Wondering if any of you have a document in your office that you would be willing to share, that spells out what the minimum office requirements an agent must have in order to list and negotiate short sales.
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I have attempted over the past 2 years to get my broker/owner to recognize the legal liability he (and all agents involved in short sales) may be unwittingly agreeing to accept by being involved in short sale transactions. It is hard to get realtors with limited exposure to short sale details to understand that a closed short sale transaction may NOT be a successful transaction!
Unlike California, North Carolina does not have an anti-deficiency statute. Homeowners who have completed a short sale are only as protected as the language in the approval letter. I have personally observed many instances where short sale homeowners were given bad advice by not only realtors, but attorneys as well. We live in a time where everyone is "specialized" and there is so much information out there to digest---especially where short sales are concerned. The financial institutions are still evolving in the development of their strategy and as a consequence, their guidelines and policies are changing frequently. Real estate attorneys, bankruptcy attorneys, and accountants are making the same mistake as realtors....short sale transactions are not part of their core business but are seen as an additional revenue stream. Therefore, they have a cursory understanding of the short sale with regard to their discipline and dispense advice from a position of relative ignorance.
Just last week, I had an attorney tell me that the approval letter my client received was strong enough protection since it specifically stated that the Deed of Trust would be cancelled and a 1099 would be issued. Nowhere in the letter did it say that the Promissory Note would be cancelled, which is the instrument that establishes the existence of the debt. The Deed of Trust (in my state) simply lays out that the property is collateral for a debt and if the debt is defaulted on, how the note holder can foreclose on the collateral. A 1099 is an IRS instrument that notifies everyone that income (cancelled debt) has been received by someone. The investor/note holder writes off the debt (bad debt), subtracts it from income to determine the "NPBT" (net profit before taxes), and determines the amount of income tax will be due for their company. The 1099 alerts the IRS that the receiver of the 1099 (homeowner) may owe taxes, depending on the circumstances of the taxpayer.
The promissory note would still "exist" and the entity that owns the note would be able to sell it in the future to a 3rd party who would then own the debt and all of its collection rights! If a collector shows up in a few years to collect on the debt, who is the homeowner going to look to for as we try to determine whose fault this is? The attorney? Maybe. Where I come from, they have a saying: "shoot them all let God sort them out."
The potential future liability with regard to the deficiency after a poorly worded approval letter is simply laying the groundwork for significant legal issues in the future. The "cross" disciplines needed to help a homeowner complete a "successful" short sale is, in my opinion, way too important to be ignored by any of us in this profession. Even though most of us started out learning on the fly (and if you are like me, in the beginning I was willing to accept what I was told by the servicer/investor) does not mean that the way we gained our experience should be the standard for realtors who now want to "guide" a short sale transaction. There is more information available now. There are many of us out there that have many, many of short sales under our belts and who have learned from our mistakes. Our experience is valuable and should be recognized as such. We have been in the arena longer and have the scars to prove it.
Having a CDPE, SFR, etc. is definitely NOT a recipe for understanding a short sale any more than sitting in a garage makes you a car. I have just about all the designations you can have and each time I deal with a different servicer, I am reminded how quickly things change and how grateful I am for my experience that allows me to continue to keep things moving forward toward a good outcome for my client. I can move through the process with the patience because of the instincts that come only from experience.
So I read, I study, and am a part of groups such as this so that I can better, and with good conscience, guide my distressed clients through the "goat rodeo" that is a short sale. This in NOT business as usual. There are realtors out there now who are truly experts in the short sale transaction in every sense of the word. And in my opinion, any Broker/Owner who does not require a standard of competence in this type of transaction is going to be part of the cast of characters for the next part of this play.
Jeff as a KW agent I have to say that the policy is only as good as the ALC members who make it. Just my little rant but I am a little tires of agents who have been "given permission" to list a short sale calling me and asking me how to do it. Not asking a specific question, but how to actually do a short sale. I am in favor of mentoring even though I was originally self taught. However when I first started short sales there was more time, no Equator, no co-op, no HAFA, etc. There was just not as much to learn as there is today.
So I say the policy should be work with another agent till you learn how to do it.
Marcy Moyer I feel your pain for sure :) I call those agents askholes..........
The ALC can put together a training program for these agents for sure but should not be able to make a rule that affects their business. That could get out of hand fast, especially with some of the dysfunctional ALCs out there.... In my area, there are very few of the top 20% on the ALC anymore
Marcy I do not disagree with you but where does it stop? The solution to the agent calling you asking for advice is really easy, tell them to "call the broker" or "call your teamleader" because that is their job. I moved out of the office because of that very thing and once I started telling them to call the TL, the calls stopped.
This is just the beginning of the "elite" or ALC agents making policies that affect agents business. Not the ALC who should be deciding who is "qualified" that is a broker/TL/OP issue.
Does the ALC need to make a policy stating that agents have to go thru Mike Ferry training in order to call FSBOs and Expireds? Do they have to take Mike Mahers 7 levels training before they are given permission to call their sphere and cultivate referrals? I am also tired of agents who don't follow up with their sellers but it is not the ALC responsbility to determine what it takes to be able to work short sales, listings, buyers, etc.
Just my 2 cents, I appreciate your thoughts.
BTW, take a look at the average ALC and tell me if those members are even qualified to make these rules. The face of the ALC has changed over the years as the top 20% agents have moved away from ALC to run their own business. I know a MC that has an ALC member who will close one deal this year.
Our company will not allow an agent to list short sales unless they have completed the CDPE course and taken an additional 8 hour short sale class put on by the company which further covers California-specific laws and forms. Agents representing only buyers in short sale transactions only need to take the 8 hour class.
Wendy Cutrufelli, is that a broker requirement in your office? State specific law class is a great idea as is any education for sure.
Contrary to what it sounded like in my previous post :) I do wish that there were a short sale license required to do a short sale over and above just getting a real estate license but then again I wish our dues to be a realtor were MUCH more expensive and wish that our educational requirements just to have a license were much more stringent.
I am just not a fan of my fellow agents (ALC in KW) passing rules that affect others business in a negative way.
It is a broker requirement for all offices within the company and is closely monitored. Additionally, our bi-annual legal updates also review the latest short sale "hot topics". A side benefit to the policy is that it results in a group of agents who can share short sale best practices, lender contact information (like a mini Short Sale Superstars) and give an early "heads up" for the short sale schemes that continually seem to pop up.
Good stuff, thanks for sharing.
What have you seen this do for your office? How many agents actually work short sales in your office and what has it done for the success %
Wendy - Does your office charge for that 8 hour class ?
No charge for company class.
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