If you consider yourself to be a candidate for a short sale, a critical task will be obtaining the best available real estate and legal advisors to guide you.
This is not a time to make snap judgments about the quality of counsel you retain, says Neil Garfinkel, founder and partner with the New York City law firm of Abrams Garfinkel Margolis Bergson LLP, specializing in foreclosures and short sales. "People are desperate, and they sometimes allow desperation to cloud judgment," he says. "That's something you have to strive to prevent. You have to keep as clear a head as possible, and be as diligent as possible. You're making important decisions here, and they can affect the rest of your life."
Experience, experience, experience
When choosing a real estate agent on either the sell or buy side, one of the most fundamental issues to ask about is experience, says Mike Golden, co-founder of Chicago's @Properties real estate brokerage. The agent you choose should be experienced in short sales, and able to take you step by step through the process, explaining how long it will take and your role at each stage, he says.
One way to determine the level of expertise is to ask about education and certification, says Alex Charfen, CEO of Austin, Texas-based Distressed Property Institute, the national body certifying real estate professionals with the Certified Distressed Property Expert (CDPE) designation. The institute (www.cdpe.com) has certified more than 23,000 agents, and is the largest independent education organization with certified short sale agents. The fact that agents have sought specialized training demonstrates they are serious about short sales, he says.
Sellers should also ask how the agent plans to market the home. The answer should be that the marketing effort will be as or more rigorous than that for a traditional sale, Charfen says. "The reality is they must be doing everything they would with any other sale," he says. "They should make sure the property is in the MLS, that there is an online presence, that photos have been taken, that there is a virtual tour and there is a cohesive marketing plan for the sale of that property. The answer shouldn't be, 'We just use the best price to get attention.'"
Buyers should ask real estate agents how many short sales they've completed, and in how many they represented the buyer. They should also ask them to explain the different processes in buying in a short sale as compared to a standard sale, says Pat Kelly, broker-agent with Realty World All-Pro in Chicago.
Get the comps, financing
Before a buyer makes an offer, he or she should also ask the agent for a market analysis listing prices of at least three properties similar to the one under consideration that have recently sold or are for sale in that area, Kelly says.
"That allows you to know whether you're bidding high or too little," he adds. "If you are really motivated to buy, you want to make your best offer."
In working with lenders, buyers need to be approved, not just prequalified for a loan, Charfen says. "What we really want is a pre-approval these days. That expedites the process... Even if you are approved today, the programs are changing so rapidly that you might not be approved tomorrow. You want that lender to do everything they would to close the deal, and use a high level of care in getting you approved. So the question you want to ask is, 'Will you pre-approve me, rather than just prequalify me?' "
As in other real estate transactions, retaining a qualified lawyer is not just advised but essential. The first question to ask of attorneys, Garfinkel says, is whether they specialize in distressed properties. A lawyer may be a real estate attorney, but not be specialized in foreclosures and short sales, he says.
"We sometimes see people going to a divorce attorney for a real estate transaction," he says. "You're best served asking attorneys if they specialize in this area, and there's nothing wrong with asking them for references."
Not that there is anything ill-advised about trusting your gut instincts. As you talk to the attorney, does he or she sound very knowledgeable about this topic?
In addition, do you feel you have a rapport with this lawyer? Did he or she return your call in a timely manner and assume a professional demeanor? All these issues are important to consider before making a choice, Garfinkel says.
Finally, ask the attorney for a retainer letter. Have the attorney spell out their fees, whether those fees are by the hour or a flat fee, and how and when they will expect payment. "Sometimes the retainer letter will go into tremendous detail, and other times it will be just an overview," Garfinkel says. "But if they're not willing to put it in writing, you probably don't want to retain them."Copyright © 2015, Los Angeles Times