll just let the bank take it." Here in NY the foreclosure process is judicial and takes SO LONG that people feel they are often better off residing in their homes as long as possible and letting the marshalls throw them out on the last possible day.

Over the summer, I noticed a previous high school teacher of mine's house came up for sale.... He was on the lis pendens list... since 2008!! It finally came up for sale in summer 2016. In that case, he was able to stay in his house for 8 more years without paying for it while declaring bankruptcy/whatever other legal strategy he used.

William Murrell · Answer

If they can't meet you on the terms, move on.  This is a business and we have to treat it that way.  Yeah, there's a possibility they could find someone to pay more for their house, but where is that person?  Something is only worth what someone is willing to pay for it.  If they're talking to you, there's a reason.  Stick to the offer and move on.  They'll either come back and accept or refuse and you'll find something better.

Why sellers let their house go into foreclosure

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