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Eric
Before I take a short sale listing, I always ask the seller if he has consulted with an attorney about his options, discuss the effects of each option. And if hasn't yet. I will refer him to an attorney whom I know is very knowledgeable about short sales, bankruptcies, foreclosures, and most anything real estate related.
The sellers do...and then they tell me that what they are told merely validates what they are about to do: short sale.
However, they also tell me that they are asked (or offered) to work with the attorney in managing the short sale process. That's fine -- they can do the negotiating if that's what they want to do, for a fee of normally around $1,500. But the property still needs to be listed (by a realtor), actively marketed on the MLS. Unless the attorney is also a realtor, the seller will need a realtor to do this piece.
Realtors market the property for sale, attorneys can work on the negotiations. Sounds fine to me.....except many realtors are also adept at negotiating short sales.
I had a case last month that I referred to an attorney. It's the very first one I've had that fell to foreclosure.
She insisted she was an expert and her referral source, a commercial broker, said so. She could "talk the talk."
Turns out she didn't even know from which department to get the appropriate information she needed to advise me/client. She accepted the word of the Loss Mit department that there was no Foreclosure Date when she should have been speaking to the Foreclosure Dept. I had an offer that was acceptable to HUD on the day before the Sale, and she told me "don't worry." They've postponed the sale date." Nice!
She might as well have been working for the bank. Yes, I'm sour on attorneys. I hope I find one that will redeem them. Meanwhile, I'll handle them myself except when required by law.
Just like realtors, there are a lot of bad attorneys out there...I have seen a lot of damage caused to clients from following lawyer advice that was spoken out of ignorance or self interest. The problem is the consumer generally believes the lawyer is the ultimate reliable source of information, when that is just not the case. If a lawyer is not well versed in short sales, they shouldnt advise in that area, but they will anyway and the client will ultimately believe what any lawyer says over a realtor.
And if I had a dollar for every time one of my clients was told by an attorney that the best solution to all their woes was to just file bankruptcy and let the house foreclose...I'd be a rich woman.
Or even worse when my clients will go to mediation ( CT is a judicial state and we have this service for jomeowners ) and then ask THE BANKS FORECLOSING ATTORNEY for advice on their short sale. Oh good lord. I have actually fired clients that took that attorneys (completely misguided) advice against mine. UNBELIEVABLE.
That one kills me the most.
But I guess Im getting a little off topic. I feel your pain, and totally agree.
Most of us here are realtors. My view is that most people are not doing their best to deal with the new market. And this includes many realtors who don't like short sales and still list short sales, allowing their clients to go to foreclosure and holding fellow realtors on deals that are not going anywhere. Not to mention the short sales with 3 offers and more still on the market. Hello.... you don't know how to play, don't play!
I would expect the big brokers to step up and show the better way to do business in this new market. But I guess most people still don't get it...
There are many attorneys that are just involved in what is being coined as "Foreclosure Postponement Law" frivolous lawsuits against the banks and trustees or using bad techniques with shell corps in chapter 11. They know full well that they are only effective toward delaying the inevitable. These attorneys are killing the homeowner vision of acceptable workout solutions. Also I would challenge any attorney who is doing home loan modifications to stay in strict compliance with CA SB 931 even though they aren't entirely subject to it. We are attorney and broker based and will not charge until the modification is done. We've done it long enough that we can pre-screen with our knowledge of each investor's guidelines. We wont take it on unless we think it will get done. If for some reason it can't, we feel it is a disservice to the homeowner to keep fighting a losing battle. We'll screen for any bank errors before making a determination of resubmitting. If an agent has brought the homeowner to us we will then return them to do a short sale with that agent. There is enough business in being responsible and identifying the probable from improbable for homeowners. Business owners should be thinking about putting the client in the best possible situation to rebuild, it will only cultivate more return business.
See below for our website references to back up claims of our standards
http://equitableres.com/realtor-asset-retention.html
http://equitableres.com/mortgage-loan-modification-los-angeles.html
Just like there are bad agents, sellers, and negotiators...there are bad attorneys. BK attorneys are the worst, they love to tell sellers to just walk away.
I have found more than a few instances of misinformed attorneys giving the wrong advise. One of my clients was told that when the bank finds out the home owner wants to short sale they will start the foreclosure. Another was told, that no one is buying short sales, and yet another advised her client not to short sale his primary home because he would be 1099 'd, Another lawyer did foreclosure defense and after it failed and there was a sale date, my client asked him about a short sale and the attorney told him he knew nothing about short sales and to pack and move. And, the last example I can recall is an attorney telling my client to let the banks foreclose and then file bankruptcy to wipe out the deficiency. All of these except one (he listened to his attorney) was a successful short sale with a full release of deficiency plus a few received HAFA or incentive money to boot...You can read my blog at www.AskAboutAshortSale.com
I find the biggest mistake attorney's make is advising Bankruptcy prior to attempting the Short Sale with a deficiency waiver. However if the home owner has other debt, then a bankruptcy may be necessary. Also I was told that the bankruptcy should happen prior to the foreclosure for best results. From what I have seen they seem to really push the 'File Bankruptcy' issue on distressed homeowner.
However, since you are not an attorney, you can not give legal advice and you might just have to sit on the side-lines and watch. The attorney might even charge the home owner $1500+ to do the short sale. Sad, but it happens all the time. Homeowners often trust attorneys/lawyers/liers above everyone else.
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