Hi there,
I have a property that is rented out (because I wasn't able to sell before) and am looking to start the short sale process. I was wondering if any one had any advice regarding my situation.
The main question is based on whether or not I should hire an attorney for $500 flat fee to work / negotiate my short sale... or save the money and work with my realtor who has experience with short sales.
Is there value in having an attorney involved? Does it get me a better chance at successfully navigating and expediting the process?
(Some more details: I am current on the mortgage but only because the tenant offsets some of my loss. The tenant is moving out so time is very important. I know that being current does not provide the best leverage.)
Thanks for your time and help,
JD
The service agreement is open-ended and and is really a fee for them to submit documentation. It is not what this agreement says, it is what is does not say and this is why it is open-ended and really is not an agreement but a disclaimer.
Since Florida is a deficiency state, you will likely have a judgment against you unless you can come up with an amount sufficient to make them waive their rights to file against you. I have a lot of experience with CW and they are not pleasant to deal with.
In my experience, CW will not subsititute a promissory note in place of a deficiecny judgmment. A judgment has more teeth and is worth more on the secondary market for debt collections.
Unfortunately, you are between a rock and a hard place. I believe the short sale is the lesser of two evils. Your deficiency will likely be smaller and if you can bring some cash to the closing table and hire a strong negotiator, it is possible to settle without a deficiency judgment.
Good Luck!
$500 for an attorney to work a short sale? Either that attorney is desperate for business, or there is some fine print you should closely scrutinize. My attorney charge $300/ hour and it take much longer than a couple of hours. Sorry, but I am skepticle.
A REALTOR with experience in short slaes is probably a better choice since you pay nothing. I would have the REALTOR produce actual closings where they were able to seek a deficiency waiver and avoid a seller contribution.
Fact is, most agent will not offer to protect your interests post-sale. That is mainly due to the fact they really do not negotiate they just submit paperwork.
Under neither sceanrio will you have what you really need an instant offer from a qualified buyer.
Good Luck!
Hi Scott,
Thanks for your reply! It got me thinking and I re-read the retainer agreement again with your comments in mind. I've copied the "Services" and "Retainer" section below.
I think it comes down to that I don't really understand what their definition of "negotiate the terms of the short sale..." is... considering they say "Postclosing deficiency negotiations requires payment of additional fees..."
Do you have any thoughts on what they are truly offering? (like just sending in a package of my documents?)
I will ask them too, but any other interpretations would be very appreciated. I never been in this situation before so I might not know the right questions to ask.
Thanks for your time, JD
***
Services. In connection with the Firm’s representation of you, we will provide the following services: (a) negotiate the terms of the short sale with the lender (Please note that the Firm cannot guarantee the success of short sale negotiations. The acceptance of the terms of the short and subsequent release of liability is at the sole discretion of your lender. Also, please note that if the lender declines the terms of the short sale that the lender may pursue a foreclosure action against you and the foreclosure will not stop and will proceed with a sale date ultimately being entered and the property being sold at public auction if some action is not taken by you to resolve the delinquency with your lender); and (b) providing all title work for the closing. Postclosing deficiency negotiations requires payment of additional fees and is not covered under the scope of the short sale flat-fee.
Retainer. It is the Firm’s practice to require a retainer when we undertake a new representation; a flat fee deposit in the amount of [FEE///$500.00] will be required for the Firm’s representation in this matter. This fee represents the Firms’ fee to negotiate the terms of the short sale; accordingly our fees cover all of the above services. Our representation does not include any additional services not listed in this letter. Representation of any foreclosure action is not included under the terms of this retainer agreement. We will not bill you any attorney fees without your further express written consent.
***
Have you spoken with anyone about the possibility of actually getting a short sale on this property? I would do that before paying anything to anyone for this deal.
Specifically, this sounds like an rehab or your primary residence gone bad. You turned it into a rental out of need. Do you have income or other assets? Do you have some hardship that's leading to the short? The verbage above specifically doesn't guarantee success. The best chances of success are a owner selling their primary residence who have some hardship, limited income and no assets. The worst chances seem to be an investor who's underwater and losing money, but who has good income and has assets. If that's the case, the bank is going to want some money from you, and paying this lawyer $500 would be a waste.
