I have read numerous posts about "short sale specialists" and other titles that denote a prowess in negotiating short sales. I wanted to provide some perspective in this area because there are problems on the horizon and many do not see this coming. It may not be prudent for the listing agent to negotiate the short sale. In Orange and Los Angeles Counties, California, there are over 4,000 lawsuits against agents that unsuccessfully negotiated a short sale and the home owner filed a lawsuit. Personally, I feel that the home owner has to take personal responsibility for the situation, but we all know that in these litigious times, there is no personal responsibility.
I also realize that frequently the failed short sale is a result of the home owner not complying with the requests made for them on their behalf. I have had clients refuse to provide financial information out of a misguided fear that this will create a streamlined process for the bank to seek a deficiency judgment.
I have encountered many real estate professionals that believe they were either providing full service for their clients in negotiating the short sale or who were afraid of losing control of the deal. Neither of these scenarios are valid for negotiating the short sale for your clients.
Instead, it is prudent to have a third party negotiate for you. First, there has been proposed Federal legislation to prohibit anyone with a financial interest in a home or sale to negotiate the short sale. This would include all real estate professionals in the transaction, AS WELL AS the homeowner!! Second, having a third party negotiate for you presents a more professional approach because the seller is turning the negotiations over to an experienced third party. My experience is that lenders prefer this approach. It is also my experience, that an average turn around for my short sales is only 75 days. This is much faster than industry standards and it is not necessarily due to my experience, but rather, a unified approach that incorporates a professional approach to the lender. I do not recommend under paid processors to negotiate the short sale...only experienced professionals should be on the phone with the lenders mitigation specialist.
The final reason for utilizing an experienced third party negotiator is an attorney favorite: liability. I have NO doubt that you will soon see attorneys on late night television ads promoting the theme of "HAVE YOU LOST YOUR HOME IN A FORECLOSURE SALE AFTER AN UNSUCCESSFUL SHORT SALE?? Yes, it is coming, trust me. The lure is too powerful for many Plaintiff litigators. The pool of clients is huge and growing daily. The REAL concern is that many (most) Errors and Omissions (E&O) policies MAY NOT provide coverage for this loss!!!! You REALLY need to check this and be certain that your brokers check this as well!!! They will be named in any litigation too and they may not have coverage either.
As an aside, I am a bit appalled at the practice of title companies negotiating short sales. Their employees are not accustomed to negotiating anything and my experience with them is very poor. I refuse to utilize title companies that are offering this service. I know that all of this will be blasphemous to many...but it is my opinion as a result of a lot of experience and we all need to be careful in this day and age...
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