[5-DayForum] harsh reality
Bill Effros
bill at effros.com
Mon Sep 3 10:45:59 EDT 2007
David,
Many of these were fixed rate mortgages for short terms with monthly
payments less than the amount of interest. Each month, the homeowner
"borrowed" part of the monthly payment from the bank to make the
payment. At the end of the short term, usually 2 to 5 years, the bank
knew the individuals would be no more able to make the payments than
they were at the start of the term, and the homeowners would owe
substantially more than they originally borrowed, eating up their own
equity portion of the home purchase. So the home would default to the
bank. When homes were going up in value from 10% to 50% a year, the
bank could then sell the home at a nice profit if the homeowner was
unable to do so.
But now banks won't give mortgages like this, and the people who had
them don't qualify for what is available, and nobody can get the amount
currently owed on these homes.
Who is going to give a mortgage for more than the value of a home at a
preferential interest rate?
If anyone can find low fixed rate mortgages with no money down on homes
worth less than the mortgage amount everyone else surely wants to know
about it. The government doesn't have enough money to make this
happen. First there is likely to be a bloodbath, then we'll see who is
still standing.
Bill Effros
capndave2k at netscape.net wrote:
> Obviously he shouldn't finance to another ARM. His own suggestion was
> to refinance to a fixed rate. Which does make sense if he can do that.
>
> David
>
>
>
> -----Original Message-----
> From: Bill Effros <bill at effros.com>
> To: How To Sell Your Home in 5-Days
> <5-dayforum at mailman.howtosellyourhomein5days.com>
> Sent: Sat, 1 Sep 2007 4:22 pm
> Subject: Re: [5-DayForum] harsh reality
>
> David,
>
> That's how the banks got themselves into this mess in the first
> place. The low payments are disguised borrowing. The payments don't
> cover the interest. So every month people owe more than the month
> before. Most of these loans are already beyond the equity value of
> the home. The banks aren't really going to lower the actual interest
> rates of high risk borrowers with less equity than the face value of
> the loan. All of those loans must eventually default. They're just
> playing "hot potato" trying to get as many bad loans as possible out
> of their portfolios. They're not going to make more bad loans, and
> the government can't force them to do so unless it is willing to
> assume every bad loan issued. No one has even hinted they are
> prepared to do that.
>
> Bill Effros
>
>
>
> capndave2k at netscape.net wrote:
>>
>> I agree Bill, however if he doesn't need to sell and this is his
>> primary residence, then I think refinancing to a payment you think
>> you can maintain makes sense. We all have to live somewhere and if
>> he can get his payment down to where it's comparable to what rent
>> would be on an equivalent residence (when the tax is factored in)
>> then he should be able to afford to hold the house until the market
>> rebounds as we all know it must eventually. Based on his comments
>> that seems to be his situation.
>>
>> David
>>
>>
>> -----Original Message-----
>> From: Bill Effros <bill at effros.com>
>> To: How To Sell Your Home in 5-Days
>> <5-dayforum at mailman.howtosellyourhomein5days.com>
>> Sent: Sat, 1 Sep 2007 8:41 am
>> Subject: Re: [5-DayForum] harsh reality
>>
>> David,
>>
>> This is not necessarily good advice. If the value of the home
>> continues to go down, the owner might be better off selling now and
>> taking a smaller loss.
>>
>> I don't know what the market will do, but those who didn't sell 6
>> months ago, when market values were higher, regret that decision today.
>>
>> Bill Effros
>>
>>
>>
>> capndave2k at netscape.net wrote:
>>>
>>> Harlin,
>>>
>>> Based on what you've said. If you're able to get a decent rate,
>>> refinance. After all you have to have a place to live anyway and if
>>> you rent, you can't deduct interest from your taxes which will then
>>> go up (At least that's the way it works for most of us.) Compare
>>> what you'd pay for rent with the amount of you potential new payment
>>> less the tax differences and you can decide which is the more best
>>> way to go.
>>>
>>> Don't buy trouble from tomorrow if you don't have to.
>>>
>>> Hope this helps.
