Exactly! It doesn't happen to us very often, either.  But it did today.

And we were so impressed that we felt compelled to toot the horn of INPAX, Inc. courier delivery services.

Here’s what happened: We had a time-critical delivery and a courier pickup scheduled with INPAX. The courier would be carrying a check from us to deliver to the recipient, a local business. Unfortunately, the recipient of our package had just changed their processing fees, so our payment was short $15.

Let's be clear: It was definitely our fault.  We should have verified the fee before scheduling the delivery. INPAX tried to reach us while the driver was still at the recipient’s office. They called twice, but had to leave a voicemail message. When we returned the INPAX calls, we fully expected to learn that we missed our delivery deadline and that the package was on its way back to our office.

Instead, we got insane unexpected service:

1. INPAX authorized the driver to pay the $15 difference out of his pocket.
2. INPAX reimbursed the driver when he returned to their office.
3. INPAX simply added the $15 to our next invoice.

They knew the delivery was urgent. They knew we would have missed the deadline otherwise. And they instinctively knew what action they could take to make our world so much better.

We were shocked!  We were in awe. We wanted to tell the whole world about it.  Our hats are off to our INPAX customer service representative extraordinaire and to that amazing INPAX driver. They've raised the bar for customer delight to an almost unbeatable level -- a level which we'll strive to reach as well.

INPAX, you’ve now got a customer for life.  Bravo!

We will say right up front: We don’t condone this.

In fact, if you don’t have to move and you are not in financial difficulty, the best thing to do is sit tight and wait until the market is more on your side.

Still, we’ve seen our fair share of frustrated homeowners ready to give up because they are severely upside-down on their mortgage or because they have tried to sell with no serious offers for months (in some cases, years!).

For you homeowners who have entertained the thought of walking away from your mortgage (even for just a fleeting moment), an attorney who is also a real estate broker has written a white paper worth reviewing on the pros and cons of walking away from your mortgage.  It also lists some options to walking away.

Here’s the thing … If you are like many Atlanta area homeowners and you are upside-down on your mortgage, the author strongly recommends pursuing a short sale.  But a short sale assumes you’ve found a buyer in this market. And a short sale assumes that you are ready to endure the typically long and drawn out process of getting a short sale approved by your lender.

Homeowners who have to move and are thinking about walking away have another option that is often missed:  Buy yourself some time to let the market rebound and let someone ELSE pay on your mortgage in the meanwhile.  In a word, rent.

Yup, we said the taboo word, rent.  Rent your home to a responsible tenant that makes the mortgage payments for the next 12 – 24 months while you move on.  At the end of the lease term, if the market has improved in value, sell at that time.  Ideally, sell to the tenant who has been living in the home.

What if you’re moving out of town? What if you don’t want the hassles of being a landlord?  What if you simply don’t have the time to market for, screen, and manage a tenant?

If any of those describes you, then consider having Home Pride Properties be your corporate tenant.  You’ll be a landlord on auto-pilot with a company “on the hook” and not an individual.

What to know more about how that might work for you?  Ask us.  We’ll gladly give you more details.  Then, you decide if it’s better than walking away from your mortgage, if that is one of the options you were considering.

“Yeah, yeah … I heard about the First-Time Home Buyer Tax Credit (FTHBTC) deadline on April 30, 2010.  But I already have my house rented out.  What does any of this have to do with me?”

Then, what does any of that have to you do with you?  A LOT!  About $8000 worth!

There is another way:  You sell the house to your tenants (Mr. and Mrs. Goodpayer) now and you finance them until they are able to get a mortgage.  Once Mr. and Mrs. Goodpayer are able to get a mortgage from a bank, perhaps in 18 – 24 months, then they can refinance to pay you off in full.  In the meanwhile, the Goodpayers pay you every month as their lender, rather than as their landlord.

Sure, credit is a big reason that many people cannot qualify.  But there are many other reasons that can get in the way of someone qualifying for a mortgage that can be fixed relatively quickly (like within 18 – 24 months).  Here are a few examples:

• Your tenants haven’t saved quite enough of a down payment yet
• Your tenants moved in from out of state and don’t yet have 12 months of job history
• Your tenants have 14 more months left to pay off a car loan which will significantly lower their debt-to-income ratio

The IRS rules allow a seller to finance the sale of a home to their buyer and have the buyer still qualify for the $8000 refund.

What that means is this … You can agree to sell your house with seller-financing to your good paying tenants now, if they agree to pay a reasonable down payment of $8000 to you.  That down payment will be due in full just once the $8000 FTHBTC refund is received from the IRS, typically within 3 – 6 months of filing for the FTHBTC.

As part of the sale, you and your buyer will have some mutually agreed upon timeline for them to refinance with a bank to pay you off in full.

