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SHORT SALE FLIP - QUESTIONABLE METHODS

This article is a follow up to an issue discussed in December titled Short Sales and Title Insurance - Critical Look at Hybrid Closing Schemes.

I am representing an ultimate buyer on a short sale "flip" that raised some eyebrows and got me to looking carefully on how it is put together. The ultimate buyer came to me to assist in legal representation and I was very surprised on how it was structured to the utter disadvantage to the ultimate buyer. In this example, the ultimate buyer is my client; the seller is the flipping buyer; and the owner is the regular seller. Let me point out some interesting and I think important points:

1. The purchase and sale agreement is the Florida Association of Realtors / Florida Bar form 02/08 "AS IS" form.

2. The buyer is the ultimate buyer in this situation. The buyer is just defined as the Buyer in the contract as if it were a typical deal.

3. The seller (flipping buyer) is a company that we determined is not the current owner. They say they have a Power of Attorney from the owner, but we have not seen it. They apparently have some control over the owner since we were able to have a tour of the home, in which the owner is still living.

4. The contract does not disclose the power of attorney nor the name of the actual owner nor that the seller is not the owner. But that control may just be that the owner contracted with a realtor involved in the deal as the seller's broker.

5. The seller insists on their chosen title insurance company both hold the deposit and do the title and closing, even though the buyer is to pay for those costs.

6. The contract provides for the closing date of 3 weeks from now, but seller can extend for an additional 60 days after that.

7. The contract says that if the seller can't deliver title by the end of the extended 60 days, the buyer gets their deposit returned.

Here are the unusual issues that concern me:

A. The contract form assumes that the seller is the owner. This creates a problem in the enforcement of the contract because if the "seller" cannot deliver marketable title after diligent effort, there is no remedy for specific performance against the seller. Although there is no short sale addendum to this contract, the end effect is that if the bank does not agree, there can be no sale. But this is not a condition up front in the contract. End result is the buyer can tie itself up without the ability to negotiate with the lender and the original owner, and then end up after over 80 days with nothing but its deposit returned. Remember who the parties are - the real seller is not in privity (ie: direct contract) with the ultimate buyer.

B. The deal smells of the seller using the buyer's deposit as its own deposit with the owner. This could tie up the buyer's deposit in a contract dispute with the owner and the flipping buyer.

C. The deal smells of an undisclosed double contract, which is bank fraud in which the title agency is (unwittingly?) participating. The buyer is getting a mortgage, but the new lender has no idea of the simultaneous lower priced sale. The 1^st American article reference above says, "Several variations of the short sale frauds we have seen involve multiple sales contracts at different prices - a low one to show the "old" lender when negotiating a discount and a higher one used for negotiating with the "new" lender. Knowingly making, issuing, delivering, or receiving dual contracts - only one of which shows the true purchase price - is a crime in Florida and a major red flag for fraud. See §877.10 Fla. Stat".

D. There is obviously no disclosure to the owner nor to the owner's lender of the double contract. Whether this is needed or not is a good question. See the quote of 1^st American in the above referenced article where it states, "While there are no hard and fast rules, the single best guide in evaluating a proposed short-sale (or any other transaction) is to ask yourself -- "Would the lender take this discount (or make this loan) if they knew all of the facts that I do?" If the answer is yes, there is no harm in disclosing the facts to the lender(s) in writing and awaiting their written approval. If the answer is NO, then your hiding the information may sweep you into a mortgage fraud conspiracy. There presently is no bright-line rule as to how much profit is too much or how long the property should be held before making the profit. As such, it is best to contact underwriting when faced with this scenario"".

E. The contract requires the ultimate buyer pay all the seller's (flipping buyer) expenses including "but not limited to" title, recording and documentary stamps". This means that buyer could be involved in double everything - including the first closing expenses.

I have been involved in multiple contracts, and the selling lender has even approved of the "assignment" contract if handled in that fashion. The key seems to be to get the bank to agree first on the initial amount. Once that is out of the way, assignment of the contract seems not to be a problem. A fee for the assignment is not a contact that involves anyone other than the contract holder and the new buyer. The new buyer discloses the underlying assigned contract and the assignment fee to arrive a the "selling price" with its new lender. No harm no foul, and every one who needs knowledge has knowledge. In one deal we have the new buyer learned of a hole in the foundation that was not filled in with cement after some investigation. We sent the pix to the shorting lender and got the price lowered.

