How To Limit Short Sale Liablity For Yourself & Your Broker

By
Services for Real Estate Pros with Great Lakes Home Solutions, Inc.

How To Limit Short Sale Liablity For Yourself & Your Broker

I got a call from one of my new Inner Circle REALTORS® yesterday asking "I see sellers suing their REALTORS® all the time for not disclosing all of the possible results of a short sale. What do I do to limit the liability for myself and my broker?"  Wow, great question, and I applauded  him for thinking so far ahead!

Unfortunately, no one is "sue proof" and I am not an attorney. Here are my best two suggestions to you (both covered in more detail in my Michigan Short Sale Con-Ed Course):

One

Keep your sellers' interests in mind beyond all else, provide the best service you can, and constantly communicate with them. In short, keep them happy and listen to them! You probably already do all of this, but it's even more important for a short sale.

Two

Work with your attorney or your broker's attorney to create a document that completely discloses everything. My attorney will not allow me to share my 8-page disclosure with the general public.  However, all of our Inner Circle and Elite REALTORS® (and their brokers) are covered under this 8-page disclosure.  Here are the items covered in it to get you started.  All of these items are disclosed to, and acknowledged by the seller:

  • Other Things They Tried Before Listing With You
  • There's No Equity
  • If Short Sale Fails, Still Have Foreclosure & Still Be Liable For Debt
  • If Get Short Sale Approval, Still May Have: Deficiency, 1099-C, Promissory Note, Cash To Closing
  • They Will Move Out Before Closing
  • If Balance In Escrow, Lender Will Likely Keep It
  • Can't Buy Back House Or Live In House After Closing
  • It's Ok To Share Their Personal Information With Whomever You Think It's Necessary To Get Short Sale Approved (Title Company, Lien Holders, Etc.)
  • Bank May Approve Short Sale Then Change Their Mind (Rare, But It Can Happen)
  • You're Not An Attorney Or A CPA (that they may want to consult one before signing anything)
  • You're Giving Them Copies Of Everything Signed Today
  • They're Still Responsible For Making Payments And If They Don't, They May Still Have A Foreclosure & Still Be Liable For Debt
  • Just Because You've Listed The House Doesn't Mean The Foreclosure Will Be Stopped

Dedicated To Your Success,

Joel

Short Sale Negotiations: you earn FULL COMMISSION and no fee to buyer/seller - www.GreatLakesShortSales.com

Comments (3)

Melissa Hailey
North Texas Top Team, REALTORS (Plano, Murphy, Wylie) - Plano, TX
Collin County Realtor-Lucas, Murphy, Plano, Parker

Thanks for the good information - and for the Active Rain blog post.  It's so good to learn from other professionals like yourself.

Apr 06, 2010 05:06 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi  Joel,  Pretty complete list !  Desperate people .....   Best to take very specific written notes and keep everything in a file.

Apr 06, 2010 05:09 AM
Stephen Arnold
HomeSmart Elite Group - Scottsdale, AZ
CRS, GRI, SFR

Sound advice here Joel!!  It is so important to be the source of the source with these transactions!!

Apr 06, 2010 05:52 PM