Short Sales: Legal Pitfalls and their Solutions
Reprinted from REALTOR.org/realtormag Law & Ethics April 2009
Comments in italics written by the Short Sale Queen®
July 2009
In many areas, short sales are the biggest game in town. But you don’t want to jump into this niche willy-nilly. In addition to educating yourself on the ins and outs of these complex deals, you also need a good picture of the legal risks that exist for you.
There is no reason why any of these so called Pitfalls have to negatively affect us as real estate investors and double closers. We are making money disclosing and playing ethically, there is nothing in here that I do not include in your manual, coaching calls or when I personally talk to my Seller. If all of these explanations and pitfalls recovery option are not included in what you tell your seller now, CHANGE WHAT YOU SAY TO YOUR SELLER. There is no reason why you can’t do as many deals, make as much money but disclose to your Buyer, Seller, Title Company, Realtor, etc. and be honest, ethical and moral with all your clients!
Facilitating transactions not listed on the HUD-1 form.
It’s not uncommon for investors to offer incentives to sellers to move a deal forward, but lenders typically frown upon sellers who walk away with money when they’re supposedly taking a loss. Investors sometimes work around this limitation by offering to buy something from the sellers at an attractive price, such as a couch for $5,000. Associates who communicate these offers to sellers can get tied into charges of lender fraud because the deals may be deceptive.
SSQ: Offering cash to a homeowner to get them out of the house is not unrealistic in today’s market. Your sellers may need that cash to move out or rent another place to live. Don’t be ridiculous in your cash payments. Saying you are paying $5,000 for a couch is ridiculous. If the bank was ever to follow a paper trail and found that, you could be accused of fraud. Write a check to the new apartment complex, pay REASONABLE fees for items. There are too many deals out there to have to break the rules.
Come to Short Sale Queen to discover the ethical, legal and moral ways to get avoid Legal Pitfalls and short sales obstacles and make more money in the next 12 months than in your last 12 years!
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