There are a myriad of "concepts" that are being tried in the short sale arena. Be careful of what you get involved in as a broker, seller or buyer. Just because it worked before does not mean it is legal or will work again.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales

Posted by Richard Zaretsky, Florida Real Estate Attorney on 03/18/2008 09:11 PM

Comments (32)

short sale attorney, short sale lawyer, real estate lawyer, palm beach county, short sale, preforeclosure, west palm beach short sales

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32 Comments on SHORT SALE FLIP - QUESTIONABLE METHODS

MAR

2008

Richard,

It's a great post.I was not aware of these techniques ysed by some companies.

Thanks!

Everything you have written is pretty text book (if there were one) on how these "investors" operate.

I am suprised they didn't just assign the contract it would avoid the double closing costs. Alot of banks are refusing to finance the ultimate buyer if they see "assignment fees".

Point C is interesting, would that include a double closing? Can't imagine they could have a claim once they have been removed from the chain of title.

Matthew

I was just reading an article in The Fund Concept of Attorneys Title Insurance Fund on short sales. It addresses this specific issue in C.

The lender providing funding for the new buyer is putting that loan in a certain underwriting program. If the parameters used change, even if after the closing (ie; discovered that there was a short term flip), then the origninating lender could have to buy back that loan. That means a lawsuit against those in the know on the deal for bank fraud (civil) or worse (criminal).

Thanks, you are a real asset to the AR community!

APR

2008

Hello Richard, I just came across two of these listings when working with a buyer client who is looking to purchase a home in Charlotte NC. My buyer and I didn't get to the point of actually seeing the investor seller's (flipping buyer's) addendum to the Standard NC Offer to Purchase and Contract. So, I enjoyed reading the details contained in your post.

Thanks for telling me about your post when commenting on my Active Rain blog post about the same subject. What's up with this? Listing property as a "short sale" when you're not the owner!

This is an important subject Cheryl -

We get a call on this situation about 2 or 3 times a week and I am very uncomfortable with it.

Richard

APR

2008

It would seem to be an uncomfortable situation. Hopefully it all works out.

APR

2008

Here in Michigan this has been rampant. The short sale company puts the home into a land trust as to not break the chain of title. they negotiate a short sale with the bank and have the Realtor obtain the 2nd buyer. They are pocketing upwards of $50,000 on some of these.

As a legitimate short sale specialist it makes me sick to see the fraud that takes place here. It has also made it difficult for me to help homeowners and Realtors utilize the short sale process due to the bad rap these deals are getting. The good news is that their days are numbered. MAR has taken up the crusade to stop the fraud. Not a minute too soon.

There are companies out there right now whose main line of business is to recruit realtors and try to get them to flip on their behalf. they show them how to do it. Take half of their first four flips and move on. (There may be one reading this right now) If everything is disclosed to the bank it is legal but, if there is a hidden agenda and the true numbers are not disclosed its fraud. The obvious point here is, what bank is going to let a third party pocket an additional 20%. its just not going to happen. thanks for bringing this to light.

JUN

2008

This goes on everywhere. Pretty much from the moment a lis pendens is issued to a homeowner, they are flooded with scammers trying to "save" them. There is one guy in our area who is sending out unsigned $2,000 checks to homeowners!! The "investor" seller likely put in a $10 option contract to purchase the property (no liability). They think it is an ownership interest and equitable title. Its basically practicing Real Estate without a license, which is of course a 3rd degree felony. Many of these investors are currently under investigation, check with the state!! I feel sorry for the gullable realtors out there that are actually listing these on the MLS, as they may end up "up in the creek" in comming years. I list short sales all day in Northeast Florida, and DON'T work with investors in this way period. If they want to buy one of my listings, they are putting up and binder and doing an legitimate offer, without the option to assign.

By the way, if the deal doesn't happen, and it isn't written that the contract is contingent on lender approval, I would SUE the listing broker for my commission, regardless. They listed it on the MLS and offered compensation to another broker for procuring a ready, willing, and able buyer for the property. You have done that, and are entitled to a commission regardless of whether or not it closes. Thats why we have to put the contency in our MLS listings!!!

OH, your an attorney! Thought you were a realtor!! my bad

JUL

2008

I sat through a class one afternoon and this was pretty much explained step by step the same way. The sad thing was, they were selling this knowledge plus more for $4000+ dollars. I raiased my hand during the "pitch" with several objections. You could tell they were none to happy with anyone trying to "question" their "expertise"

AUG

2008

Richard, I am a managing partner of a national RE investment firm and we have been doing short sales, along with other RE investment transactions, for many years. I have never responded to these postings but feel I need to in this case. You have many valid points and they need to be clarified.