You won’t want to embark upon this on your own.  You’ll definitely want a few people on your team to assist you with the details:

• A closing attorney to assist with the purchase and sale agreement for the seller-financing and to handle the closing
• An accountant to confirm your tenants are eligible for the FTHBTC and to file the documents with the IRS for the refund
• A mortgage broker to help you and your tenants understand exactly what is keeping them from getting approved for a mortgage with a bank right now and a reasonable estimate of how long before they could refinance

What if you learn from your mortgage broker that your tenants can get a mortgage from a bank right now?  On occasion, a good-paying tenant is surprised to learn that they can qualify for a mortgage and didn’t even know it.  Wouldn’t that be nice?

So what must happen now?  The IRS requires that a valid purchase agreement be executed by April 30, 2010 for the buyer to be eligible for the FTHBTC.  Then, the closing must be completed by June 30, 2010.

Talk to Mr. and Mrs. Goodpayer today. Find out if they are interested in owning the home that they love right now, if you agreed to help them by offering seller-financing.  Then, with your attorney’s assistance, finalize the details and execute the purchase agreement by April 30, 2010.

Your attorney should guide you on the specifics for structuring the terms for seller-financing, what both parties are obligated to do, what happens in case something wrong, and all the other closing details.  Also, be sure to have your attorney include a provision that allows you to confirm with an accountant that your buyers are fully eligible for the FTHBTC and a provision to confirm with a mortgage broker that they will likely be able to refinance in a timeframe that works for you.

You (and your tenants, for that matter) can complete your due diligence after the purchase agreement has been executed, just as long as the closing happens no later than June 30, 2010.

There you have it!  If you have good-paying tenants who would love to own the home that you had hoped to sell, let Uncle Sam and the First-Time Home Buyer Tax Credit make that possible with a win-win for you and your tenants.

To get a quick sale, Tammy and her Realtor carefully reviewed the recent sales in her neighborhood to set her asking price.  She priced her home attractively and was fortunate enough to find a serious buyer in less than 90 days.

Like many sellers, Tammy was upside-down: She owed more on her mortgage than what her home was currently worth.  So, Tammy submitted a short sale request package to her lender.  After months of waiting for an answer, the lender agreed to accept less than what she owed … with one big catch.

Tammy’s lender demanded that she sign a Promissory Note agreeing to pay the lender $12,000 (in monthly installments) after the sale was completed.  That is, the bank would go along with the short sale if Tammy promised to pay back some of the money that the bank had discounted in order for the sale go through.  Tammy would have been on the hook to pay the very debt that she desperately needed to get out from under.

Tammy’s buyer really wanted the house and hoped she would agree to the bank’s demand.  Tammy’s Realtor also wanted to see the closing happen and strongly suggested that Tammy agree to sign the Promissory Note.  More than anyone, Tammy was most eager to get the house sold.  But she was not willing to commit to making payments on a debt she knew she could not honor.

So Tammy simply told the bank “No.”

In the end, the bank agreed to the short sale without the obligation to pay the lender after the sale.  Tammy stood her ground – even when she was advised to cave in – and prevailed.

Why did the bank ultimately agree to the closing without the $12,000 Promissory Note?  It wasn’t out of kindness or compassion for Tammy’s situation.  It was because the bank eventually determined that it was in their best interest to do so.  Fortunately for Tammy, the bank’s best interest worked out for her as well.

The lessons are simple: Don't be bullied by banks or peer-pressured into a bad deal.  Arm yourself with the facts and then aggressively defend your right to financial peace-of-mind!

• One bank told a borrower that a payment was coded as late due to a returned check when it was not.  They later admitted that the representative misread their computer screen.
• Another advised a borrower that they were eligible for a loan modification program when they were not.  The representative didn’t verify all the requirements for the particular program.

These sorts of mistakes don’t happen often.  The lender’s representatives are typically well-trained and have systems to eliminate errors like these.  But in this high-stakes environment of foreclosure, even once is one time too many.

Your only defense is to get organized and take names and numbers.  You must take notes.

1. Date and time of your call
2. Telephone number that you called – Most mortgage companies have several telephone numbers and you want to be sure you can get back to the one that was most helpful to you (or prove that you called in the first place).
3. Full name of the person that you spoke to – If you are transferred to a different department, get the name of each person. (Some companies won’t allow their representatives to provide their full names.  If that happens, ask for two things:  Their employee ID number and the name of their supervisor.)
4. City and state of the work location of the person you spoke to – Large mortgage companies have several locations.
5. And of course, document the details of what you were told (amounts due, programs available, documents required, and deadlines that must be met).

It’s also a good idea to get in the habit of documenting these things when calling your credit card companies and your utility companies as well.

