Several months back, I took on a client that wanted to buy a new home but walk away from her old one. Sadly, this is not uncommon in these times but as I relayed to her, a foreclosure would result and might not be her best option nor would she be able to buy a new property unless the ownership of the old one was resolved.
After weighing various options, it made sense for her to speak with a real estate law firm that specialized in short sales. Who better than someone with that experience to advise my client on how to resolve her predicament? My client scheduled an appointment and requested that I accompany her. She was provided with a questionnaire in advance and submitted it to the firm (which had a good reputation) for the preliminary assessment. Based on the information and the consultation, my client was advised that she was in a good position to consider a short sale.
So, we listed the home at what was supposed to be a competitive price. However the house sat. And it sat. We reduced the price---reduced it again and made a deep cut again. The third time was the charm and we were so excited when 6 visitors showed up within 72 hours and then received a clean and uncomplicated offer. The timing couldn't be better as a Notice of Default (NOD) showed up on the house.
The offer was submitted to the law firm, which we were going to employ as a third party negotiator on a contingency fee basis (no funds owed unless they got results.) They bounced the offer and we were told that it was not within an acceptable price range per lender guidelines. What?!! This was never mentioned at the preliminary consultation. Neither the seller nor myself recalled being told that they would reject representing the seller if the price fell below a certain threshold.
However, as another broker said, it is highly likely that some real estate attorneys are engaged in cherry picking the short sales. This firm has prominently featured itself in our community as an expert on short sales. They have a weekly radio show and probably have more business than they can handle so they can take on only the short sales where they have the highest degree of success. Sadly, they did not tell us they turned down representation when it fell outside their internal guidelines but as I began to dig, I found out that this was not unusual and others have had the same experience.
Would I steer people away from this firm in the future? It really depends. Another client was able to go through the assessment and find out about loan modification options from the same firm. They will likely be able to retain their property thanks to their interaction with the same firm. Also, we were able to put together a very complete packet on behalf of the client well in advance of the offer because the attorneys were so persistent with my client to get what was needed up front. However, it's clear that we cannot unequivocally count on these firms to do right by our clients and must use due diligence even when they come highly recommended.