First, FULL DISCLOSURE is the most important aspect of this type of transaction. Both, the "Short Sale" contract between the investor and the short sale bank, and the "Retail Sale" between the investor and the end buyer, must disclose that the sales and purchases are "Subject To" successful short sale negotiations with the lender, and that you are the "middleman" or investor negotiating the purchase and sale of the property.

Flipping is NOT illegal and should be fully disclosed. We work with several national title underwriters and all approve the practice. In addition, if there is a mortgage with the retail (end) buyer, Fannie Mae, Freddie Mac, and recently FHA allow for flips. FHA just started allowing the practice because of the current market conditions (short sales, foreclosures, REO, etc).

The contract does not have to disclose the POA, but if you ask for one the investor should provide one to you without hesitation. The POA allows us to market the property and negotiate the short sale without having to go back and forth with the homeowner on every detail. In most of our short sale cases, the homeowners have vacated or abandoned the property alltogether and could care less what happens.

We choose the title company because we pay for closing costs, as allowed by the lender/institution. In addition, the three title companies that we use are very familiar with the short sale process. We want the transaction to go as smoothly as possible and not every title company is familiar with the process.

The title, contract and appraisal all state or note that we are NOT the owner of record. Using the retail/end buyer's funds to fund the short sale purchase is completely legal, again, as long as it is fully and properly disclosed. Our end buyers are always aware that we are negotiating the short sale and will be purchasing the home at a simultaneous closing.

There is no double contract on this transaction. These are two completely separate real estate transactions. One is a short sale with the bank at below fair market value to an investment firm. The second is a fair market sale to an end buyer.

Finally, why would the short sale lender accept a discount or less than fair market value for the property? Because the lender is not negotiating the tangible, real estate. The lender is negotiating with us their investment (mortgage/loan) they made on that property. The property is simply a widget in the transaction. They are evaluating the value of the investment, loss on the investment, and the margin they can recapture. Like the bulk REO's that our firm negotiates for our larger clients, the short sale is simply a single REO transaction. In bulk REO's the lender agrees to accept .30 - .60 cents on the dollar, depending the state, region, etc. They will gladly accept .70 and .80 cents on the dollar on a short sale. You must separate the tangible real estate from the intangible loan. The lender only cares about the intangible transacation at this point.

I hope I have not been too forward in my responses, however, your use of the word "scheme" concerns me. For those of us that have been successfully negotiating short sales and REO's for years, the concerns from those new to the industry is bothersome.

Thank you for your time.

I have an issue with this ONLY if the investor-buyer (we'll call it the A-B transaction) is using a Land Trust. Ownership is 'hidden', and you're never quite sure, as the retail buyer (the B-C trasaction), who you are dealing with. Often times they use the end buyer's money to close their A-B, then close the B-C. I do believe this could be considered fraudulent (I'm not an attorney).

If an option contract is used, I don't have a problem with this at all. To me, it's investing 101. Buy low, sell high. The recorded option gives you the right to market and close the B-C. The land trust guys don't record anything. It would blow their 'cover'. With an option contract, you close the A-B with cash (usually OPM). Then close the B-C with the retail buyer's money. Simple. You only own the property for as long as it takes the recorder's office to record both deeds...

Obviously, there is a significant amount of disclosure involved with the homeowner. Have an attorney draw up some sort of affidavit of understanding. Investors get a bad rap because a lot of the times they're smarter (and more wealthy) than the average Joe. When consumers can't grasp the situation, they automatically cry "foul".

As a Realtor, and investor, I can sucessfully wear both caps by handling all of my business in a manner that is ethical and legal.

AUG

2008

"The obvious point here is, what bank is going to let a third party pocket an additional 20%. its just not going to happen. Thanks for bringing this to light".

Actually, lenders and loan originators have made money for years, under the table. They do a thing where they get an application from a potential borrower, quote a rate HIGHER to the borrower than what they would have otherwise paid, then make a "yield spread premium" without fully disclosing to the borrower that this is what they have done. The practice is RAMPANT in the industry.

Also, I have been working with a seller who desparately seeking help to avoid a foreclosure, if at all possible and the bank had cranked up the rate to 10.5% -- on a home mortgage -- and this after the mortgagor had paid over $4,000 to catch up her payments once already (to avoid a foreclosure a few years ago, because she had a debilitating illness and this borrower had fallen behind in payments because of the illness).

