Foreclosures and the Five Stages of Grief

By | Economy, Foreclosure, Realtors, Short Sales, Tips

Back in 1969 just a couple of years after I was born, a woman named Elisabeth Kübler-Ross wrote a book called On Death and Dying in which she described five stages of grief after studying the terminally ill. These stages of grief have been found to apply to other situations, and I personally have found them to serve me quite well when talking to homeowners, Realtors, and others about foreclosure.

The stages are:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

It is easy to understand how each of these can apply to the current real estate market and foreclosure situation. This is true both for homeowners as well as for anyone who depends on the real estate market to make a living.

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The Five D’s of Foreclosure

By | Distressed Properties, Foreclosure, Realtors, Tips

Back in mid-2006, nearly a year before I launched ForeclosureRadar.com, I wrote an article for iTulip.com to help Eric’s readers better understand current foreclosure statistics. In it, I introduced the fact that there is a base rate of foreclosure that happens regardless of the housing market. This base rate of foreclosure being due to the Five D’s: Death, Disease, Drugs, Divorce, Denial.

From the time I started buying foreclosures, through writing that article in mid-2006, the housing market was booming. Selling most homes was easy, and anyone with a pulse could get a loan (one lender actually went as far as to advertise a “pulse loan”). In this environment, many found it hard to believe that foreclosures even occurred. I initially struggled to make sense of it myself. Why would there ever be homes with tens or even hundreds of thousands in equity being sold at the foreclosure steps? Building this list bridged that gap for me. While the Five D’s now represent a small percentage of the foreclosures that we see, I still feel it is an important part of the larger story.

I’ve wrestled a bit with whether this list is right or not over the years. Some have argued that drug use is a disease, or that denial is a cop-out/catch-all. I had even added a 6th at one point, Duty, as our service members began losing their homes while serving in Iraq. I’ve since dropped Duty as part of the base rate, as I sincerely hope that it is a temporary problem that will not continue. After all the arguments, this is the list that continues to stick. Let’s take a quick look at each:

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The Five D’s of Foreclosure

By | Distressed Properties, Foreclosure, Realtors, Tips

Back in mid-2006, nearly a year before I launched ForeclosureRadar.com, I wrote an article for iTulip.com to help Eric’s readers better understand current foreclosure statistics. In it, I introduced the fact that there is a base rate of foreclosure that happens regardless of the housing market. This base rate of foreclosure being due to the Five D’s: Death, Disease, Drugs, Divorce, Denial.

From the time I started buying foreclosures, through writing that article in mid-2006, the housing market was booming. Selling most homes was easy, and anyone with a pulse could get a loan (one lender actually went as far as to advertise a “pulse loan”). In this environment, many found it hard to believe that foreclosures even occurred. I initially struggled to make sense of it myself. Why would there ever be homes with tens or even hundreds of thousands in equity being sold at the foreclosure steps? Building this list bridged that gap for me. While the Five D’s now represent a small percentage of the foreclosures that we see, I still feel it is an important part of the larger story.

I’ve wrestled a bit with whether this list is right or not over the years. Some have argued that drug use is a disease, or that denial is a cop-out/catch-all. I had even added a 6th at one point, Duty, as our service members began losing their homes while serving in Iraq. I’ve since dropped Duty as part of the base rate, as I sincerely hope that it is a temporary problem that will not continue. After all the arguments, this is the list that continues to stick. Let’s take a quick look at each:

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Trading tomorrow for today

By | Economy, Foreclosure, Realtors

There’s an awful lot of debate about who is to blame for the current foreclosure crisis and who should, or should not, be bailed out. Some folks are down right angry.

My father was a logic and philosophy professor. As a kid growing up I was allowed to do almost anything I wanted so long as I could make a valid argument for doing it. This was much harder than you might expect thanks to the many fallacies that rendered my arguments invalid in my father’s eyes. That my teacher said it was true didn’t make it so (the appeal to authority fallacy). But of all the fallacies that my father used to thwart my plans, the one I remember best is the post hoc ergo propter hoc fallacy – which says that just because something happened first doesn’t mean it CAUSED what happened next.

Subprime loans were the first to foreclose, but that isn’t enough to prove subprime lending caused this crisis. Speculation is correlated with foreclosures, but is it really the cause?

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Stoking consumer hopes at the expense of Realtors

By | Economy, Home Sales, Housing Market, Realtors

Foreclosure information services are not new. Some local services have been in business for more than twenty years. Surprisingly though, there has been almost no innovation in this space since the dawn of the Web. These service providers do little more than collect and distribute foreclosure notices that are available free from the County Recorders Office.

Most of these services share another trait: the not-so-subtle scent of hucksterism. Promises to get rich quick, save 50% on your next house, or buy with no money down are rampant. Recently, this has produced a counter-trend, so called “white knight” investing. But the chivalry is only skin deep. Many who would train you to be a white knight will also tell you to press homeowners for at least 30% off, and talk in shrill tones about all the money you can make.

Give me a break.

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