Friday, February 03, 2012
Beware of the evil clowns of Los Angeles short sales
First and foremost, you shouldn't pay any money to anybody upfront to handle a short sale for you. They get paid through the commission when the sale closes. This is California law.
Second, you need to sign all legally binding contracts, starting with the listing paperwork. No matter how dire your straits are, please take the time to review the paperwork your Realtor gives you.
Third, you'll need to disclose everything you know about your property in standard forms. Your Realtor can help you fill these out, but don't let him/her do it for you. You're liable for non-disclosure long after escrow closes.
Fourth, yes, you do have a say in who buys your place, and the terms and conditions of the sale. You'll sign off on this paperwork, too. You're probably thinking, "But I'm walking away with nothing in a short sale; why should I care?" Well, there are many contractual terms that still concern you besides money, such as when possession will be given to the new buyer (negotiable), what appliances stay, whether leases are still in force, etc. One thing to know: you can't short sale your property to a relative. The bank will insist that the transaction be "arms length."
Five, and this is important, you can take your property off the market (just in case, say, you get a windfall and no longer have to short sale it).
Remember, sellers, your short sale negotiator/Realtor is working for you, first and foremost. Don't be afraid to ask questions. If you'd like to educate yourself more about the process, the California Department of Real Estate has lots of info on its website, as does the California Association of Realtors.