Banks are not in the business to lose money, so who can blame them for repossessing the collateral on a non-performing asset, but to somehow think investors who do all the negotiating to backend a short sale deal then flip to a retail buyer are "bilking the bank", or even committing fraud, these are very harsh words and beyond the pail.

No one made the bank take the offer from the investor. The lender obtains a BPO, or an appraisal, and then says to the investor, "Here's what we'll take". If the investor make the deal happen, and finds a retail buyer in the process who will accept the house in the same condition as the investor is buying it, but pay more, this doesn't make the investor "evil" or even a criminal. They are performing a valuable service (most Realtors are trained to be Short Sale Specialists, nor do they want to be! We don't make nearly enough money for all of the frustration!!!) and deserve to be paid for it.

I don't think we're talking about fraud, unless the appraiser on NEW mortgage is over-inflating the true market value. Hmmmmm, sounds a lot like two to three years ago, when housing prices were escalating so fast the banks were rolling in the cash from making so many loans. You didn't hear them complaining then, right?

Interesting thread. Interesting issues, Richard, but let's flesh out some more details on these fraud allegations. I certainly wouldn't want to be a party to fraud but am happy to help my seller's move on with their lives AND to help the bank recover cash sooner, rather than later. That's part of the tradeoff, I imagine.

If they want to do the deal, they will do it. If not, they certainly can wait for the Sheriff's sale and market it as an REO. The falacy is in thinking that somehow they'll come out ahead by losing even more money later, rather than letting the SS-investor take a cut prior to the foreclosure.

AUG

2008

Would this be one of those types of schemes to recruit realtors...or does it sound like something different?

http://www.shortsalesriches.com

Short Sale Riches / Loss Mitigation - this is a combination of recruiting sources of loss mitigation work along with selling the book for a hefty price. The production of the sales pitch was not cheap - thus the method of generating income for the promoters is coming from not just the book, which is incidential but likely a referral loss mitigation / short sale conselor effort that generates fees as a portion of the broker fees is my guess. Nothing wrong with it but nothing new either.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com

NOV

2008

Hello all,

A very interesting discussion on here. Though I am not an attorney, it seems that the Attorney Generals and FBI are getting very aggressive in prosecuting real estate investors, brokers, realtors, etc. Check out:

http://www.mortgagefraudblog.com

I know many of the short sale experts on here will justify what is being done in many ways. But it seems that when a property is stated as having two different values to two different lenders (the short sale lender and the new lender) fraud is happening. Also, the value of a property is determined by the most recent sales in the area. An appraisal is only an opinion of this value based on available data. So, if a property is being acquired in a simultaneous close for $134,000.00 and resold for $170,000.00 the minute it closed for $134,000.00 this becomes the most recent sale and the new value of the property regardless of what an appraisal says.

I know there is a great deal of room for argument on the above. However, foreclosures are "under a microscope" right now and the courts do not seem to be siding with "creative" arguments. If you are a real estate professional, I think it is money well spent to sit with an attorney for an hour, get a solid legal opinion (in writing) backed by his/her errors and omissions insurance and FOLLOW THIER ADVICE.

Just my two cents.

MAR

Private funding for Short Sales and REOs. How is this done and is it legal?? Yes Rich if it is structured correctly.

There are two parts to this question: 1. Transaction funding, 2. Short Sale. Let me answer one at a time.

Transaction Funding is used nowadays to facilitate “double closings”. Whenever you (the investor - “B”) buys a property from a seller (”A”), and sells it on the same day (”immediately”) to an end buyer (”C”), most title companies will require you to fund your purchase transaction (”A -> B”) with funds other than the funds that are coming from your sale transaction (”B -> C”).

Because these funds are merely used to facilitate a transaction, this is commonly called “Transaction Funding”.

As such, this applies to all kinds of transactions as long as you need a “double closing”. In case your title company tells you that double closings are illegal, ask them about “consecutive closings”. But don’t worry too much about title companies. I have a good title company if you need one.

The 2nd part of the question: “Short Sale”. What is a short sale? A Short Sale occurs when you buy a property from a seller who owes more than what you’re buying the property for. This transaction requires the bank’s or lender’s approval; because they will take a hit on the money they’re owed.

Transactional funding can be used not only for short sales but also for REO’s (bank owned properties) and any other transaction that you structure with a double closing.