Hi Jon,
I've spoken with a realtor who works with short sales and also that attorney (through a free consultation). They are unaffiliated parties at this point - and both said it's possible (I suppose anything is "possible" though).
It was my primary residence outside of Tampa, FL, a few years ago in 2005. I moved for a job across the country shortly after the purchase, and it coincided with the beginning of this awesome market where I wasn't able to sell it at the time.
I come out of pocket a large amount each month because the rent never covers the costs... and it's getting hard to keep floating myself along. First tenant busted up the place a bit and I had to bring it back up to good condition. The current tenant is moving out next month - which will accelerate my disappearing money.
Asset-wise, I have a small amount in 401k, my car, and a little bit of savings.
It's a Countrywide (BofA) loan. No seconds or anything else.
I would love to hear your thoughts; it's all a bit overwhelming. This has all been quite an education. Thanks for your help and time.
I'd also have to give that an "its possible". You do have a hardship. And the lender's are well aware values in FL have tanked. I hear BofA can be a bear to deal with, though. You may well have to accept a promissary note for a small slice of the forgiven debt.
I don't think I'd spend the money on an attorney. Start the discussion with BofA yourself. Have your agent get it on the market at a price that will draw a quick contract. I'd say "I'll give you a 90 day listing, price it to get a contract very quick." Once you have a contract in hand, the may be more willing to have a chat. I'm sure others can add their two cents, but I'm not sure what an attorney adds to this situation that justifies the $500 (at least) cost.
Even if this does work, its likely to take months and months.
Yes, exactly. You agree to pay back a small portion and they forgive a larger chunk.
Be sure to discuss this whole situation with your CPA as there may be tax consequences. Forgiven debt is normally treated as taxable income. There are some exceptions which may apply.
The service agreement is open-ended and and is really a fee for them to submit documentation. It is not what this agreement says, it is what is does not say and this is why it is open-ended and really is not an agreement but a disclaimer.
Since Florida is a deficiency state, you will likely have a judgment against you unless you can come up with an amount sufficient to make them waive their rights to file against you. I have a lot of experience with CW and they are not pleasant to deal with.
In my experience, CW will not subsititute a promissory note in place of a deficiecny judgmment. A judgment has more teeth and is worth more on the secondary market for debt collections.
Unfortunately, you are between a rock and a hard place. I believe the short sale is the lesser of two evils. Your deficiency will likely be smaller and if you can bring some cash to the closing table and hire a strong negotiator, it is possible to settle without a deficiency judgment.
Good Luck!
Thanks for all your feedback and advice. I really appreciate your time.
In your last reply, you mentioned that if I can bring some cash to the closing table and hire a strong negotiator, it is possible to settle without a deficiency judgment.
I know you operate in Arizona, but was wondering if you had any connections to any negotiators you trust in Florida (around Tampa?) that you could point me in the direction of?
Thanks again.
If you still need negotiations for short sale you can PM me for attorney performed short sales negotiations with coordinations, tracking system FREE for Sellers and RE Agents, more. You don't need local or in state negotiator, but anyway we are in Jacksonville.
In FL. I will suggest you to use attorney to do that in FL and because it will not cost you any money it is no brainer to have an attorney perform only short sales and mortgage retention plans.
PM me and I'll be happy top help you.Either you already have negotiator,but you need some help just contact me.
Jozef
I forgot to mention for property in FL short sale negotiation will include also closing with title insurance all done by the same RE Attorney free for sellers and RE agents.
Jozef
In my opinion it's better value in using real estate attorney who specialize in short sale negotiations. You should not need to pay for attorney as they get already paid from lender loss mitigation fee and if the same attorney perform also short sale closings attorney will make money on it without you paying any money from your pocket.At least mine don't charge me any money, but you wouldn't have any problem when you do little research.
Your other issue agent versus attorney. If you will have a choice to use salesman instead of professional negotiator you must think. Short sale transaction is about to get it correctly done and especcialy negotiated to the amount so it will be attractive to resale in this market. If there is no attractive price for the end buyer in today market you will not be able to atract any buyers. Short sale is time limited transaction not as conventional sale. Your time is ticking, so you don't have this leverage as maybe your neighbor selling conventional way with some equity in and in fair market value.