They have humans working over there too.

• A loan modification can be requested by the borrower, but must be approved by the mortgage lender.
• Approval is based on the borrower’s current income and monthly obligations and not on the borrower’s credit score.
• Though more difficult, when a borrower is current on their payments, a lender may consider a loan modification because of a documented hardship, such as job loss or large unexpected medical bills.

Bottom line, a loan modification is basically a mortgage refinance – without the huge upfront costs of closing a new loan.  And, unlike with a refinance, the borrower doesn’t have to have great credit to get approved for a loan modification.

If the payments on your mortgage are more than you can afford and you would rather stay in your home instead of sell it, then a loan modification is definitely an option worth considering.

Let's start with the bad news.  No matter how hard we all wish it were so, here's what a fair price is not:

1. It's not your appraised value from two years ago
2. It's not your mortgage balance plus $20K of "profit"
3. It's not what your new neighbor paid for the house next door

Even as sellers with hundreds of sales, we've made the mistake of mis-pricing a house more than once.  And every time, we suffered the agony of a long and expensive vacancy.  Finally, we learned to accept the harsh truth: Sellers don't get to determine the fair price for a house. 

The good news?  Buyers don't either.

Fair price is always — and only — set by the marketplace.  It is a reflection of what a majority of willing and able buyers would pay, given the number of houses available for sale.

The problem is that you probably don't have a crystal ball to know what someone might pay in the future.  So, the next best thing is to see what previous buyers have paid for houses like yours.

We understand that a list of recent sales is no substitute for a thorough market analysis that you might get from a real estate agent.  And, raw sales data won’t take into account things like condition of the house (repairs needed or high-end upgrades done) or how long the house was on the market.  But it can help you get an idea of what is going on in your neighborhood with today’s sales, and not what happened 18 – 24 months ago.

The following websites provide FREE information about recent sales:

• Zillow
• Trulia
• Homegain
• The Atlanta Journal & Constitution Homefinder

So here's the tip: If the average time-on-market in your area is longer than you are willing to wait for your house to sell (5 months, for example), keep that in mind when you set your asking price.  A lower sales price could mean a faster sale.  And, if your house is vacant, a faster sale could mean a higher NET profit to you.

But during the Bubble, banks (and mortgage brokers) mostly just wanted to make lots of loans. And, real estate agents wanted to sell lots of homes.  And, buyers wanted to buy everything in sight.

So back then, appraisers were strongly encouraged to be "generous" with their valuations so that more (and larger) sales could close. Which was pretty easy, since prices were soaring.  And everyone was pretty happy.  Best Friends Forever!

Then came the Meltdown.  Homeowners started defaulting on loans, banks started foreclosing on owners, and home prices started plunging.  Some blame fell on the appraisers and their cozy relationship with the agents and mortgage brokers they worked with.

And that's when our government jumped in to save the day.  So you know things were about to get worse.

A new Home Valuation Code of Conduct (HVCC) was made effective in May 2009.  Put simply, it put up a big brick wall between the appraiser and those who needed a high valuation price to make their deal work.  No longer could agents or mortgage brokers interact with appraisers.  From BFFs to TTYNs ("Talk To You Never" according to famed relationship expert Paris Hilton).

So today, even after a home seller struggles to sell a home, finally finds a willing buyer and settles upon a mutually-agreeable price, it's not over yet.  The whole deal can easily go down in flames if the bank-selected appraiser sets the fair market price below that contract price.  Unless the buyer can make up the difference in cash, the deal could die.

Given the vast number of foreclosures out there dragging down property values, this has become a major problem.  Perhaps a wiser approach is a middle ground so that homes can still get financed and prices can stabilize.

Can't we all just agree to be frenemies?

The Situation

Bill (not his real name) has owned his home for nearly two decades.  He and his wife Amanda have made many memories, raised a family, and built a life in that home.  Like many homeowners, he refinanced his mortgage to cover a few major expenses, including college costs for their daughter Lydia.

Now his monthly payment is too high for him to handle.  Even worse, Bill owes $170,000 on a home that wouldn’t appraise for more than $100,000. That's $70K in negative equity (yikes!).

Bill contacted his mortgage company about accepting a short sale, but was denied because his payments are “too current.”  Bill played by the rules and paid his mortgage and bills on time – even during the lean years when Lori lost her job.  To Bill, it doesn’t seem quite fair that loan modification help and short sale approvals are going most often to those who didn’t pay when promised.

Bill can't afford to stay in his house, so he has considered three options:

1. Sell the house - "I can't.  I’m upside-down and the bank told me they won’t approve a short sale."
2. Get a loan modification - "I tried.  The bank says I don’t fit their criteria since my payments aren’t behind."
3. Move out and rent the house - "I would, but the home needs a few upgrades and some cosmetic repairs to make it ready to rent.  I don't have $4000 - $5000 to fix it."