>>>
>>> David Cron
>>>
>>> -----Original Message-----
>>> From: Bill Effros <bill at effros.com>
>>> To: How To Sell Your Home in 5-Days
>>> <5-dayforum at mailman.howtosellyourhomein5days.com>
>>> Sent: Fri, 31 Aug 2007 9:21 am
>>> Subject: Re: [5-DayForum] harsh reality
>>>
>>> Harlin,
>>>
>>> Our e-mail has crossed again. But that's okay, what we're talking
>>> about is exactly what I want to be talking about.
>>>
>>> I can't tell you whether to hold or sell. I can't predict the
>>> future any better than you. Sometimes what I think works out,
>>> sometimes it doesn't.
>>>
>>> But I've really been involved in a lot of 5-Day Sales, and what I'm
>>> trying to do with this forum is to pass along information to people
>>> who have seen fewer 5-Day Sales than I have.
>>>
>>> If you think you are likely to get less than you owe, then I think
>>> you're probably right. You can make the decision about whether or
>>> not to sell before running your 5-Day Sale. If you decide to run a
>>> 5-Day Sale, play it straight. If you decide not to run a 5-Day
>>> Sale, go to your bank and ask them what they'd like you to do. They
>>> may offer you a great deal to stay where you are for a couple of
>>> years. They may tell you to sell your home and take what you can
>>> get -- they may offer to make up the difference, or part of the
>>> difference.
>>>
>>> Explain to your bank that you know how to get the current market
>>> price for your home, without paying any commission, at any time.
>>> Show them your copy of the book. Tell them to join this forum.
>>>
>>> People are basically honest. We are really all in the same boat.
>>> Nobody really knows what to do next. The 5-Day Method gives you
>>> something most people don't have -- the ability to determine the
>>> current market value of your home, and to sell it for that amount,
>>> in exactly 5 days. This knowledge is a powerful negotiating tool.
>>>
>>> First use it to negotiate with yourself. What do you want to do?
>>> The Method can't change the market. Nothing can. Where does that
>>> leave you? When you know the answer to that question you can go to
>>> buyers, or banks, from a strong negotiating position. You know
>>> exactly what you're going to do. You want banks, or buyers to
>>> choose what they're going to do. And then you follow through, and
>>> move on with your life.
>>>
>>> It sounds simple because it is simple. The hard part is the
>>> negotiation with yourself. Keep us posted, we all care about the
>>> outcome.
>>>
>>> Bill Effros
>>>
>>> Harlin Seritt wrote:
>>>> That's what I thought the real answer is... basically be willing to
>>>> do everything possible to sell your home to the high bidder even it
>>>> will be a short sale.
>>>>
>>>> Pretty much my situation: my home was appraised at 117k three years
>>>> ago. I owe about 98,000 on it. It was financed as an ARM. My
>>>> payments have gone up on it by about $50/month in the last couple
>>>> of months. I want to sell it and rent -- I am divorced with one
>>>> child. I want more cash to get closer out of debt. I feel the house
>>>> will probably only sell for about $85-90k at this point. I can make
>>>> the house payments (for now but what happens when the rate goes up
>>>> farther? or worse, I lose my job?). I am wondering if it may
>>>> instead make better sense to get it refinanced with a fixed rate
>>>> and hold on to it until better times come -- maybe 2 to 3 years
>>>> down the road.
>>>>
>>>> Thanks,
>>>>
>>>> Harlin
>>>>
>>>>
>>>> */Bill Effros <bill at effros.com>/* wrote:
>>>>
>>>> Harlin,
>>>>
>>>> Our e-mail crossed, so let me speak directly to your point.
>>>>
>>>> Properly run 5-Day Sales will get you a price at the high end
>>>> of the current market value every time. If you don't believe
>>>> this is true, you shouldn't run a 5-Day Sale. If you do
>>>> believe it's true, you must understand that you can't ever "put
>>>> your thumb on the scale" by bidding against your buyers.
>>>> Reserves, whether disclosed or not, are bids below which you
>>>> refuse to sell. Essentially, you are bidding against your
>>>> buyers, whether you understand it or not.
>>>>
>>>> Most people's consciences give them away. Buyers can tell the
>>>> seller isn't really going to sell to the high bidder
>>>> notwithstanding what was said in the ad. Buyers know they
>>>> shouldn't reveal the highest price they are willing to pay
>>>> because the seller isn't really going to take it. They know
>>>> the seller is going to try to sell the home some other way, so
>>>> it's smart for them to make the seller think the home is worth
>>>> even less than it's really worth.
