Short sales, what’s your issue?

Last Friday, I taught a continuing education seminar to a bunch of lawyers in Philadelphia. The title of the course was Real Estate 101… but the course quickly went off course and into deeper waters. Not unlike seminars that real estate licensees attend, continuing education classes for lawyers can become rather involved when the participants start asking questions.

One of the topics of conversation was short sales. Like real estate licensees, attorneys generally understand the problems of negotiating with lenders to get a short sale approved – they don’t respond! Other than simply getting the sale price approved, there are other key factors to be identified and discussed with the seller. Are there other junior liens on the property (maybe a seller who is selling short wants to get a title search on their own property?); are there judgments that have been recorded against the property? What is the deficiency amount and will the lender reserve the right to pursue the seller for that amount? How much debt is being forgiven and what are the income tax implications to the seller?

These are all critical factors that need to be discussed with the seller, preferably BEFORE they list the property for sale! If you have successfully navigated several short sale transactions from start to finish, you are likely aware of these – and other – potential pitfalls that lay ready to snare the unwary!  The attorneys in my class concluded that if you’ve never done a short sale before, it’s wise to work through one or two with an experienced practitioner before venturing out on your own…

Some advice is sound no matter WHAT your profession…