What you need to know when hiring a Realtor or Real Estate Broker to do a short sale of your property:
Hiring the right realtor or real estate broker to conduct a short sale may be one of the largest challenges facing short sellers today. Messing this step up could devastate your chances of avoiding a deficiency judgment.
Your Realtor or real estate broker may not have your best interest in mind. Your goal is to avoid the potential for the lender to seek a deficiency judgment. The Realtor or real estate broker’s goal is to sell the property and collect a commission, regardless of whether the Lender agrees to refrain from pursuing a deficiency judgment. This is one of the most important reasons to be represented by an attorney. Be certain that your interests are being protected throughout the short sale process.
Many Realtors only look out for the commission and do not care whether or not the homeowner avoids a deficiency judgment, and their brokerage agreements read accordingly. In fact, it has become prevalent for real estate brokers to include a short sale addendum in the real estate brokerage agreement that could have a negative impact on your best interest. For example, many short sale addenda to real estate brokerage agreements require that the client provide “ALL” information the Lender may request to evaluate whether or not the Lender will “approve” the short sale. The problem is that the Lender’s request for financial information is a fishing expedition to determine whether or not the Lender will pursue a deficiency judgment. You don’t want your agreement with your real estate broker to have a negative impact on your end goal of avoiding a deficiency judgment.
Therefore, it is important to have an attorney review the agreement between you and your real estate agent or broker before you sign a real estate brokerage agreement.
Likewise, it is also important to have an attorney review the offer to purchase or real estate purchase and sale agreement prior to signing. Many real estate brokers include a short sale addendum that doesn’t include a provision that makes “closing” contingent upon the Lender’s agreement to refrain from pursuing a deficiency judgment and cancel the promissory note. This is important because without such a provision, the short sale buyer/purchaser could sue to force the short sale seller to “close” where the Lender approves the short sale, but will not agree to refrain from pursuing a deficiency judgment and canceling the promissory note, the ultimate goal of many of our clients.
Every short sale situation is different. Therefore, you need advice that is specifically tailored to your individual situation. Because real estate brokerage agreements come in as many shapes and sizes as there are brokers, a thorough review of the proposed brokerage agreement is mandatory to ensure a consistent strategy to avoid a deficiency judgment. Castle Law Group typically recommends the use of one of our addendums to the brokerage agreement, and one of our addendums to the purchase and sale contract.
The advantage in having Castle Law Represent ONLY YOUR BEST INTERESTS in a Short Sale:
Our addendums typically include the following: (1) make the real estate broker commission contingent upon actual closing, (2) provide that the Seller has discretion concerning the type and nature of the documents to be provided to the Lender for the Lender to evaluate whether or not to approve the short sale, and (3) that the Seller is not obligated to sell/close unless the Seller is satisfied with the terms of the Lender’s approval letter, contract or settlement with the Lender.
The post Hiring a Realtor or Broker to Short Sell Your Property appeared first on Castle Law Group.
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Short Sale Consulting
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