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April 18th, 2011 4:43 PM by David W. Welch
Things have been heating up here in Orlando, and not just outside. There are more than 11,000 active or pending short sales listed in our MLS. With that many people actively pursuing short sales, and more to come, lawyers are looking to cash in. So the question is: do you need a lawyer to short sale your house? This is a very different question than - should you consult a lawyer. You absolutely should consult a lawyer if you are considering a short sale or facing foreclosure. I recommend every one of my short sale customers get the advice of a qualified attorney. You do not however need a lawyer to short sale your house. Everybody has legal questions in a short sale, but not everybody needs to hire legal counsel.
The process of short selling is twofold: first, the sale of the real property; second, the negotiation of the short sale. The sale of your property can be done on your own or by a licensed real estate salesperson. The second part of this process can also be done on your own or by a licensed real estate salesperson. Guess what? You don't pay the agent, so why go it alone? Many of the banks even tell you to hire a Realtor, if you call them about doing a short sale. If the short sale is approved the commission comes out of the proceeds of the sale. If the short sale does not close, the agent makes nothing, and you owe nothing. The short sale negotiation process is more about providing the bank with all the necessary paperwork than anything else. If everything goes well, the short sale may be approved with no deficiency judgment, note or cash from you, the seller, at all.
If you hire a lawyer to process your short sale, they will still have to have a licensed real estate salesperson handle the sale. Of course that fee comes from the proceeds of the sale. In addition to that fee, an attorney can charge their own fee for handling the short sale negotiation. I know of at least one large law firm in town charging about $3,000 up front to handle your short sale. (Only lawyers can charge that upfront fee.) They insist you list your home with their in-house Realtor, and close the transaction with their in-house title agency. Keep this in mind, if you walk into their office - they cannot guarantee the short sale will be approved. They will cash your check however and keep the fee. In my opinion, it makes more sense to consult a lawyer up front, so you understand your options. If you choose a short sale, you can always consult with a lawyer again once your house is under contract, and the short sale approval has been issued. You may pay for a couple of hours consultation, but that is a lot less expensive and makes more sense than $3,000 up front with no guarantees.
David Welch, Orlando Real Estate Optimist