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Realtors make sure to protect yourself in a SHORT SALE LISTING

By Ann Urias

Real Estate Broker/Owner with Aston Group - Orange County Real Estate 01451803

January 30, 2008 08:36 AM

I just had a short sale listing approved by the bank and the seller backed out because she was able to get a hold of half the amount that is in default and said she decided she wants to keep the home. I worked on this file since September of 2007 and as a Realtor I did my part I sold the home as well as negotiated a loan from 515k down to 425k. Also I delayed her trust deed sale date multiple times. This loan is 8 months in the rear. When I originally listed the home I did confirm with the client that she was positive she no longer wanted the home and that she could not afford the home, she agreed and signed all my disclosure forms. Now I have to cancel the listing and let the buyer know that he no longer can move forward on a home that he has been waiting on for 5 weeks.

That is great that she was able to come up with the money but, the sellers should make sure they are moving forward with the sale of their home prior to listing it and having an agent spend, time and money. Now I am out a lot of time and money. With all my new listings I am now charging a cancellation fee for my services and possible upfront fees. Short sale transactions take a lot of time and patience.

I recommend agents charging upfront fees or cancellation fees.

My lesson came the hard way. I thought I would share my experience and hear your thoughts on this matter.

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Cory Clure

Tamarack Realty - Spokane Valley, WA

interesting reading thanks for sharring it with us

Jan 30, 2008 08:42 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

Ouch! That is a lot of time and money spent on a listing. How can she cancel when she is still going to be behind 4 months? Is the bank re-instating her loan with a new start date? How is she going to make her payments now?

Jan 30, 2008 08:45 AM

Ann Urias

Aston Group - Orange County Real Estate - Irvine, CA

Your Real Estate Concierge

She is setting up a payment plan. She has to pay them all 8 months by 3/15/08. She says she should be able to fund enough loans to make it happen. She is taking a risk. If she does not pay them the full amount owed they can still foreclose.

Jan 30, 2008 08:49 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

She'll be back.

Jan 30, 2008 08:53 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

I can't believe that she wants to risk everything. She has about 45 days to come up with another $10k to $15k, plus she has to make her mortgage payment on top of that. Way too risky. I think she will end up paying the bank the 4 months, will fail to come up with the next 4 months and the bank will foreclose. Then she will not have enough money to move on.

That really sucks Ann. I am sorry. Hopefully someone will call you today or tomorrow and beg you to help them find a home! Good luck to you!

Jan 30, 2008 08:57 AM

Gregory Maley

Sold Buy the Sea Realty & R.E.N.T. - Wilmington, NC

REALTOR, GRI, CBR, SHS, e-PRO, ABR

I agree with Lenn. She'll be back. You can implement your new cancellation fee in the next agreement.

Jan 30, 2008 09:00 AM

Anonymous

Stella Barbour - Real Estate Agent - Serving Northern Virginia

Ann - I charge a retainer for short sales for that reason. Non-Refundable. If it goes to closing you can always return the retainer if you choose to.

Jan 30, 2008 09:10 AM

Rosemary Brooks

BMC Real Estate - 209-910-3706 - Stockton, CA

The Mother & Daughter Realty Team

I have mixed feelings. I sure would be a little ticked to say the least that I came that far and got that close and bam!! But then I'd be happy for the homeowner if she feels or even better if she does come up with the money to keep the house. However, I'd advise her how risky it is to have a buyer sitting there and shooo them away and this might not work for her. Then what will she do?

Lenders are bad at doing things like this at the last minute and not advise the homeowner of the bird in the hand....

But can't you tell the buyer that she is going to try this and if they still are interested, you will keep them updated on the outcome and stay in touch with everybody and see if you may still have a sale at the end of the day. I would try that and wish the homeowner well with her plan. But stay close to the daily updates on what and where she is with it all. my 2 cents.

Jan 30, 2008 09:18 AM

Ann Urias

Aston Group - Orange County Real Estate - Irvine, CA

Your Real Estate Concierge

Rosemary,

I did try that but, the seller demanded me to cancel and advise the buyer that she is no longer selling. She is scared that they can sue her. I did advise her of all her options. She has some one other then me telling her different.

She is not open to any more suggestions and started to get hostile. I did what she requested and advised her to make sure to pay the bank every dollar owed or they will proceed with the foreclosure.

Also she asked me to arrange a payment plan with the bank for her. I sent over a bill for those services and she never signed it. What a surprise

Jan 30, 2008 10:03 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

I can't believe she had the gall to ask you to arrange a payment plan with the bank for her. I would have told her that I would be happy to, for a nominal, non-refundable fee of $1,000. Also, why did she cancel if she didn't have a plan in place with the bank already? That doesn't make a lot of sense.

Jan 30, 2008 10:31 AM

Ann Urias

Aston Group - Orange County Real Estate - Irvine, CA

Your Real Estate Concierge

She wanted me to get it in writing for her. She had already contacted the bank but, nothing is ever guaranteed with the foreclosure dept. They would not give it to her in writing.

Jan 30, 2008 10:34 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

Then she has no agreement. The bank is simply going to take her 4 months of payments and foreclose on the property. I have seen this happen many times over the last 10 years and it will happen. Maybe this is karma coming back to haunt her!

Jan 30, 2008 10:37 AM

Ann Urias

Aston Group - Orange County Real Estate - Irvine, CA

Your Real Estate Concierge

I agree with you Charles. They already cashed in the second note with insurance company.

I believe they will foreclose unless she is completely up to date on all payments by sale date.

Jan 30, 2008 10:41 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

Yep. If they have a sale date then she will lose the home. She can only get it re-instated up until 1 week before the sale date. I would try to convince her to take that money she received and move and sell the home to this buyer, otherwise she will not have a home or the money to move on. Good Luck!

Jan 30, 2008 10:45 AM

Kim Walker

RE/MAX HI Net The Walkerland Group - Arlington, TX

Interesting that a few of you are charging retainer fees for doing short sales. That's smart. I was kind of wavering about if I should start but was not sure how much to charge. What's the average retainer fee? Short sales are alot of work. Also, just FYI, for the sake of your clients another great way in the door is to let them know that there is a form 982 that can possibly offset the 1099 the bank will send to them if they short sale their home. Helps relieve the tax burden a bit. They can speak with their accountant to get more info. Just FYI.

Jan 30, 2008 07:04 PM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Ann, Our listing agreements on the Emerald Coast of Florida state that the commission is payable, with NO closing required, should we find a buyer, ready, willing and able. I think you have a claim. If the sale was approved by the bank, you also have a seller default and the buyer could sue, as well. Wendy Rulnick

Jan 31, 2008 01:19 AM