If you are taking short-sale listings, you’d better darn well know what you are doing!  If you don’t have the necessary training or experience, don’t just assume you can handle it.  You have a FIDUCIARY OBLIGATION to your clients to either bring someone in who knows what they are doing or refer them out to someone who does.

Remember, you cannot earn a commission on a house that goes to foreclosure.  Worse then earning no money is getting sued and then paying.

- The Bank Slayer

Below is a good article posted by Tori Stamps, MA, JD (a Broker in TN).

Realtor Lawsuits – The Other Side of the Coin…

I just read a featured blog by Walter Hayes called “Realtor Lawsuits” and have to say I was shocked by the comments.

Walter’s blog stated he’s heard “homeowners who have lost their homes to foreclosure are coming after agents and suing because their home didn’t sell and ended up being foreclosed on.”

The vast amount of comments basically said “What?!?  Those scummy lawyers?” Instead of looking at the possible validity of the argument, these agents are tossing blame to the attorneys.

The truth of the matter is that too many agents are practicing outside of their area of expertise!  Agents who have never been trained, and have no experience in what it takes to get a short sale to the table are taking these listings (because they need the commission) instead of referring them to agents who know what they are doing.  They list the property like any other and hope for the best (instead of contacting the bank on a daily (or more) basis working through the issues.)

I understand the desperation of agents out there right now.  Times are tough.  Really tough!  But, taking a listing outside of your level of experience and scope of normal practice, is not going to help.  Not only are you setting up your client to LOSE THEIR HOME (that should be bad enough!), but you are also setting yourself for a lawsuit!

AND - YOU WILL LOSE!

Short sales are a VERY labor intensive listing that require a VERY experienced agent.  While I’m an SFR (BFD, I took a class), I still bring in an agent who has A LOT more experience in short sales (from a different company, no less) because that’s what my clients NEED!  The Code of Ethics is VERY specific here - and it’s not hard to understand!

Article 11
…
REALTORS^® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service…

If you are taking short-sale listings, you’d better darn well know what you are doing!  If you don’t have the necessary training or experience, don’t just assume you can handle it.  You have a FIDUCIARY OBLIGATION to your clients to either bring someone in who knows what they are doing or refer them out to someone who does.

Sometimes acting responsibly means you don’t get a commission.  And THAT’S O.K.  That’s what Fiduciary obligation means!  To put your clients well being above your own!

From Wikipedia.org…

“A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”

A fiduciary duty is the highest standard of at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”):he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.

But you need to takes steps immediately when the seller receives the customary “You Have Been Sued” letters.  But what does this mean and what do you do?

First thing to tell the seller:  Open all your mail.  All of it.  Every time.  Go and pick up EVERY green card mailed to you.  Certified mail which is not picked up has the same effect as not picking it up; but you just don’t know what it said.

Second, call someone like us immediately to connect your seller with an attorney.  Even if they are broke and don’t have two nickels to rub together.  Why? Because proactive steps can be taken to kick the lender back to the curb and buy your seller another 3-4 months before the foreclosure sale date.  Simple and straight forward filings by a competent attorney can really put the mortgage company on their heels.

Third, if you don’t have an offer, start lowering the price to secure one ASAP.  Time is working against you and many mortgage companies are talking 30-45 days until they can even review an offer.

Fourth, don’t let your seller represent themselves in court for the “suit.”  The mortgage companies are too sophisticated and will crush your seller.  A rock solid foreclosure specialist attorney will know how to get the mortgage company to pick up most of the tab for your seller.

Fifth and finally, the popular “Produce The Note” strategy will likely be tried by your seller and it can be very effective…sadly it will fall on deaf ears if not presented the right way.  They need good reliable information to buy the most time and eventually bring the lender to the table to cut a deal to close out your short sale.

-          The Bank Slayer