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Do You Need a Lawyer for a Sacramento Short Sale?
You may not need a lawyer in Sacramento to short sale a single family home.
Because of the liability that can befall a Sacramento real estate agent who does not tell a client to get legal advice when the client asks legal questions, every smart real estate agent will advise a client, especially a short sale client, to get legal advice — even if the client doesn’t really need a lawyer. Knowing this, a client might ask whether legal advice is necessary and, again, that is a tricky situation because we’re damned if we tell them no and we’re damned if we tell them yes. Besides, we’re not lawyers.
If a seller who is contemplating a short sale hires a lawyer, that seller will most likely pay the lawyer somewhere between $3,000 and $6,000. Out of pocket. Once — out of all the $65 million in short sales that I have negotiated over the past 8 years — I can recall only one time in which a negotiator agreed to pay a small portion of the lawyer’s fees. So, while a lawyer might tell a seller that they will ask to be paid from the proceeds of sale, it doesn’t really happen very often and, when it does, that payment is probably not in full.
If a seller who is contemplating a short sale hires a Sacramento short sale agent to handle the short sale, the commissions paid to the agent are paid from the proceeds of sale. There is no arguing with the negotiator about paying the agents because the commissions and all of the ordinary closing costs are paid from the proceeds of sale. Nothing out of pocket for the seller to pay, not to mention, a bank cannot under CA Civil Code 580e force a seller contribution; it’s against the law. A seller who hires a competent short sale agent basically gets the short sale completed for free.
Every so often, I might run across a situation in which the seller could use a lawyer’s assistance. It’s not to get a release of liability because you don’t need a lawyer for that. It’s not to avoid a deficiency judgment, because you don’t need a lawyer for that, as long as you’re doing a short sale. It’s not to advise whether the seller should do a short sale because short sales trump foreclosures. Short sales win hands down.
When I first started to do short sales, often I would refer the difficult cases to a lawyer, but I have discovered that I can handle them with ease (not to mention, laws favor the sellers now), so why not save the seller some money? Today, I might advise that a seller should hire a lawyer if the bank continually rejects the short sale for one reason and one reason only: because banks typically don’t want to mess with lawyers. Agents? Pfff.
I closed a short sale this week that I’ve been working on for almost 18 months, which is an unusually long period of time. We had received 3 or 4 rejections. I suggested that the seller hire a lawyer during the last go-around, but the seller said she could not afford it, and besides, she had “faith” in me. OK, I don’t give up — I have a ton of perseverance, and I am analytical. She begged me to re-submit one more time. I repackaged the short sale and resubmitted, and was accepted! Maybe short sale sellers don’t need a lawyer? Maybe sellers need only a top notch short sale agent who stays up to date on all of the changes in short sales?
Many lawyers hand over the package to paralegals or assistants and they don’t personally negotiate the file anyway. They also might not know much about real estate or have extensive experience in real estate. I’ve talked with lawyers who did not know how to fill out a HUD for Bank of America. The bell curve applies to just about any profession. You’ll find bankruptcy lawyers who offer to negotiate short sales because it’s another avenue of revenue for them. When short sales go away, they will go back to bankruptcy cases. Some will suggest bankruptcy alongside a short sale, which doesn’t make a lot of sense to me. You can’t do both simultaneously.
But people are afraid when it comes time to do a short sale and they don’t know where to turn. They think they need a lawyer to do a short sale. They are worried about consequences and liability and taxes when laws mostly remove those concerns. Will a lawyer tell a potential client that they don’t need a lawyer to do a short sale? If you ask a real estate agent if this is a good time to go on the market, what would an agent say? Same deal. Except most people in California do not need a lawyer to do a short sale.
Can a Sacramento Short Sale Agent Give Legal Advice?
Not only am a top producer who sells Sacramento real estate, but I also have a second job. I just returned from an About.com conference in San Francisco over the weekend. Some of you may not know that I write for About.com as its Guide to Home Buying, and I’ve been building and maintaining that website for 6 1/2 years. Whenever About.com hosts a conference west of the Mississippi, I try to attend. I always learn something new. One of the new things I learned at the About.com conference is Google no longer rewards SEO efforts in the same manner that it used to. Now, rankings are based more closely on authority. Which is excellent news for me. I’m not a big keyword stuffer.
But I am consistent. I write every day no matter what. I write about real estate in Sacramento and mostly about short sale transactions because short sales are what’s selling in Sacramento. I rank in the top 1% of agents at Lyon Real Estate, which is the largest independently owned real estate company in Sacramento. If I lose a ranking spot in Google to, say, HUD, it’s not that important to me. I am still found in the top 10 results on page 1 for hundreds and hundreds of real estate searches and real estate questions. To my readers, that makes me a real estate authority.
The problem with this is I am easily locatable. Thousands of people across the United States annually write to me and ask questions about short sales and real estate. I am a Sacramento real estate broker, so my phone number and email is in plain view. However, I am not a lawyer. I don’t practice law. I don’t give legal advice. Even if I know the answer, I can’t tell anybody. I sell real estate. I am paid a commission to sell houses, one by one. If I am selling a short sale, I am still paid a commission from the proceeds of sale. The law is very clear about what a real estate agent can and cannot do, and we can’t talk about legal matters with authority.
When I explain this to clients, they nod, say they understand, and then they ask me a legal question. Hypothetically speaking, you understand. Nope, still can’t answer it. If you need legal advice about a real estate matter, you absolutely, positively, without question, need to obtain that advice from an entity capable of giving it to you. That entity is not a Sacramento REALTOR. That entity is a real estate lawyer.
Will the bank release me from liability? Legal question. Does this short sale approval letter contain verbiage that protects me from a deficiency judgment? Legal question. Will doing a short sale stop the foreclosure process; how does SB 458 apply to me? Legal questions. If you don’t know the answers, you need a lawyer, not a REALTOR.
When I go to a client’s house, it’s to put that home on the market. I shoot professional photographs. I prepare my agent visual inspection. If there are ways to improve the showing condition, I share those thoughts with the sellers. Perhaps we want to do a bit of home staging or prepping. I generally find a good spot for the lockbox. We sign listing paperwork. We don’t discuss the legal aspects of the real estate transaction because I am not a lawyer. I suggest to all clients that they obtain legal and tax advice. Do they need it? I dunno. Maybe, maybe not. That’s for each client to determine.
If they need a terrific Sacramento real estate agent, they’ve come to the right place. I’ll get that home sold, and I guarantee my performance. Have over 30 years in the business. But I do not give legal advice. No reputable real estate agent would ever try to perform a service that she is not licensed to perform.
