This is not a joke. Realtors who think they are now “Short Sale Specialist” or “Loan Modification Specialist” are running a huge risk by trying to navigate in dangerous water and practicing in areas for which they lack training and more importantly don’t have a license.
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.
Excellent post! In my county alone there are hundreds, maybe thousands, of homeowners that lose their house to foreclosure each year that could have avoided it if their Realtor would have successfully procured a short sale.
Even a highly trained short expert cannot stop a bank from defeating itself and not every short sale will get to closing. But it is the Realtor’s responsibility to diligently and methodically go through the dozens of extra steps that don’t exist in a traditional listing. The short sale expert will surely have thorough documentation of all the interactions with the lender and the seller. Invariably the seller who lost the house to auction will actually thank the expert short sale Realtor instead of suing him.
You are right – Realtors who aren’t trained and don’t have the time or staff to handle short sales should simply not take on a short sale. The client comes first and it is irresponsible to doom the client to foreclosure just so the Realtor can have a sign in a yard and pick up buyers.
Realtors should refer their short sales to short sale experts. This way their client is served and the Realtor still gets paid. The referring Realtor is still the hero because he or she was resourceful enough to bring in the expert.
Unfortunately, I have worked with a few lawyers who say they are short sale experts, but the people in their office are so overwhelmed with having so many files and have to work without the benefit of that attorney, the homes end up in foreclosure. The only short sales I have lost so far have all been in the hands of attorneys (2 different ones). If you have someone else negotiating your short sales, make sure you are also listed on the authorization and that you as the real estate professional call often for updates. Short sales are a lot more time consuming and labor intensive, but if you are just giving them to someone else to negotiate and not staying involved, your client is not getting the benefit of a real estate agent who knows how to take care of their short sale listing.