How To Limit Short Sale Liablity For Yourself & Your Broker
I got a call from one of my new Inner Circle REALTORS® yesterday asking "I see sellers suing their REALTORS® all the time for not disclosing all of the possible results of a short sale. What do I do to limit the liability for myself and my broker?" Wow, great question, and I applauded him for thinking so far ahead!
Unfortunately, no one is "sue proof" and I am not an attorney. Here are my best two suggestions to you (both covered in more detail in my Michigan Short Sale Con-Ed Course):
One
Keep your sellers' interests in mind beyond all else, provide the best 
service you can, and constantly communicate with them. In short, keep them happy and listen to them! You probably already do all of this, but it's even more important for a short sale.
Two
Work with your attorney or your broker's attorney to create a document that completely discloses everything. My attorney will not allow me to share my 8-page disclosure with the general public. However, all of our Inner Circle and Elite REALTORS® (and their brokers) are covered under this 8-page disclosure. Here are the items covered in it to get you started. All of these items are disclosed to, and acknowledged by the seller:
- Other Things They Tried Before Listing With You
- There's No Equity
- If Short Sale Fails, Still Have Foreclosure & Still Be Liable For Debt
- If Get Short Sale Approval, Still May Have: Deficiency, 1099-C, Promissory Note, Cash To Closing
- They Will Move Out Before Closing
- If Balance In Escrow, Lender Will Likely Keep It
- Can't Buy Back House Or Live In House After Closing
- It's Ok To Share Their Personal Information With Whomever You Think It's Necessary To Get Short Sale Approved (Title Company, Lien Holders, Etc.)
- Bank May Approve Short Sale Then Change Their Mind (Rare, But It Can Happen)
- You're Not An Attorney Or A CPA (that they may want to consult one before signing anything)
- You're Giving Them Copies Of Everything Signed Today
- They're Still Responsible For Making Payments And If They Don't, They May Still Have A Foreclosure & Still Be Liable For Debt
- Just Because You've Listed The House Doesn't Mean The Foreclosure Will Be Stopped
Dedicated To Your Success,
Joel
Short Sale Negotiations: you earn FULL COMMISSION and no fee to buyer/seller - www.GreatLakesShortSales.com
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