Review Important Purchase Contract Details With Lender
As a realtor, you have a scope of services that you can provide to a seller: listing the property
, marketing and showing the home, negotiating with buyers, filling out the purchase contract. However, short sales transactions have tax, credit, and legal consequences. A good place to start would be to have your seller look for answers from trusted sources, such as the HUD web site: www.hud.gov. This website has general information about the consequences of a short sale.
Each short sale transaction is different. Because of this, it is important that a seller consult with the appropriate professional to discuss their specific consequences. Advise the seller to speak to their tax preparer to discuss the tax consequences such as the 1099-C form or capital gain issues. The seller should also consult with an attorney to discuss issues such as foreclosure vs short sale, to review of the short sale approval letters, to respond to seller contribution requests from the lenders, and to handle any deficiency judgments. Finally, it would be a good idea to also consult with a credit expert, especially if the seller has a desire to rebuild their credit, and qualify for a home loan in the future.
Absolutely do not ever give advice outside of your area of expertise. It is best that the seller receive professional advice before you even list and market the property. Now the accountant or attorney may advise the client that it is not in their best interest to pursue a short sale, and the best service you can provide is to decline the listing opportunity. You do not want to waste time marketing the property, find a buyer, manage the short sale process only to find out shortly before closing that the buyer has been advised against doing a short sale.
Final tip have your seller consult with their lender to explore the possibility of loan modification, before you start any marketing activity on the home. When the seller has fully explored loan modification, and learned that they do not qualify, they are able to emotionally detach from the home, conclude that a short sale is their best alternative, and do their best to help you with the short sale application. By exploring loan modification first, you also protect the homeowner from the various save you home scams, where companies charge an up-front fee promising to save the home from foreclosure, and then running away with their cash.
Look out for our future blogs/articles from our Short Sale Leadership Series content.
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by: Art Lee
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