Realtor is a designation for a fee and while they are supposed to adhere to a “higher” standard it does not address competency!

I can agree that legal guidance is important but again I feel as though tax consequences and exposure should be addressed before any loan mod or short sale is considered.

There are MANY options for homeowners seeking help. The FREE options simply MUST be made available to the general public as OPTIONS. Some will choose to go the “free” route. Others will choose to hire an attorney, others will choose to hire a competent real estate agent.

I have had attorneys talk me OUT of spending money with them. What they do, is they lay out all the possible consequences of, for example, going to trial v. settling out of court. An attorney knows that he/she is in a higher position of knowledge (about the law) than the average random consumer. Because of this, the duties owed to the consumer are higher than, say, an independent third party short sale negotiator which is what you sell.

So I am clearly on the side of homeowners exploring all costs of third party help.

I have found that hiring an attorney (WHO HAS HIGHER DUTIES TO THE CONSUMER) is often LESS EXPENSIVE than hiring a third party negotiator, plus the consumer has the advantage of receiving legal counsel.

Here is how the choices stack up from my perspective:

Do it yourself: Free
HUD Counselor: Free
Free legal aid (for those who qualify): Free
Hire a Realtor: Commission owed but negotiation can be done BY the Realtor for the same cost as the commission
Hiring an attorney: Less expensive than you’d think.

Hiring a third party negotiator: Sometimes MORE than legal counsel without the higher duties, and the the homeowner still has to pay Realtor commission on top of this fee. A poor choice, in my opinion.

Hands down, I believe homeowners are far better off hiring a competent Realtor to negotiate with the lender as well as hiring legal counsel in order to understand all the short sale paperwork, and all their legal options.

The ONLY time a third party negotiator is worth their fee is if it is coming out of the Realtor’s commission.

Consumers hire Realtors for their negotiating skills and for the knowledge and experience. With this lacking, surely a third party negotiator can pick up the slack…..for a fee….but this still does not negate the consumer’s need for competent legal counsel to understand all the possible consequences of a short sale.

Try calling HUD, ask for a counselor and see what the level of service actually is! Have you ever filed a complaint with the BAR association.

Ok, so in the real world I have rarely seen an attorney pass up business. I realize the higher end Attorneys may indeed refer to another but most will take business where they can.

Free legal aid is predicated on funding availability and again the expertise of those attorneys. I will agree with you that seeking advice is imperative to sound decision making.

Please call 211, HUD, Neighborworks (the ruler of the CRA…community reinvestment act…monies) and the other “free” service providers. I think you will find that you “got what you paid for” in most cases!

Not so. Consumers can file complaints with their state Bar Association.

“I find it very interesting of late that very few attorneys have the knowledge base to provide information yet, it seems as though passing the Bar was their ticket to becoming an expert in every arena.”

The other reason why attorneys are better than unlicensed, unregulated short sale negotiators is because attorneys REFER clients to other attorneys who ARE specialists when they are unable to help a client.

“Even paying an attorney for advice may have been the wrong decision when it comes to feeding their families!”

I fail to see how this would be true. If a homeowner is unable to afford legal counsel, they can seek help from the free legal aid services offered by most all state Bar Associations or in this state, they can also contact the Northwest Justice Project for help with free legal aid as well. Homeowners can also seek out help from HUD-approved counseling agencies for free help with short sale negotiation.

All in all, I do not see many reasons why a homeowner should pay a third party short sale negotiator with one exception:

If the listing agent was so incompetent as to not know how to negotiate the short sale. At this point, as a homeowner, I would make sure that the third party negotiator’s fee came from the listing agent’s commission.

Ok, we can agree to disagree. I am certain that there are real estate agents and mortgage brokers far more knowledgeable in these matters than most attorneys. I realize legal advice is reserved for an attorney but the standard to which one must adhere is in question. If a non-attorney practices law without a license they face severe consequences, whereas an attorney that fails to provide correct or accurate advice usually gets paid and does not face suffer any consequences.

I find it very interesting of late that very few attorneys have the knowledge base to provide information yet, it seems as though passing the Bar was their ticket to becoming an expert in every arena.

