Every time someone hires us to help them with a short sale on their home, we take them through a healthy stack of paperwork. It's an ever-growing list of contracts, disclosures and information-gathering forms.
One of the most important documents is a disclosure advising sellers to seek the guidance of an attorney and tax professional ... because we aren't either of those. Yes, it's an important document because it covers my behind. But it's more important because the seller really does need the professional guidance.
Why? Because the ramifications of a short sale could be wide-ranging and far-reaching. Depending on the financials, loan terms and amounts involved, distressed home sellers face crippling legal judgments and high-dollar tax bills. This stuff is just too important to leave to chance and a chatty short sale "expert."
As a Realtor, I can't talk to you about the specifics of your situation. I can only speak in generalities.
I can't tell you what will happen to you if the bank decides to come after you for a deficiency judgment. I can only tell you about what happened to other clients.
I don't know whether you qualify for insolvency after your bank sends you a 1099. I can only point you to the websites that detail the law.
But I can refer you to some knowledgable experts who WILL answer those questions for you. And I do just that for all my clients. But guess what. About 1 in 10 clients actually seeks the advice of counsel. With potentially massive ramifications looming, the vast majority of sellers make conscious decisions to not talk to a licensed professional. At least, that's the anecdotal experience we've had.
What must we do to impress upon home sellers the necessity to better protect themselves? Do we need to build an hour's worth of attorney fees into the deal and set up the appointment ourselves? Do we need to partner up with a CPA and negotiate referrals for free consultation for our clients? How about a little hypnosis and/or brain-washing?
Whatever it takes, I'm on board. Distressed homeowners are often single-mindedly focused on their lack of money; it's an all-encompassing, exhausting issue that overshadows everything in their lives. And $200 for one hour with a lawyer can seem too steep a price when you're wondering whether you should pay the cable bill or buy groceries for your kids. But clearly, the long-term gain outweighs the short-term pain.
For the real estate industry, that light at the end of the tunnel isn't an exit -- it's a train coming. Opportunistic shysters (not all attornies, just a few ambulance chasers) are already approaching home sellers asking to see their real estate files. The avalanche of lawsuits could dwarf the "California Mold Rush."
It's gong to be ugly for agents who haven't put their clients' best interests ahead of their own. Almost as ugly as it will be for the sellers who didn't run that approval letter by their attorney.
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