Nevada is a "recourse" loan state. It is not a "walk away state." Creditors could "go after" borrowers/sellers and seek a judgment for any deficiency for a home loan. Here's what two Certified Short Sale Professionals had to say when I asked them whether Countrywide or any other lenders were seeking deficiency judgments in Las Vegas, Nevada.  According to Don Lainer of the Platinum Elite Team at Prudential Americana Group, REALTORS, "No bank is doing anything systematically or consistently for that matter.  The negotiation skills of the listing agent will be pivotal to the seller's results.  At this time, we are not experiencing any issues with Countywide regarding this matter."  Leslie Carver of Team Carver also at Prudential Americana Group, REALTORS stated that, "I haven't had Countrywide or any lender go after my clients, yet.  Countrywide seems way too overwhelmed to go after borrowers/sellers."  Caution!  Do not advise clients on this matter.  In the case of a short sale, be sure to negotiate with all lienholders that the money they receive in the "short payoff" will be in FULL SATISFACTION of the debt, and that they therefore waive any right to seek a deficiency judgment.  Clients should always consult with legal and tax professionals in this matter.

Allan Herman from RE/MAX Benchmark in Las Vegas, NV says, #1 WORK WITH A SERIOUS BUYER! If you're working with "a low ball artist" it's time to move on.  Most offers are selling right around 97% to 98% of list price. Educate your buyer on what properties are selling for.  Show them the recent closings to support your claim.  #2 DON'T BE AFRAID TO HAND DELIVER YOUR OFFER! But also, send your offer via email just in case your offer gets lost in the shuffle.  #3 TRY TO BUILD A RELATIONSHIP WITH THE LISTING AGENT!  It's a lot more difficult with "the heavy hitters."  Although the decision rests with the asset manager, if you're on good terms with the listing agent and there's two offers that are similar, your personal relationship may get your offer accepted.  #4 MAKE YOUR OFFER AS SIMPLE AS POSSIBLE! Remember, your probably competing with multiple offers, so the more you ask - the harder it's going to get your offer accepted.  Make sure you explain that to your client.  #5 SELL YOUR CLIENT TO THE LISTING AGENT!  If your client is a cash buyer provide the written and verifiable documentation.  If your client is financing the tranaction and they have a 800+ FICO score, let the agent know!  If you've closed deals with your client before, let the listing agent know!  #6  BE PERSISTENT!  Keep following up with the listing agent (phone calls, emails, knocking on their door) regarding the status of your offer.  The listing agent wants to work with an agent who takes care of business.  #7 MAKE SURE THE OFFER IS COMPLETE!  A  signed purchase agreement that includes an earnest money deposit.  If financing or cash, then a pre-approval letter and/or proof of funds.  #8 KEEP THE CLOSE OF ESCROW DATE SHORT! The longer the escrow, the more the bank loses.  #9 TAKE INVENTORY OF THE PERSONAL PROPERTY!  Before you write an offer, make sure you have a detailed list of the personal property set forth in the purchase agreement. When performing a final walk-thru verify all items are still on the property.  Many properties have been vandalized.  #10 TYPE YOUR OFFER! It's far more professional to have a type written purchase agreement than a handwritten one. 