BTW: In some cases you can save the costs of transactional funding by structuring your transaction with only one closing. That is usually not possible on a short sale, sometimes possible on an REO, and almost always possible if you’re buying from a private seller who does not need bank approval for a discounted payoff (i.e. the seller has “equity”).

Get more short sale education, access to 100% private transaction funding to fund your short sale flips simply email me.

Realtors I know you don't like shorts sales but I think this program might help the market.

for more information on this creative transaction go to:

www.wefinancedeals.com

JUN

Is there a black letter rule for exactly what needs disclosed to the short lender? Once they determine the sum certain to release the mortgage lien, to what extent are they entitled to the nuts and bolts of subsequent transactions?

Again - it seems nobody is concerned about the seller. If a real estate agent has the house listed, their first duty is to that home owner, not the '3rd party negotiator'. Their duty is to get the highest price they can for the property. Do the investors involved here, stop to make sure that the lien holder has agreed to release the home owner from the debt - and not just release the lien from the property? Because if not, you are sticking the seller with tens of thousands more in liability than he should have had to endure. And if no real estate agent is involved, does that make it OK for investors to stick the sellers with this liability? What about next year, when the seller will be taxed on the forgiven amount? Is that going to be disclosed to the seller?

Why do investors act like this scenario is the only way short sales get done? I've done several - from both sides - and when I'm the seller's agent I'm making sure we get the highest price possible. As the buyer's agent, I want the lower price, of course. But everything is done up front, and NO title company or lender or real estate agent is uncomfortable with any aspect of it.

I just read your post on the Title Insurance issue and will be sharing both that information and the information you present in this post to my agents to make sure they understand. I can only tell them so much, but if they see it from a third party, it just might make sense to them. Thank you for sharing this important and valuable information with us.

JUL

Richard,

You seem like a good guy just trying to make sure people don't get ripped off, but you are making a few generalized assumptions that are just not true when applied to certain methods involving short sale double closes, and specific ways of transacting them. When people here the term "double close" they automatically assume that any deal structured to close similtaniously or back-to-back, or on the same day is illegal and should be avoided. When people don't understand something they automatically think the worst. Commercial real estate is done this way all the time. Residential has adopted this method for efficiently moving pre-foreclosure properties to the end buyer. The traditional method for buying short sales involves a lot of waiting for end buyers to make offers, and one of many problems arise; like not always being prepared to pay for hidden or ancillary liens that come up at closing, thus slowing things down and making it harder for everyone.

An investor using a properly structured back-to-back closing method can eliminate most any problems that come up, and make it a WIN, WIN, WIN for everyone.

Nick Daily above has got it right, using the Option contract where everything is transparent, and everyone knows what's going on is completely ethical and legal. Besides the banks do not, and should not have any right or business what the property is ultimately sold for. If they agree to a specific price and they get their money, then what happens after that is not their business. Anyway, remember they got the bailouts (we didn't). Curtesy of OUR money!

Happy Investing!

Dean - everyone, including yourself, and right or wrong, is entitled to their opinion.

JUL

Thank you for your insight. An investor has contacted me to put in offers for him. He is putting everything out there, fully disclosed. It sounds legal. However, I don't want to get into anything unethical. Your blog has pointed out several sides to this issue. I guess FAR should be my next call before getting involved too deep.

AUG

There is too much speculation with ethics, legalities, and the best position for whom. Not once have I heard about the lenders and their horrible processes with hanldling these short sales in a timely fashion BEFORE they foreclose on the homeowner. The precentages each RE agent deals with regarding successful short sales is small and therefore is difficult to make a sound statement that they can be successful doing these without the help of a cash buyer (investor) to not only stimulate the negotiation, but also to handle the necessary costs associated with upkeep, moving, negotiating, and improving the property to sell it with a realtor at best price. So far it is the investor whom works and takes the risk to make the entire process flow and get handled before the property is left for dead and becomes an ASSet to the community and the lender. Discounts forfeited by the lender is quite needed in order to account and move the asset back onto the market. Ask the lenders about their comparison of a cost of a short sale versus REO. Agents a good sound real estate investor built to help and assist in this market is your greatest business partner. We don't have to work with every agent, just the ones that get it.

SEP

Sorry I just don't see the issue here:

1. Option Contract submitted to bank with a disclosure stating: "I investor/buyer intent to immediately sell this property for a substantial profit" (bold letter) HUD Submitted as well

2. Seller's Banks sends out BPO agent to the property to determine the properties value.

3. Sellers Banks informs Buyer Rep/Negotiator/Investor the value that Bank needs to Net. The ask you to resend and HUD/Option Contract reflecting this amount.

