As we enter into the heart of this year’s hurricane season, I think about the unique bond that we share in south Florida as “Hurricane Survivors” and the lessons that we have learned together over the years in preparing for these dangerous storms and their aftermath.
I moved to Boca Raton in 1992, just three days before Hurricane Andrew, and learned a lot that week … about hurricanes, about life in Florida, and about the need to be prepared with a plan– before, during and after the storm.
In a way, we are lucky, because unlike other natural disasters (like earthquakes and tornadoes) hurricanes take time to develop and they give us warning about their impending assault that offers the unique ability to plan, prepare and protect ourselves, our homes and our loved ones to the best of our abilities. In fact, experts suggest that it makes sense to prepare ourselves months before the storm warning is anywhere on the radar. We are urged to purchase supplies, inspect windows and doors for weaknesses, trim trees and scale back landscaping, plan for pets and special needs, make a list of resources and emergency numbers, chart an evacuation route/plan, and review the plan with family and experts, and finally to stay alert and advised on weather updates and warnings. There is also a to-do list for before, during and after the storm has arrived.
There are many similarities between preparing for a hurricane and dealing with the unfortunate situation of being upside down in a home and/or not being able to pay the mortgage. Like hurricanes, this situation usually takes time to develop, and there is plenty of warning that trouble may be on the horizon. In addition, planning and preparing can make all the difference between disaster and a more positive outcome. When working with our clients we can help them learn how to hope for the best while planning for the worst.
When a home might be falling into jeopardy, there are several important steps to take. First, evaluate options to reduce the debt-load, such as a loan modification, refinance or restructuring of the debt. Simultaneously, find ways to cut back on any non-essential expenses in an effort to keep the home affordable. Some people even go so far as to take on another job, get a tenant or roommate in a spare bedroom or liquidate other assets to make the situation work.
After reviewing these options, if the home is still not affordable, it is time to contact an expert who can help explore the evacuation plan – the sale of the home. Is there enough equity in the home to go for a traditional sale, or is a short sale or foreclosure the only option? A short sale, in the hands of responsible and knowledgeable professionals offers a lot more control and predictability then letting the house go into foreclosure. In this case, there is a negotiation with the current lender, who agrees to let the house sell for less than the current mortgage. With this option, there can be a move into a new home without worrying about getting foreclosed upon with very little notice.
The next step is to determine the amount of housing expenses that will be affordable moving forward, and to find a situation that meets the current needs. Just as with a hurricane evacuation, there must be a plan for pets, special needs and any other particular circumstances, in an effort to make the new home as comfortable and secure as possible.
Either way, you have helped your client weather the storm, and get prepared for whatever Mother Nature brings their way.
DID YOU KNOW… As the end of the year approaches, your closing date can affect the amount of real estate taxes that you will pay for the following year?
If you close Jan. 1 or later, you will pay the seller’s real estate tax rate for the entire year of 2015. Whereas if you close on or before Dec. 31, you will pay a tax rate based upon your own purchase price for the coming year. If you or your client is closing on a property toward the end of the calendar year, this decision could have huge implications on the amount of real estate taxes to be paid in 2015. Laurie Dubow