>>>>
>>>> If the high bid is less than you owe, and you honestly believe
>>>> it's the most you can get -- what are you going to do?
>>>>
>>>> Instead of telling the buyer that you're going to renege on the
>>>> deal, why not tell the buyer that the offered price is less
>>>> than you owe, and that you and the buyer together will go to
>>>> the mortgage holder to see if a deal can be worked out. Often
>>>> it can. This is not the same thing as telling the buyer you
>>>> had a hidden reserve. This is part of selling your home in 5-days.
>>>>
>>>> Sometimes the buyer may say they will pay half the difference
>>>> if the bank pays the other half. Sometimes a different deal is
>>>> offered. None of this should matter to you. If you sell your
>>>> home to the high bidder, you will consistently get the highest
>>>> possible price on the weekend you select whether the deal goes
>>>> through or not. Don't try to weasel out. Don't start by
>>>> saying you won't really take the high bid.
>>>>
>>>> Bill Effros
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> Harlin Seritt wrote:
>>>>> This sounds like: If you're not willing to sell the house at a
>>>>> price that is below what you owe, then you shouldn't run a 5
>>>>> day sale. According to *your* post, this is either wrong or
>>>>> right with no in-betweens.
>>>>>
>>>>> Harlin
>>>>>
>>>>> */Mark Conway <sanford5daysale at yahoo.com>/* wrote:
>>>>>
>>>>> Folks, I'm going to stir the pot a bit with this note.
>>>>> You've been warned.
>>>>>
>>>>> The forum has become pretty discouraging reading for me.
>>>>> It seems common for people to run 5-Day Sales with an
>>>>> undisclosed reserve, a bidding threshold below which they
>>>>> will not sell their home. In and of itself, I don't see
>>>>> this as a problem. It's the real world. Homeowners have
>>>>> mortgages for which the banks hold them financially
>>>>> responsible. What I find disturbing is when I see a 5-Day
>>>>> Seller making a conscious decision not to inform
>>>>> prospective buyers of the existence of the undisclosed
>>>>> reserve at the outset. It's a deceptive practice. It's
>>>>> misleading to bidders who believe their bids are taken
>>>>> seriously, not conditionally, by the seller.
>>>>>
>>>>> Sure, many 5-Day Sellers list a rule that says that bids
>>>>> aren't binding on the buyer or seller until a contract is
>>>>> signed. It's a comfortable escape clause that, as much as
>>>>> anything, can be a platform for negotiation. As much
>>>>> discussion as there is about this issue, however, that
>>>>> rule ought to be in over-sized type, bold, underlined and
>>>>> listed as the very first rule on the Bidding Rules
>>>>> document so bidders fully understand how seriously the
>>>>> seller takes this provision. List the rule that way and
>>>>> see what kind of questions it prompts from potential
>>>>> bidders. It's better that discussion happens before and
>>>>> not after bidding.
>>>>>
>>>>> Clearly stating the minimum bid that will be accepted is
>>>>> one approach that has been mentioned in the Forum. That
>>>>> seems straightforwardly honest to me. Phrases like
>>>>> "Highest/Best Bidder" and "Best Reasonable Offer" are just
>>>>> seller's weasel words used to ease the seller's conscience
>>>>> and reduce his or her anxiety while still concealing the
>>>>> complete truth from prospective buyers.
>>>>>
>>>>> When a seller has a "hidden" undisclosed reserve and a
>>>>> prospective buyer comes to inspect a 5-Day Seller's home
>>>>> and asks the seller, "What's the minimum amount you'll
>>>>> take for your home?", the seller's answer will be
>>>>> indicative of his or her character. One answer could be,
>>>>> "I can't tell you what the reserve is." That's evasive but
>>>>> truthful. Denying the existence of the undisclosed reserve
>>>>> at that point would be lying. Period. Rationalization
>>>>> doesn't change that.
>>>>>
>>>>> There's a fair amount of talk on the Forum about having to
>>>>> make that difficult phone call after the round-robin
>>>>> bidding is over to tell the highest bidder that the seller
>>>>> is reneging on the commitment to sell the home to the
>>>>> highest bidder. That phone call is difficult because the
>>>>> seller has been disingenuous with the bidders. That's a
>>>>> seller's conscience kicking in, albeit too late.