4. They inturn send you an approval based on the Option Contract/HUD that you have provided them with (Remember you have disclosed that you intent to resell for a profit)I am still so confused why if you have disclosed all of this and the bank has aproved this and determined value based on their own research why this is such a huge issue. It seems that everyone is confusing this more than neccessary.

The end Buyer makes the investor an offer based on there own research and due dilligence.

This matter is very straight forward...now if you have not disclosed this info, big problem but if you have lets move on.

SEP

/begin rant

Arbitrage in business occurs all of the time. The guy in the middle makes money because he pulls the two parties together and is the "procuring cause" for the deal, not for bringing the parties together or even representing the parties. A Short Sale investor represents the deal, and his/her own interests, not those of any other party.

The primary reason a Lender approves a short sale is that they realize they are likely to lose even more money if the property is is added to REO inventory, which takes anywhere from a few to several months. Then the property may sit on the market for months, even years, be vandalized (including urban mining of copper, removal of water heaters, appliances, furnaces, breaking of windows and doors -- I've seen all of the above and such dramatically decreases the value of the property -- and there is the very common occurance of the allergen mold -- very common in a closed-up house with a sump pump that can't run without electricity.

The justification is there for the bank to accept a short sale from an investor. Most could care less if savvy investor finds a retail buyer and works the arbitrage to earn a wholesale profit. Speaking of wholesale profits, how about those folks who bring in boat loads of cheap products from China (and all over - don't mean to pick on the Chinese), then sell those goods at huge markups? Does the buyer of a product at the big box stores care that the product is costing them three times what the retailer paid for it?

Considering that Banks are going to make something like $13bn (or is it $30?) this year from overdraft fees, primarily to the same demographic who are losing their homes through foreclosure, I'm really not all that empathetic. Same goes for credit card companies. Legalized theft, if you ask me. Miss a $15 payment and they'll charge you $39. Legalized robbery, and many of you are all worried because some investor is going to make a few thousand?

For a short sale to be approved by a L/M, it's a simple business decision. If they don't want to accept the offer from the investor, they don't. A lot of people think REALTORS/Real Estate Brokers rip off people, too. They think we charge way too much in brokerage fees, but they don't have a clue how much work we do to earn the few bucks we make.

And speaking of people who rip people off, how about the lawyers who take 33% of the monetary awards in worker's comp cases, earning fees of millions while the disabled party keeps the rest -- the actual injured party -- yet most of those clients don't complain at all.

And neither do my short sale clients OR the retail buyers who are purchasing the property, usually at some kind of discount. I see this as win-win-win-win-win-win, etc.; lots of people benefit from a short sale. Compare that with an actual foreclosure, in which the Lender often nets a LOT less than what they would in a Short Sale.

Disclosure is the key. Party on, Richard.

/end rant

SEP

Like it has been noted all over the posts, if there is FULL disclosure like many of the shortsales we have seen completed, where is the harm? An attorney would ALWAYS create a very eloquent argument that there was in fact fraud, where there was none!

MANY of these transactions have such disclosures and are legal!

The key is to get educated! Work with professionals that know how these transactions are to be correctly done and all should be good.

The home seller who is about to face foreclosure is ALWAYS better off doing a shortsale other than allowing the bank to foreclose.

Get the necessary, CORRECT short sale education and access to 100% private transaction funding to fund your short sale flips by visiting http://TheCashProvided.com

Realtors I know you don't like shorts sales but I think this program might help the market.

for more information on this creative transaction go to: http://TheCashProvided.com

Hope this helps.

SEP

Great post Richard.

Good luck to you & your client on this one.

NOV

I love when some one tears down their competition. I mean really do you have a lot of credibility discussing this in a blog? Maybe you should talk about how to spot a crooked attorney and look up their license with the state bar. You could include all the bogus claims attorneys make about being able to stop someone's house from going to foreclosure. Now that would be something I would like to here from an attorney so long as he doesn't name other attorney's he may be competing for business with. lol

NOV

Hey All,

This is Kevin Kim, author of SeattleShortSaleBlog.com

While flipping short sales is not "illegal," often times it is not in the best interest of the seller. The only time flipping short sales is allowable (in my opinion) is when the deficiency is waived and the seller is exempt from the tax obligations.

The "equity" created in such transaction typically equals a deficiency balance to the seller. So if the investor eliminates the deficiency balance, I say, take the cake and have your reward. If not, then know that the seller is paying your spread.

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