Some short-sale listing agents may be circumventing the intent of NRED Form 636 and 637 which went into effect under SB69.  They are presenting offers directly to the seller's lienholders.  Their intent appears to be avoiding having an offer presented and accepted by their seller's subject to  lienholder(s) approval, thus, requiring them to place the listing in a contingent status, according to local MLS rules. Consider the following:  Nevada Real Estate Division (NRED) Form 636 Waiver Form states, "In representing any client in an agency relationship, a real estate licensee has specific statutory duties to the client.  Under Nevada law, only one of these duties can be waived.  NRS 645.254 requires a licensee to "present all offers made to or by the client as soon as practicable."  This duty made be waived by the client.  Last May 2008, it came to my attention that some Nevada real estate licensees were using Form 636 so they could submit offers directly to the Seller's lienholder(s). According to Mr. Jan Holle, Compliance/Audit Investigator/Nevada Real Estate Division, "The intent of Form 636 was to allow limited service brokerages to be in compliance with NRS 645 that states 'All Offers Must Be Presented.'  The intent of Form 637 was to allow a mechanism for a buyer's agent to deal directly with a seller if this was in agreement with the seller and the seller's agent." The question was posed, "so the seller signs NRED Form 636 which allows the listing agent not to present all offers.  Who presents the offer to the seller?  Mr. Holle stated, "It could be the buyer's agent or an unrepresented buyer.  In the case of a buyer's agent presenting the offer - Form 637 Authorization To Negotiate Directly With Seller would need to be in place along with Form 636.  If a buyer was unrepresented, Form 637 would not be required... there could be many scenarios depending upon whether or not there are licensees involved on the buyer's side, seller's side, or both, and what type of services are provided by the brokerage(s).  NRED Compliance/Audit Investigator Jan Holle was asked about this scenario: The seller is represented by a full service brokerage.  The listing agent has the seller sign Form 636 only! The listing agent places the listing in the MLS and then advertises it in various media. The agent receives an offer from a buyer's agent to purchase the property.  How does the seller know of the offer, receive the offer, or respond to the offer, since they waived a duty owed to them to have offers presented to them?  The buyer's agent can not talk to the seller without written permission from the seller and their broker.  Mr. Holle's reply to this scenario was, "Using the form [636] in this manner and having the seller's agent receiving the offers was not the intent of the waiver.  Using this form in this way could place the seller's agent in violation of NAC 645.632 as he/she for whatever reason is receiving the offers.  If the seller's agent is receiving offers, then it is his/her duty to have the seller respond to the offer, and provide the buyer or buyer's agent with written notice of acceptance or rejection per NAC 645.632.  If the seller has waived the right for the seller's agent to present all offers than the seller's agent should not be receiving the offers.  If the seller has waived the right for the seller's agent to present offers than the MLS should state that buyer's agent is to present offers to the seller.  If the form [636] is not being utilized correctly, then the Division should be notified via a complaint form."  

According to Kathryn Bovard, Broker/Manager of Prudential Americana Group, REALTORS in Las Vegas, NV, one of the best advice tips she's seen comes from PAGR agent Debbie Tuttle. 

                                                    "12 Questions to Ask The Short Sale Listing Agent" 

1. Have you ever closed a short sale before?
2. How do you handle offers?  Do you submit them all to the bank, not having your sellers sign (which, in effect, means there is no valid offer and acceptance) and let the bank figure it out?  Or do you use multiple offer protocol, notify all agents to submit their highest and best offers, review them with the seller, have the seller accept or counter the best offer and them submit to the bank(s) for acceptance?
3. Have you requested and received the short sale package from the bank, including the hardship letter? 
4. And more importantly, has the seller completed the hardship package?  Have you confirmed receipt of the package from the bank?
5. What communication, if any, have you had with the bank?
6. Has the bank approved the list price?
7. Have you received any other offers that you are waiting to hear back on from the bank?  Has the property been approved for a short sale prior and not closed?
8. Does the loan have PMI (mortgage insurance) which may require another level of approval or a pre-payment penalty?
9. Is there 1 or 2 deeds of trust?  Any other liens? 
10. What is the name of the bank(s)?  Is the loan FHA or VA - again may require additional levels of approval?
11. How long do you estimate that the lender will take to provide an answer to an offer?
12. How far away from foreclosure is the seller?  Has a Notice of Default or Notice of Sale been filed?

Receiving the answers to these key questions should help you through the rough waters of short sales and into the smoother sailing escrow process.

