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I’m Steve Kramer. I’m a Florida foreclosure attorney and today’s topic is short sales.
Should I do a short sale? Now the first question that comes to mind is what is a short sale?
A short sale is a process where you might owe more money to the bank than your property
is worth. And in a situation like that, you might want to get out of that property. And
generally, you’re going to want to get out of that property without owing any other money.
So, when you’re doing a short sale, you’re essentially trying to get out of a property
without owing money when you owe more than it’s worth. The question that comes up is
do you need an attorney for that process? And the answer is yes. But, the way that we
think you need an attorney is a lot different than how most attorneys look at it. You can
hire a realtor to negotiate the short sale on your behalf, to handle the sale and the
listing of the property, and to deal with the listing elements of a short sale. It’s
a good idea to have an attorney there to look at all of the different contracts that you’re
going to have. And the first contract that you’re going to have is a listing agreement
with the realtor. And that’s the one where you hire the realtor. And that listing agreement
says how the realtor gets paid. And what you want to do is you want to be careful here,
because you don’t want a realtor’s commission being triggered in a situation where the bank
approves the short sale but they’re not going to release you from the deficiency – that’s
key. Another situation where you’re going to want an attorney is when you get an offer
on the house. When you get an offer on the house, generally, you’re going to accept
the offer and sign it or you’re going to prepare a counter offer and that’s going
to have some different terms. But in either of those situations, you need to have an addendum
and that’s an add-on to the agreement that says that if the bank doesn’t approve the
short sale and doesn’t release you from owing money, that the agreement is null. Basically,
the agreement is contingent on the bank letting you walk away. That’s very important. Then
you might want an attorney to go ahead and look at the approval from the bank to make
sure that they’re actually releasing you from it. Or if they’re not going to release
you, what do they want from you? How much money do they want? Because at the end of
the day, the whole reason you’re doing the short sale is because you want to get out
of this property. You want to get out from under this loan. And if you’re not going
to get out from under the loan, there’s no reason to do the short sale. I often compare
it to the scene in the movie where there is an exchange. A sensitive exchange, like there’s
a kidnapping and somebody’s got a bag of money and somebody’s got the person being
kidnapped. There is a change of hands – right then – and the change of money and whatever
is being exchanged at the same time. Because if you give them the money, they’re gone,
right? You’re not going to get what you want. So it’s got to be done at the same
time with the bank. The bank has to release you because that property that you’re short
selling, that’s what we call leverage. That might be worth $100, 000 dollars or $300,000
dollars – whatever. And it may not be worth what you owe the bank, it may be worth less
than what you owe but it still has value and you want to use that value for leverage. And
that’s where you want an attorney, to exercise that leverage and negotiate on your behalf
and to make sure that all the contracts protect you and all the approval from the bank and
everything else protects you, and the closing paperwork is done the right way. I’m telling
you this because I deal with this all the time and I see cases like this every day.
And I deal with this all the time. If you have any questions, call me. I’m Steve Kramer.
Thanks for watching.