Realtor Lawsuits - The Other Side of the Coin...

In my market area if you are not doing short sales or REOs then you might as well not be in real estate at all.  I believe that the way you handle a short sale is the same way you handle your very first transaction as a new agent, you get the knowledge and you have someone, usually your broker, to guide you thoughout the proccess.

Personally I have not done any short sales as either listing or buyer's agent (only REOs so far).  However, I have done many BPOs (in the high hundreds) for short sales and always amazes me how uncooperative some listing agents are.  In general there is always going to be some agents that are very unprofesional and should not be in this business at all.

So - if I was a skier and wanted to get better at skiing, would I just sit back at the lodge and watch the slopes?
It so happens that I spent a few days skiing, and took more than my share of the spills... If you don't crash, you will never learn. 

My point is, when I take a buyer to a short sale, talk to the listing agent and am told there are 2 loans, the second being a heloc for $180k... I have been down that hill before and know the deal is likely to require the seller to bring something to the table, or the listing agent will ask the buyer to pay outside of escrow... 

Because I have done short sales, and some of them crashed, I know this is not something you want to get into. So I can adequately help my clients. Personally, I would have turned down the listing as it is a waste of time in my eye. 

What you are saying, sounds to me like people should just pass the experience up... What is the point of that? To sit at the lodge and be safe all day? 

Ok, suit yourself, be safe - DON'T learn, DON'T evolve, DON'T serve your next client better... 

That kinda makes the post pointless doesn't it?

Great post Tori.  I've only listed two short sales with the help of a much more knowledgeable agent.  One worked, the other didn't.  It was the seller's attorney who advised the seller to foreclose, not us.  The whole process was draining.  I won't do another short sale where there are two loans, it's just not worth it to me.

Terkel:  To quote one of the most knowledgeable philosophers of our time... "You cannot be serious !"

Your analogy about practicing on a ski slope.  How silly.  If you fall on a ski slope, you break your own bones.  If you fall on a "short sale"... you can ruin the seller's life... or mess it up for a very, very long time."

You want to "learn" on something ?  Don't you dare try and learn at the expense of MY seller.  Wow.

I also think I know where you "pulled" this analogy from.  Just look at the first half or so of the word... LOL.

Tori:  By the way... great post... thank you for being so thorough with it.

I am amazed at all the complexity of the responses from everyone here.  It is so obvious that there is not agreement on this issue at all.  I have 5 short sale listings at the moment and some of them I negotiate myself, and some I hire a third party.  It is more work, but I feel like I can handle the task.

I have done a number of short sales.  They are not difficult.  The banks tell you what they want.  You give it to them (if you are any good at your job). 

They are extremely time consuming and frustrating because lenders tell you over and over that they never received your information so you send everything in 4-5 times (no exaggertion - never send originals).

In the beginning, get help with short sales so you realize you're not doing them wrong, the banks are just difficult to work with.

After one or two, rock on alone.

Exactly Tory and completely agree with you! I was one of the few that mentioned the fact that there are far too many Realtors that don't have a clue about short sales but list them anyway. It is a disgrace to our industry!

That is where team work pays off!

Tori, I expect to see this happen very soon in our resort and second home market. Right now we are flooded with short sales.

I also agree with #48 and #53.

And to the Realtors out there who say most of their short sales are cut and dry (easy), try doing them in a resort and second home market where none of the primary residence short sale- exceptions apply to second home or resort condo mortgages. Also, almost none of these mortgages had PMI.

On second homes and particularly resort condos in SC, there is a high probability of getting a deficiency judgment on a short sale one way or the other. You can try to negotiate these away, but many lenders won't accept the short sale contract that way. This is just the tip of the iceberg in dealing with second-home short sales. The banks are a lot tougher to negotiate with when it's not a person's primary residence.

In fact, many of our condos were financed through portfolio loans "commercial investor loans". The investors who backed these types of loans even have the right to say NO to a short sale, period. The seller doesn't even get the option. I've seen Realtors list properties as potential short sales only to find out that the only remedy some of these lenders will accept is foreclosure (aside from a possible loan mod, which these lenders were forced to offer as of last year) .

On second homes and resort condos, you BETTER be a short sale expert or start working with one until you know the ropes. I'm not saying this for self-serving reasons at all; I've done my share of them and no longer have the patience to deal with them. I haven't lost any business over it either.

I refer them out now!

I am glad to see that prices in general have come down so much that I have no reason to take on short sales. Here in south Florida, short sales are no longer the only sales. I worked with  several buyers on short sales  and it was  such a long process that left everyone in limbo.  Even so called short sale experts do not handle buyers professionally.I have found that it is not worth losing my good reputation and my customers' confidence over, not to mention any potential complaints.

I have friends on the grievance committee at our local board of Realtors and they say that 90% of the complains are of agents in short sales and it's always an Article 11 issue.  One local broker in town tells their agents to go and hire a 3rd party but the third party is more incompetent than the agents.  There have already been lawsuits stemming from a short sale gone awry but with little coverage or press.  Expect to hear more as the time goes by. 

Sounds like there already has been a lawsuit where an agent lost their license:

First Thing to do with your short sale clients

I highly recommend clients consult with an attorney, better yet a tax attorney. Even if we knew EVERYTHING about a client's financial situation (and none of us really know it all), advising them that a short sale is in their best interest is outside of a Realtor's scope of consulting. We can offer possible benefits, but ultimately, the seller should weigh all of his options given his particular situation. We don't know what the consequences of a short sale may be when someone has a complicated financial situation.

Short sales don't solve ALL of a homeowner's financial problems. I work with a lot of high-end clients who are in trouble and their situations are just that....complicated. Some forms of bankruptcy actually work out better for some people, it all depends on their situation. It may not be lucrative for us, but we have to admit when we are out of our league as a consultant.

Deficiency judgments placed on investors and second-home short-sellers in SC are common.    

""REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service..."

Your blog reiterated to bring in someone who IS Familiar with short sales to work with a person who is not.  Nothing to misinterpret there.  When inexperienced, get help to protect your client, your broker and yourself.

This is so true of so many agents in my area.  Without the training and the constant calls to the banks, these short sales do not close.  I've have several classes and starting more to make sure we are doing our jobs.  We can't learn enough right now.

I'm not a realtor but it does seem like common sense but obviously lots of folks needed to hear your message.

As a Realtor, I have a problem with any profession that has to dictate what ethics and morals are but that is me. I have always lived by the Golden Rule and it has got me through life pretty well.

That being said what constitue and expert or even someone good at short sales, amount of closings, listings what. I hate to burst anyone's bubble but "we are just not all that". That is why anyone even felons can get a Real Estate licenses.

Tori,

Oh, that's old "banks are greedy", "lawyers are only for money" and how conveniently missing agents. Angels, just angels.

I am going to the court foreclosure auctions for my clients and I am surprised by the niumber of foreclosures on properties that are shown in MLS as under contract short sales... Disaster

REALTORS who violate the REALTOR Code of Ethics deserve to have complaints filed against them.