CA Short Sale Myths
Short Sale Myths we hear from California Sellers looking for a Short Sale Realtor
1. If you hear a Realtor tell you, you can’t do a deed in lieu or any other workout besides a short sale when you have two loans find a new advisor. Having two loans can make a deed in lieu, a short sale or a short payoff more complex but if you have the right strategy you can frequently achieve your goals if you sequence your strategies properly.
2. “Our in house lawyer will take care of it”. I have seen the contracts drawn up by in house lawyers. They are very protective of the brokerage. Ask to speak with lawyer before you sign a listing agreement and ask the lawyer to send you a retainer agreement detailing what he or shew will do for you. An in house lawyer is not your lawyer. You need a retainer agreement with your lawyer.
3. “The deficiency is taken care of in escrow”. Wrong, run for the hills. I heard a realtor say this a few weeks before he made a very expensive mistake. Deficiencies are not taken care of in escrow and Realtors are not licensed or trained to review or negotiate contracts dealing with lien releases and loan balance releases. While attending Broker license renewal training, we were told that Realtors are not licensed to go over the terms of the escrow contract with their clients. If Realtors are not competent (licensed) to go over the escrow agreement in a standard sale transaction, how can they even consider reviewing the short sale escrow instructions with a seller? The difference between a solid release and an ambiguous one could cost you a lot of time and effort and credit in the future. We understand CA short sale law protects you. But, we urge you to make sure your short sale approval language mirrors California law. It does not happen all the time but collection people did sometimes hound people after short sales.
5. Short sales equals release from a deficiency. Yes. And No. I believe you should strive to have language releasing your from a short sale. Law can change. Especially this time since banks will argue they were not at fault for this crisis.
6. You should turn over your financial information to the lenders loss mitigation department. Maybe. If you have assets and you have recourse loans you may not want to give collection departments at banks a road map to your assets.
7. Short Sales are better for you than a deed in lieu. Probably if they are successful. Probably if you don’t have assets to protect. But, not always.