With all due respect to all agents out there doing also negotiations work on their listings by themself I saw better results with more short sales closed when agent was doing salesman part and short sale hassles get outsourced to the attorney to perform with legal and negotiation part.
Your choice. This is only from my own experience.Not many investors, agents, sellers work this out with attorneys because most of attorneys charge you and agents money upfront . If you will be able to have one without any cost to you than I'll leave it for you to decide if you will use one or not.
Another mentioned issue especially for FL deficiency judgment. Not many lenders pursuet with it, but it started to change and we see more cases with this issues, However good attorney / negotiator structure the whole deal from the beginning so no or very minimum chance of deficiency judgment will affect your short sale.
There is another thing.Most of this lenders usually try to sell judgment on the secondary market for 25-50 cents per dollar sometime the very next day after judgment. Then seller can offer low settlement on it. This create really win situation for seller even with very little obligation to pay it will have better sence to proceed with short sale instead of foreclosure.
Short sale in most of today cases is much beter to proceed with than foreclosure and good specialized attorney on your site will be able to help you with after short sale ( deficiency judgments ) issues and work it out with your lender and implement that in short sale negotiation.
Even if you might have to pay for some help, at the end it will cost you less than you just let it go to the foreclosure. With foreclosure you will most likely end up with deficiency judgment and lender will add everything what they can possibly add to it, so you might end up with foreclosure and maximum amount of judgment.
If short sale will not cost you anything and with all professionals doing their part not paid from your pocket and with better chance to avoid deficeincy judgment or if any than reduced to the minimum amount with settle it later on for let say 20 cents per dollar it might be much better for you than with foreclosure.
Also remember one more think this kind of attorneys are usually involved in debt settlements and and they might be able to proceed with yuor deficiency judgment settelement and save you thousands for fraction of cost.
Again this is only my opinion and my and my partners experience with this issues.
I always try to tell people standing before decision to proceed with short sale or not to take a blank paper, divide it in half and on one half just write scenario what will happen when you will let it go to the foreclosure with all concequences and financial loss and what will happen 6-12 months from now with you and your family and at the other half what will happen when you proceed and close on short sale and how it will affect your life in your next 6-12 months.
If you don't know usual foreclosure concequenses, just let me know and I can get you free foreclosure vs short sale list FREE. There is more bad concequences with forclosure than many people know about.
I hope this will help you understand your choices in FL better now.
Cheers,
Jozef
Hi JG. I'm curious how your situation is going and if it was resolved. I'm in a similar situation in Tampa where I'm looking to relocate but we are underwater on our house by about $30K. We have roughly that much in savings but are wondering if there is any way to protect that savings. Did you work with someone in Tampa that you could recommend to advise us? Thanks for your help.
If you want a quick resolution do not use an attorney. I was a buyer in two short sales where attorney's represented the seller's. Its been more than a year and one is still being worked out.
In one instance, the seller ended up in bankruptcy and the attorney's fees paid by the lender ended up on the fees inccured. This seller DOES have a portion of the deficiency to payback as per the BK terms. Therefore, he is partly paying for the attorney indirectly.
I would caution anyone who uses an attorney to read the fine print. In most cases, if the atttorney cannot get the lender to pay, then you will pay.
Just cause you might not be cutting the attorney a check does not mean you will not be paying. It very similar to RE Agents and commissions. They always say, the seller pays when it is really the buyer since he is bringing in new money.
Using a traditional attorney, unless they specialize in short sales, is likely a waste of your hard earned $$. Likewise, some realtors are very good but typically only when they are true short sale specialists. Most submit paperwork but do not totally understand the process, are not the best negotiators, and may be less likely to get the bank to forego pursuing the deficiency. There are many experienced full time short sale negotiation/loss mitigation pros on this site. Post here seeking them and you will likely save $ and end up with a better result. I do not provide that service but happy to refer you to some.
I am currently seeking only licensed attorney or re agent in California for full time short sale work, we are not newbies, just now looking to comply with new California law, Grey area or not.
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