Las Vegas, Nevada's Prudential Americana Group, REALTORS Sahara Office Broker/Manager KathrynB@PrudentialAmericanaGrp.com recently attended a National Real Estate Institute "Negotiating Bank Owned Properties Seminar" and condensed the highlights.  #1 KEEP IT SIMPLE  - This is not the time to write a novel.  REO offers are sent electronically and are usually reduced down to the net.  #2 CLOSE OF ESCROW - Try to close on or before the 25th of the month.  It takes about 3 days for bank wires.  Banks are assessed handling charges on the first.  If they have not received the check before the end of the month ("EOM"), then there's an additional for them.  #3 LIMIT CONTINGENCIES - Most banks will not accept a sale of another property contingency.  #4 DO NOT ASK "WHAT WILL IT TAKE." Do not ask the listing agent "what will it take."  Listing agents do not know what the asset manager will accept.  #5 ASSIGNEE -  Most banks will not allow a buyer to assign the contract.  #6 AGENT/PRINCIPAL COMMISSION - Most banks will not pay a commission when an agent is acting as a principal ("Buyer") in the transaction. #7  BUYER LOAN PRE-APPROVAL - Banks prefer buyer pre-approval from banks rather than mortgage brokers. #8  TITLE INSURANCE -  Sellers are not required to pay for title, so if the buyer wants to pay all the costs, then they can dictate the title company. #9  HOMEOWNER'S ASSOCIATION ("HOA") - Banks will bring HOA current.  Make sure to address it in your offer. #10 EXPECT A COUNTEROFFER - Even if you come in at full list price, expect a counter.  Counsel your buyer to expect it.  However, you should still offer your "highest and best" offer to eliminate competition.  #11 ALWAYS RE-COUNTER - Always keep in the game and re-counter. #12 MULTIPLE OFFERS -  When there's multiple offers and you receive a "highest and best" request from the bank, it is usually a 24-hour timeframe, but, always check with the listing agent.   #13  ASSET MANAGERS ARE NOT EMOTIONALLY VESTED - Asset managers usually have 400-500 files to process and get off their desks.  #14 TIMEFRAMES - Response time may vary from 24 hours to two weeks. #15 AS-IS - The Bank's position is that they're responsible for only known conditions.  Be sure to read their AS-IS addendum carefully.  Pay particular attention to a clause that states "if repairs exceed 5% of value, the property reverts to "as-is."  #16 EXTENDING THE CLOSE OF ESCROW - If you extend the close of escrow ("COE"), make sure to extend the financing contingency, otherwise the earnest money deposit ("EMD") goes "hard."  #17 DUE DILIGENCE PERIOD -Try to limit the "Due Diligence Period" to 3 days.  #18 LICENSED INSPECTOR  - Document your repair list by sending an inspection report to the listing agent.  Your chances are fairly good that they will be taken care of.  # 19 REPAIR WORK CREDIT -  The buyer's lender will probably not allow for work repair credit at close of escrow.   CERTIFIED FUNDS FOR "EMD"  - Most banks will not accept bank wired earnest money deposit.  They will ask for certified funds.  #21 OFFERS ARE ACCEPTED ON THE "NET" - Make sure that everything you want the Bank ("Seller") to pay for, has the exact dollar amount specified.  

The Mortgage Forgiveness Debt Relief Act of 2007 was extended for 3 more years! The Act now extends through 2012 under the Emergency Economic Stabilization Act.  In addition to calendar years 2007-2009, the Act now includes 2010-2012! Additionally, you should tell your clients to ask their tax attorney or CPA if they might qualify for Canceled Debt & Mortgage Forgiveness under IRS Code 108 (a)(1)(B) Section 1401 - Insolvency exception, aka "Insolvent Debtor Clause" Remember:  Never give tax or legal advice!  Advise your clients or prospective clients to seek the counsel of caring and competent professionals. 