>>>>>
>>>>> 5-Day Sellers who want their bidders and prospective
>>>>> buyers to treat them with integrity should be modeling
>>>>> that behavior themselves. What goes around, comes around.
>>>>> If a 5-Day Seller is not truly prepared to take the
>>>>> highest bid, then they should NEVER make that claim.
>>>>>
>>>>> Here's to 5-Day Sales run in a manner that respects the
>>>>> integrity of buyers and sellers.
>>>>>
>>>>> Mark Conway
>>>>>
>>>>>
>>>>>
>>>>> ------------------------------------------------------------------------
>>>>> Park yourself in front of a world of choices in
>>>>> alternative vehicles.
>>>>> Visit the Yahoo! Auto Green Center.
>>>>> <http://us.rd.yahoo.com/evt=48246/*http://autos.yahoo.com/green_center/;_ylc=X3oDMTE5cDF2bXZzBF9TAzk3MTA3MDc2BHNlYwNtYWlsdGFncwRzbGsDZ3JlZW4tY2VudGVy>_______________________________________________
>>>>> 5-DayForum mailing list
>>>>> 5-DayForum at mailman.howtosellyourhomein5days.com
>>>>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>>>>
>>>>>
>>>>> ------------------------------------------------------------------------
>>>>> Sick sense of humor? Visit Yahoo! TV's Comedy with an Edge
>>>>> <http://us.rd.yahoo.com/evt=47093/*http://tv.yahoo.com/collections/222>to
>>>>> see what's on, when.
>>>>> ------------------------------------------------------------------------
>>>>> _______________________________________________ 5-DayForum mailing list 5-DayForum at mailman.howtosellyourhomein5days.com http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>>> _______________________________________________
>>>> 5-DayForum mailing list
>>>> 5-DayForum at mailman.howtosellyourhomein5days.com
>>>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>>>
>>>>
>>>> ------------------------------------------------------------------------
>>>> Boardwalk for $500? In 2007? Ha!
>>>> Play Monopoly Here and Now
>>>> <http://us.rd.yahoo.com/evt=48223/*http://get.games.yahoo.com/proddesc?gamekey=monopolyherenow>
>>>> (it's updated for today's economy) at Yahoo! Games.
>>>> ------------------------------------------------------------------------
>>>>
>>>> _______________________________________________
>>>> 5-DayForum mailing list
>>>> 5-DayForum at mailman.howtosellyourhomein5days.com
>>>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>>>
>>> _______________________________________________
>>> 5-DayForum mailing list
>>> 5-DayForum at mailman.howtosellyourhomein5days.com <mailto:5-DayForum at mailman.howtosellyourhomein5days.com>
>>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>> ------------------------------------------------------------------------
>>> *Check Out the new free AIM(R) Mail*
>>> <http://o.aolcdn.com/cdn.webmail.aol.com/mailtour/aim/en-us/index.htm>
>>> -- Unlimited storage and industry-leading spam and email virus
>>> protection.
>>> ------------------------------------------------------------------------
>>>
>>> _______________________________________________
>>> 5-DayForum mailing list
>>> 5-DayForum at mailman.howtosellyourhomein5days.com
>>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>>
>> _______________________________________________
>> 5-DayForum mailing list
>> 5-DayForum at mailman.howtosellyourhomein5days.com <mailto:5-DayForum at mailman.howtosellyourhomein5days.com>
>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>> ------------------------------------------------------------------------
>>
>> _______________________________________________
>> 5-DayForum mailing list
>> 5-DayForum at mailman.howtosellyourhomein5days.com
>> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>>
> _______________________________________________
> 5-DayForum mailing list
> 5-DayForum at mailman.howtosellyourhomein5days.com <mailto:5-DayForum at mailman.howtosellyourhomein5days.com>
> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
> ------------------------------------------------------------------------
>
> _______________________________________________
> 5-DayForum mailing list
> 5-DayForum at mailman.howtosellyourhomein5days.com
> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.howtosellyourhomein5days.com/pipermail/5-dayforum/attachments/20070903/efd70128/attachment.html
More information about the 5-DayForum
mailing list