Short Sale Buyer Representation

Ray, the problem is that many have no idea what they are doing, and in fact, I know some agents who would have their seller sign multiple contracts, and submit all to the bank. And then tell the buyers whichever one the bank accepts is it. It is NOT the right way to do it. The problem though is the lack of knowledge. And it is a matter of time before someone is called to the mat for doing it.

Wow... that's pretty scary. It's pretty basic contract law. But I do see a lot of agents who don't know what they are doing.

Last month I had 4 buyer deals fall apart because the listing agent didn't know what they were doing. Everybody looses. It's because of things like that that I decided to get into short sales. But I don't venture in until I know enought that I could teach it. I wish more people would not go the learn as you go route.

Catherine

Your absoluely right, I failed to realize each State is unique. Next time I will have add an asteric to my comments. Sorry for the confusion folks. I agree, once we start reading about the indictments in the paper then maybe we will see some of the industry clean-up. They are Short Sale gurus out there promoting these activities and make a ton of money giving out bad advice. Makes me want to go into the guru business, I just can't seem to get over the taking advantage of poeple part.

Noel, while certainly there is some good education out there, people still need to be careful as the rules and laws vary state by state. There is one short sale 'university' I saw that has as part of their Top 10 Seller questions a phrase something like "most people will not owe taxes on a short sale." For me, it runs about 50/50. I have some selling non owner occupied properties, I have some with cash out refi's or helocs. So I think that instead of telling your students "most" I think our party line should ALWAYS be to see a CPA or tax attorney for their individualized "risk" of taxes, etc. I think one thing we will start reading about are the people who did "successful" short sales, but had NO IDEA they may be liable for a tax bill - or that thought or were told that the Bush Mortgage Debt Cancellation Act will be their savior when in reality it did not apply to them.

That should be the next topic. Can a buyer just withdraw cuz they found another house while they were waiting? Ummm technically, probably not, for the same reasons a seller can't "accept" more than one offer, but in practice that is what many agents are doing. And as I've said before with the agents (in California) who are submitting multiple contracts - they are playing with fire.

Catherine,
Great question and topic. In Maryland the "Subject to Third Party Approval" form has a date by which the third party must reply by or the buyer may cancel the offer.
The Maryland contract obligates the buyer just as it does the seller otherwise they may loose their good faith deposit and be subject to legal action by the seller.

Would it be possible to post or email me a copy of the CA Short Sale Addenda?

Paul

I'd be carfeul which CPAs and Attorneys you ask too. Until a few weeks a go some CPAs and Attorneys in my area had no idea about last years' repeal of the phantome tax on short sales of primary residences. Now you are telling me if I refi-ed or cashed out I may also be subject to taxes on the deficiency? That's interesting.

Noel, you're right , you have to really screen the "experts" you send your clients to. That is why I made it my mission to educate myself the best I could so I would at least know enough to know if my clients were in "trouble" or getting "bad advice." Frankly, sometimes its best to foreclose for some people - for tax and for recourse reasons. And not so much if you just "re-fi'd" to get a better rate, but cash out, buy a boat, etc... or either way ... see your CPA :)

Paul, I'm happy to send the CAR short sale form, if anyone else wants it just let me know.

Hi Noel,

There is soooooo much misinformation flying around out there it is scary! I second Catherine...we MUST be committed to properly educating ourselves so we can recognize and disspell these "myths" and guide people to the right sources for answers.

I do not know the correct verbiage but the forgiveness on primary home applies only to "ORIGINAL INDEBTEDNESS". So, yes, if you owe more than you did when you bought the home that will not be included in the forgiveness unless you can show that it was used directly to improve your home ie pool, garage, upgrades, etc. but that is definitely conversation for a COMPETENT CPA. :-)

As Brokerages, we need to have disclosures for short sale transactions that informs clients/customers that this, as well as many other, liabilities exist and they should receive counsel from other professionals as well. This is out of our scope but we need to be aware and make them aware.

Warmest Regards,

Christina

Christina Henley said,

As Brokerages, we need to have disclosures for short sale transactions that informs clients/customers that this, as well as many other, liabilities exist and they should receive counsel from other professionals as well. This is out of our scope but we need to be aware and make them aware.

I have several that I use and am willing to share with anyone who wants them. They're in PDF format and have my name and my broker's info. Disclaimer: Have them reviewed by YOUR attorney if you wish to use them. Maryland doesn't have any statewide forms other than the third party approval form.

I'd also like to receive any that others are using as well (including state or local association) via email or FAX to: Paul@AnneArundelMDHomes.com or FAX 443-716-3011.

Thanks,
Paul

BTW, is there anyway to upload them to the fourm here?

I wish there was a way to upload... maybe if John Reilly is reading this :) he will let us know.. wouldn't it be great to have a bank of forms ? Paul, I'll send you the california forms (both listing and sale addendum for short sales) if you will send me yours. Our broker feels the state forms are adequate. But our local Remax offices has another addendum they type up that says that "buyer reserves the right to withdraw/cancel the agreement at any time prior to lender acceptance." That I assume is in response to what we're talking about here with the sellers. We can't have it both ways.. its either a contract (subject to) or it isn't. If it is, then a buyer can't just back out because they found another house... so I like Remax's idea and I've proposed it to my brokerage to protect our buyers too.