Wednesday, February 24, 2010
Investors offering to negotiate the short sales for free??? Be aware!
I have been approached by a ton of these "Investors", and have given a lot of thought to this, trying to figure out if it is the right thing to do, here is my personal opinion:As a Real Estate agent representing a seller in a short sale, it is your fiduciary duty to best represent your client's interests. What these investors in general do, is they formalize a contract with the seller (directly), this contract authorizes the investor to record an irrevocable option to sell the property, meaning that they are the only ones authorized to sell the property, even if the investor will continue dealing with the agent, at a given point, he has the right to sell even beyond your listing agreement expiring. This is not the best part, if the bank wants to the property to sell before foreclosure, they don't have a choice but to deal with the investor, even if this investor is offering a ridiculous amount for the property, it is either take it or foreclose it.The investor does not give a crap if the offer is unreasonable, the only thing he will care about is the profit he is getting, so he forces the purchase price to insure a hefty profit.If the bank decides to foreclose, the investor does not care, he has other properties.What happens with your client and your fiduciary duties? they went down the drain.What happens if the seller had refinanced or had a HELOC or a recourse loan? He probably will be hit with a 1099 and deficiency judgements at some point in the future and guess what.....He will see the records that the property sold NOT FOR THE AMOUNT THEY SIGNED but maybe $100,000 more!!!! Guess what they will be thinking then?..........LAWSUIT, MAYBE?
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