Homeowners may experience any number of life-changing events that can have a significant impact on many aspects of their lives. Some of these include a job transfer, a divorce, the loss of employment by one or both spouses, filing for personal bankruptcy, reaching the golden years and settling into a life of retirement, and, finally, the death or serious illness of a family member or other loved one. If you find yourself in one of the stressful situations below, a real estate investor can help alleviate some of the pressure.
1. Transfer or Relocation
When was the last time you moved into a house and thought to yourself that you would stay in that location for an indefinite period of time, perhaps as long as 10 or more years? It seems nthat just about the time our family finally gets all the pictures unpacked and hung on the wall, we start thinking about moving again for one reason or another. Studies show that families living in the United States tend to be fairly mobile. The average American will end up moving about 12 times in a lifetime. While the reasons for moving vary considerably, one of the most common reasons is a change in a person’s employment. It’s not at all uncommon, for instance, for an employer to transfer an employee to another location. The transfer doesn’t have to be out of state to necessitate a move.
Divorce often creates a financial hardship for the family, especially if it is a more traditional household in which the father is the provider and the mother is a stay at home mom who functions as the primary caregiver for younger children. In a situation like this, all members of the family are affected, and where one larger house was adequate before, two smaller houses or apartments will be necessary now. Although some couples are able to separate under amicable conditions, more often than not there are feelings of hurt, anger, and resentment. In this type of environment, it is difficult for spouses to work together when deciding who gets what, especially where the house is concerned. In some instances, the house is sold without really caring about attaining full market price. For example, if one spouse has moved out of the house and is now renting an apartment but is also responsible for making the house payment, a financial hardship may have been created. As far as this spouse is concerned, the sooner the house can be sold, the better.
3. Job Loss
Another life-changing event that has a significant impact on families is directly related to changes in one or more of the spouses’ financial condition. The most likely cause of financial hardship is a change in employment circumstances. Homeowners who may have been caught in the latest round of “downsizing” or “rightsizing”—or whatever the current buzz word may be—are very likely to be distressed, especially those who have only a minimum amount of cash reserves in savings. I truly believe that the majority of executives running corporate America are good and honest people who have our best interests at heart. These types of leaders, however, seldom make the headlines. For those employees who have been unfortunate enough to be caught in the crossfire of corporate layoffs, the results can sometimes be devastating. Unless there are substantial cash reserves readily available in a liquid form, such as a money market account, an immediate reduction in spending is almost always the outcome.
Retirement is yet another circumstance that has a significant effect on a family’s income. At some time in everyone’s life, they reach a point at which they are ready to retire. With the aging baby boomer population, there are more people than ever who are retiring. Although we tend to think of those who are preparing for retirement as financially sound and getting ready to live a life of luxury and enjoyment, this is not always the case. In our fast paced and sometimes impatient society of “buy it today and pay for it tomorrow,” many people have become so accustomed to living from paycheck to paycheck that they can scarcely afford to retire. Some of these older citizens who are approaching the age of retirement, however, do not even realize that they cannot retire and maintain the same standard of living they’ve always enjoyed. They mistakenly believe that the Social Security benefits received from Uncle Sam along with what little they have in savings will be sufficient to sustain them upon retirement. After a few short months of living the so-called good life, they discover all too late that their financial resources are limited. By then, however, it’s usually too late because they have already retired and pride or circumstances prevent them from going back to work. For those retirees lucky enough to own their homes free and clear, selling the homes represents a viable opportunity to free up some much needed cash.
In most cases, for example, a seller who is going through a life-changing event such as the loss of a job or a divorce is all too glad to be relieved of a huge debt obligation such as a mortgage. In reality, selling a house becomes secondary to a more immediate and fundamental need that has arisen due to what are often unforeseen circumstances. By purchasing distressed sellers’ houses, investors can relieve them of what may very well be a heavy burden and thereby freeing them to focus on the immediate needs that are more important to them at that particular time in their lives.