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Deficiency Judgments Haunt Foreclosed Sellers

As the web of short sales and foreclosures continues to unfold, a new twist has come into play. Investors have begun purchasing deficiency judgments (“an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full” Wickipedia) from banks for around 2 cents on the dollar, according to a recent Wall Street Journal article House is Gone but Debt Lives On.

Silverleaf Advisors LLC, a Miami private-equity firm, is one investor in battered mortgage debt. “We are waiting for the economy to somewhat heal so that it’s a better time to go after people,” says Douglas Hannah, managing director of Silverleaf.

As with all complex business and financial matters, a specialist’s advice is invaluable before signing any documents.  We recommend speaking with an attorney and an accountant to better understand all possible consequences before making any decisions.

Don’t wait until you list your home to Update!

So many of my clients wait to fix up their house until it’s time to list for sale.  The broken back steps that require warning to guests, the peeling plaster, the wobbly door handles, replacing the broken basement stair tread, buffing wood floors are all done for the next owner’s benefit.  By the time Sellers are finished with their pre-listing “to do” list, the house is gleaming and the Seller’s have added heartache selling a house that looks the best it’s ever been.

I realize that times are tight and money must stretch further than before.  My suggestion is to prioritize a list of what you’d like to do to your house.  If you or your spouse are “handy” and you feel confident to do the work yourself, then schedule time to complete the project. (Don’t forget to utilize YouTube and HomeDepot for training and video demonstrations) Buffing floors, for example can be done pretty easily. For sanding and refinishing, however, I recommend a professional.  Reduce the “chatter” (bumps on the floor from inconsistent sander movement) and dust with a company that has a HEPA filter on their sander.  This will reduce the amount of dusting that you do over the next 6 months.

If you are not confident in your hands-on skills, talk to your friends or your Realtor for service provider recommendations.  Nothing beats a direct referral!  If you are 6 months out from your project, let the service provider know – get a quote – ask if there is a “slow” time where the service provider might be willing to offer a discount.  Now you have an idea of the cost of your project and can save accordingly. Who knows, maybe a  parent will donate to a “new wood floors” fund for Christmas if you ask.

Once you have finished a long-awaited project, Celebrate!  Have a “floor-warming” party, for example.  Then you can set your sights on the next item on your list.  This is all part of making a house YOUR HOME.  It’s true some areas offer a greater percentage return on resale, but don’t forget the value of enjoyment of your space.

Have fun making your space fit you perfectly!