Bill was ready to give up and just let the house go.  Even though foreclosure would ruin his credit and certainly is not what he wants to do, he thought he had no other choice.

Two Possible Solutions

We worked with Bill to suggest a couple of solutions he'd never considered.

Rent the home at a discount.  Bill can get his home filled fastest by offering a better deal than any other rentals in the neighborhood.  If the going rent is about $1075/mo, Bill might rent his house for $850/mo to someone who is comfortable with a paint brush (none of the repairs are safety-related).

What does Bill get?  Time to let home values to improve while someone else is paying on his mortgage.  Bill's handy tenant gets a nice house that they can make their own with a huge discount on the monthly payment.

Sell the home with owner financing.  If Bill's buyer is a first-time home owner, they might be eligible for $8,000 in a tax refund for purchasing Bill's house.  Bill and his buyer could agree to split the tax refund – say, $4000 paid to Bill as a down payment and $4000 used by the buyer for upgrades.

What does Bill get?  Once again, Bill gets time to let home values improve.  Bill's buyer gets a nice house to own with an affordable down payment and easy approval without jumping through the hoops that a bank would require.  Bill might even give his buyer 10 years to refinance and pay him off.  In the meantime, Bill's mortgage gets paid down and there is more time for the house to return to a more “normal” appraisal value.

Bill is now considering these two new options. We'll report back when we get an update on his progress.

Do you have a situation you'd like us to help you work through?  Send us an email at SellOrDieBlog@ClosedFast.com.  Every month we'll choose one seller to profile on the SellOrDie! blog. We guarantee you'll receive some creative solutions, absolutely free, and with no obligation whatsoever.

Your privacy will be 100% protected with our state-of-the-art method of dreaming up fake names for you and your loved ones.  All we ask is your permission to post our suggestions so that others in a similar situation may benefit from your experience.

Right this minute -- somewhere in your neighborhood -- houses are selling.  Sure, this is not the seller’s market of two or three years ago.  But houses are still selling because people will always value a nice place to call their own.

Don't believe us?  Then ask your agent to go into MLS and pull a sales report for the last 6 months.  Were there any sales within 5 miles in your price range? You bet there were.  So, why wasn’t your house one of them?

Let’s assume your house isn’t a wreck and doesn’t have a serious drawback like an insanely steep driveway or a pit bull tied to a tree next door.  If you're home has been on the market but hasn’t sold after 6 months, the most likely culprit is the price.  Yes, your price is too %#*@! high.

No seller wants to hear it.  But it’s true.

It’s hard to stomach the fact that you could have sold your house for $20K more a year ago.  That was the value then.  But it’s not the value of your house now (or your neighbor’s, for that matter).

A nice house that is priced at today's market value -– or better yet, just slightly below -– will indeed sell.

If you could convince your lender to accept $210,000 instead of $230,000 to pay off your mortgage, you could then sell your home for $210K without having to bring money to the closing.  That’s called a short sale: When a lender accepts less than what is owed as a mortgage payoff so that you can sell your house for today’s value.

Why is negative equity so important these days?

With all the homes out there on the market, buyers don't need to look hard to find homes with a great kitchen, gorgeous hardwood floors, or whatever other feature most sellers think is important.  The real struggle these days is getting a buyer financed so they can purchase your home.  And for buyers, every penny saved is a penny that can be used to buy your home.

So while many real estate agents focus on making your house "pretty-as-a-picture," consider these suggestions for making it financially attractive as well:

• "Seller will pay closing costs up to $4K (or whatever you decide)" — You know all buyers will ask and you know you'll end up paying them anyway, so why not make it clear from the start that you'll cover closing costs up to a reasonable, yet generous, maximum?

• "Seller has recently done a professional and impartial inspection report" — If you were shopping for a home, you'd eventually build a list of two or three likely prospects.  You'd certainly want to know every defect of each home, but at $300+ for an inspection who can afford to.  So you start trimming the list.  It would be a huge time- and money-saver if sellers just went ahead and ordered a thorough inspection upfront.  That way, your house can stay on the short list of far more buyers, and that means more serious offers.

• "Seller will owner finance a serious buyer" — OK, now this approach will require a skilled agent and a good closing attorney, but it's worth it.  If you can offer some form of owner financing, you'll have buyers beating down your door.  You are looking for a buyer who needs a year or less to qualify for a bank mortgage.  You'll be "the bank" for them in the meantime.  They'll pay you a down payment at closing. They'll make monthly mortgage payments to you.  Then, within a year, they'll refinance using a conventional mortgage.