David and Wendy Miller own a beautiful four bedroom home in the Dallas suburbs where they're raising their two young children. They have a large wooded yard for summer fun, backyard barbecues, and where their dog, Jake, loves to chase squirrels.
The Millers have lived on Cypress Drive for seven years and have become close friends with the neighbors around them. The children take turns playing at each other's houses, and the adults frequently get together on the weekends for neighborhood cookouts. While the Millers have the same everyday stresses as the typical American household, they are a genuinely happy family.
Then a bomb drops out of the clear blue sky. David gets called into his boss's office and is told the company has to lay off several employees due to the weakening economy, and he is one of them. David is completely shocked. He's worked for this company for 10 long years and has given it his all. And now to be let go with just two weeks' notice? How will he tell Wendy? Just the thought makes him sick to his stomach.
As a Business Analyst for a large corporation, David earned $60,000 a year plus full benefits. Wendy works as a Marketing Manager in the hospitality industry and brings home about $50,000 a year. Losing more than half the household income will put a huge financial strain on the Millers.
David shuffles through the door at the end of a devastating day and breaks the bad news to Wendy. After the initial shock and panic, they quickly formulate a plan to keep their heads above water. David has a couple weeks' notice and then he'll be eligible for unemployment. In the mean time, he'll hit the pavement hard looking for a new job. They'll cut out most of their discretionary spending, and hopefully there won't be too much down time between jobs.
Unfortunately, it seems like no one is hiring. Days turn into weeks and weeks turn into months and David is still without work. Something has got to give. The credit cards are now maxed out, and the bills that are being paid are being paid late.
Another month passes. The Miller's hard earned savings is gone, and the mortgage is looming. As hard as they try, they just cannot make their money stretch far enough to cover the house payment this month. Same with the next month.
David and Wendy are horrified that they might lose their home to foreclosure. What will their neighbors, friends and families think? They are honest, responsible adults and have never had problems managing money or paying their bills on time. Their pride is hurt, they are terribly embarrassed, and don't know where to turn.
This scenario is quite common. Most of the homeowners we help are good people who have just had bad things happen in their lives. We encourage homeowners across the United States to get educated on the options available should they become financially distressed. Short Sales are a great tool, providing relief to all parties.
Just remember to choose a REALTOR® with a proven Short Sale track record to negotiate on your behalf. Making the right choice can mean the world of difference to your financial future.
Based on "Avoiding Foreclosure - The Field Guide to Short Sales", Copyright 2010 - Tom & Gina Branch | Base Photos Licensed from iStockPhoto
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
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Unfortunately, there are a lot of Miller families out there in the same situation.
The Millers are an example of so many families in our country. Fortunately the stigma associated with lower income, less spending and even short-selling the house is beginning to lessen.
What the Millers did to decrease their spending and take on debt will help thier case for a short sale -- a good topic to follow up on.
Thanks.
We have all seen this sad scenario play out many times in the past few years. I look forward to when the Miller's ordeal is no longer a typical scenario but that is going to take a few more years...
A very all too common story now.
Very true, Tom. Many very responsible families have fallen this way. Your point is absolutely right -- there are alternatives to foreclosure and we need to help educate the market. As you undoubtedly know, most foreclosed homes were never even listed for sale -- the owners simply hunkered down and waited for it to happen. (Or tried to navigate the incredibly oversold "loan modification" process and just ran out of time.)
Good post Tom. Most families are only a couple of bad months away from facing the same thing.