Perhaps an IRS opinion as it pertains to an individual’s short sale tax implications would be the one most significant, long term deciding factor to consider before entering into a short sale agreement. Secondly, is there a deficiency? So a CPA or Tax Attorney or a combination of both would be the proper 1st step. Another concern is attorneys and unscrupulous negotiators charging fees up front for advice or promised results. Even paying an attorney for advice may have been the wrong decision when it comes to feeding their families!

1) As I say over and over and over again, homeowners in financial distress should not rely on a real estate agent, mortgage broker, investor, or non-profit agency (it appears as though you are all four of these which seems to be a conflict of interest to me) for any kind of tax advice at all. Especially not me, a real estate educator. Tax questions need to be directed towards the homeowner’s favorite tax advisor.

2) Homeowners in a short sale scenario need to have an attorney review ALL their paperwork prior to signing anything. This post was written just less than a year ago, prior to Washington State’s new Distressed Property Law. Today, Realtors and real estate agents are way more mindful of making sure their clients have legal counsel to explain all the possible consequences of a short sale, including WA State Supreme Court opinions that addres possible debt that survives the trustee sale OR short sale.

3) We are in agreement here. However, if the homeowner has lots of other assets, and that homeowner is also seeking debt forgiveness, these two don’t automatically go hand in hand.

4) N/A

5) The reason why homeowners in financial distress need an attorney and not a short sale negotiator is because attorneys are held to a higher standard of care towards their clients than a “short sale negotiator” whatever they are. As far as I know, anyone can call themselves a short sale negotiator with no education or licensing.

The second reason why homeowners in financial distress need an attorney and not a short sale negotiator is because the attorney can EXPLAIN all the legal documents, and explain a homeowners rights and responsibilities and advise a homeowner of all the possible consequences.

A short sale negotiator is poorly qualified to assist a homeowner in anything other than, perhaps the negotiation portion.

If the seller has chosen a real estate agent with poor negotiation skills or an agent who is unskilled at short sales, then the seller could chose to pay a third party negotiator to do the job that the Realtor cannot.

Thanks for stopping by RCG.

Although I am very busy, I will comment on some of your topics!

I have read your blog and I find numerous inaccuracies as it pertains to short sales.

These are the things people should consider:

1) Phantom Income on Non-owner occupied properties. Do you owe the IRS? If you had a non-owner occupied home, you may. Even an owner occupied property might have exposure based on length of ownership, loan amounts etc.

2) Next you need to ask do I owe the lender/investor for deficiencies?

Owner occupied and non-owner occupied property deficiencies? Deficiencies on amounts unpaid after the short sale? Yes lender/investors can and will seek deficiencies as they related to losses, especially on non-owner properties. Even in non-judicial foreclosure cases they may sell their unpaid deficiencies to a collection agency or private party for collection at some later date. Unless you get a full lien release you are on the hook!

3) Lender/Investors WILL do short sales even if you have other assets! I personally do 25+ successful short sales per month and they are not looking to make you liquidate your 401k’s etc. Lenders simply want to see that you do not have the income or cash in the bank. Even cash in the bank does not equal automatic denial for a short sale.

4) Short sales are easier with certain Lenders? True, this changes daily and sometimes, hourly.

5) Short sales have a better chance with attorneys? Ok, I may get flak for this.. False, a successful short sale negotiator needs to know in detail the subject matter and have keen negotiation skills, regardless of their having passed the Bar!

I will answer any question but not provide legal advice!

Cheers!

Randall Lowell

Would if that property in the other state (Let’s say Las Vegas for example) has been cut in half in value? In other words.. the $89K they put down is also gone? What then?

If you have the $35 the bank will want you to contribute this.

Short sales are reserved for people with ZERO assets.

If it is true that you have been a victim of any kind of fraud, you will need to provide the bank with proof of the fraud from a neutral dis-interested, third party. Just you saying “I’ve been a victim of fraud” is not going to work.

Why don’t you try re-approaching the bank with the offer to come in with a lower dollar amount, less the amount you owe for IRS taxes. You will need to provide proof of the IRS tax bill.

a short sale is far less damaging to your credit when compared with a foreclosure and bankruptcy.

It sounds like you are motivated to do the short sale. Find another attorney in your area who can help you present this to the lender again with these new facts.