When you’re driving on the highway, have you ever noticed that anyone who drives slower than you is a moron and those who drive faster are maniacs? It’s human nature to think that there is something wrong with those who don’t act the way we think they should. It’s certainly true in real estate.
Today I saw an online status update from a friend who is a short sale specialist. She was lamenting a deal lost to a “greedy” lien holder. To be fair, she is very intelligent, hard working, and a good person – she was merely venting some frustration. However, “greed” is a word that has crept into the vernacular and is used to symbolize the economic ills of today.
Think about how often the word greedy is thrown around today. We have greedy bosses, greedy bankers, greedy lenders, greedy investors – let’s not forget the greedy landlords! From the lowly janitor lamenting the fact that his greedy boss wouldn’t give him a ten cent raise, to the President of the United States scolding the greedy executives on Wall Street, everyone is getting in on the act. But is it fair?
Isn’t everyone just trying to protect his or her own interests? It’s a jungle out there and it certainly is survival of the fittest. The investor wants to get the best deal on a property, the seller wants to get the best price he can, and the banker wants to get the best terms on the money he is about to lend. Does that mean they’re all greedy?
The Front Lines
The foreclosure crisis has certainly seen its share of greed. You had hordes of novice investors trying to make a fast buck as the bubble inflated. Now you have all of those trying to do the best they can as the bubble deflates. Those involved in the short sale arena are on the front lines of this battle. The crux of the problem is that a short sale can’t take place without the cooperation of the lien holders.
From a real estate agent’s perspective it is stupidity and greed that keeps them from cooperating. Sometimes they’re right, but not always. There could be other factors at play besides greed. Sure, a lien holder may be wiped out in foreclosure if they hold a junior position. What if they feel they can get a better deal or that they may have a chance of recovering some of their investment by not agreeing? A lender in first position may be protected by private mortgage insurance and do better in a foreclosure than they would in a short sale.
The very basis of capitalism is that people are motivated by profit. That also means it is important to minimize loss. It is incumbent on everyone to protect his or her own interests. That often means that someone doesn’t get what they want. Does that make the other party to the transaction greedy? If it does, so be it.
The point is ladies and gentlemen that greed, for lack of a better word, is good. – Gordon Gekko in Wall Street
Image: Annie Mole