 P.S.  Take a look at Mortgage Workouts, Tax-Free for Many Homeowners

Steve Kitnick

Steven Kitnick Seminars, LLC

www.StevenKitnickSeminars.com

CASE STUDY:  My fiance & I live in Las Vegas NV.  We were planning to use his VA benefits to obtain a VA-guaranteed loan.  However, during the underwriting process he got laid off.  This occured during our 10-day "due diligence period."  I immediately applied for, and was pre-qualified for a VA-guranteed loan with the same lender .  At that point, we submitted a new contract on the same house, in my name, honoring the same timelines   in my fiance's contract. While my loan was in underwriting , my due diligence expired. Four days after the due diligence expired, I was denied the loan. Meanwhile, my fiance secured a new job in the same line of work and the lender issued a new pre-qual letter. Our real estate agent had the listing agent to ask the seller if he would be willing to let us place yet another offer on the property using my fiance again. The seller said he would reject the offer. He also indicated he had no intention of refunding the earnest money on my existing purchase agreement, even though he received a copy of my lender's loan denial.  OPINION:  First of all, I am not a lawyer and I can't give you legal advice!  This is for general information purposes only!  Only a judge can determine who is entitled to your earnest money deposit based upon the facts of your case. However, look at your purchase agreement!  Did you and the seller agree to go to mediation at your local Realtor association in the event of a dispute on the contract?  If you used the Greater Las Vegas Association of Realtor's Residential Purchase Agreement, you'll find that clause in Paragraph 17.  You mentioned you were past your "due diligence period." The "due diligence period" is a separate time frame for certain things to be accomplished (See:  GLVAR RPA Paragraph 12).  If the subject property is in a Common Interest Community (CICA, aka HOA), you have another separate time frame running co-temperaneously (See:  GLVAR RPA Paragraph 8). Just because you may have been past the timeframes in those paragraphs (or others) doesn't mean other contingencies and timeframes are no longer in effect!  Having not read your contract, was your offer contingent upon obtaining financing, a standard clause in most contracts?  If so, were there any specific timeframe outlined in your agreement? If so, did you at any time waive the financing contingency?  Do you know the specific reason why the seller won't release your earnest money deposit other than his frustation?  Most states have laws governing money held in escrow, and the duty of a party to a real estate transaction to executve documents to release the monies held, except for a "good faith" reason.  In Nevada, we look to NRS 645A.175 - You'll find information on my blog. RECOMMENDATION: Contact your agent and broker and tell them to prepare a rescission (cancellation) that includes a clause that instructs the escrow holder to release the total amount of your earnest money to you.  Then, tender that rescission and instruction to the seller.  In other words, you must make a written demand for your earnest money.  If the seller refuses, find out the applicable law that applies in the state where the escrow is held.  If outside Nevada, ask the escrow holder's attorney the applicable law, cite the sosurce, and send a copy of it to the seller and their broker.  You can also file complaints with the real estate division and with the local association of Realtors against the agents and brokers in this matter, if you feel they haven't done the right thing.  And, once again, you can apply for mediation at the Association if that provision was agreed to in your contract. If not, there's always small claim court.  Best of Luck! 

Recenty, I was asked whether HUD has specific requirements for an FHA-insured Short Sale. According to Sue Goad Sue@GoadTeam.com with Century 21 Infinity/The Goad Team in Las Vegas, NV, " The process tends to be about 30 days longer as the bank gives their approval, and then Fannie Mae gives their approval.  So, it's almost like having to wait a second time around. In addition, you should note that as agents we're never in contact with Fannie Mae directly. The bank requests the Fannie Mae approval, and then issues their short sale approval.  In my experience, they have NOT generally had special requirements that differ from the traditional short sale guidelines with most banks, but the last Fannie/Freddie backed loan that I had was a couple of months back. They want the offer to garner the bank a certain percentage of what the property is worth, etc."    

What is the time period in which a lienholder [beneficiary, lender] of a deed of trust has to file for a deficiency judgment in Nevada? I've "seen" materials and "heard" that they have 90 days from either a judicial or non-judicial sale.  However, the only documented information is the Nevada Revised Statutes which states "... within 6 months."  See the citation below!     

NRS 40.455  Deficiency judgment: Award to judgment creditor or beneficiary of deed of trust.

      1.  Upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale or the trustee's sale held pursuant to NRS 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if it appears from the sheriff's return or the recital of consideration in the trustee's deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.

According to Darrell Walker of Keller-Williams Realty Las Vegas, if the tax lien on the property is unenforceable, meaning, the IRS can not collect because the value is not there, the IRS can issue a release of the tax lien. The purpose of attaching the tax lien to the property is, if the property is sold any proceeds would payoff the IRS, as well as the lien holder.  However, if the property is sold short, then the IRS is out of luck and can release the tax lien.  The person is still held responsible for the tax liability. If they have other properties, the IRS could and probably would transfer the tax lien [see: IRC 301.63251 Release of lien or discharge of property].  I recommend you consult with a tax attorney.