Realtor Program

It’s our goal to work with pro-active licensees who want a Long  Term Relationship Only and are willing to work in the spirit of compliance with regards to Full Disclosure when referring A Seller Client to our firm. Because we are working directly with the seller we will be in constant communication regarding the lenders requirements for the short sale. As our selling agent it is we who are responsible and will fight to ensure a full 6% commission is made available between listing and buyers agent. Under this arrangement, we will ask for collaboration in the following areas.

• No intermediaries

  We must have direct contact with the lenders and sellers at all times. Once the short sale begins there cannot be any communication between you, our selling agent and the debtor’s lender. This has, and will cause irreparable challenges with the short sale.

• Debtor confidentiality

  There are two separate transactions. The first is where our company pays the short sale lender – paid off with cash. The second transaction occurs when the company resells the property. Upon resale agent agrees not to disclose to short sale lender what the property is being sold for at a later date. We are the buyer and do not wish to have our purchase price disclosed. The short sale is not a transaction of which you will be involved.

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FAQ

Q. How is this different from conventional short sales?

A. In a conventional short sale the homeowner will hire a Realtor to list the property through the MLS. The Realtor waits for a qualified buyer to present an offer and then negotiates with the defaulting lender to get an approved short sale. It may take months to wait for a qualified buyer, months to negotiate with the lender, and tens of hours of the Realtors time to close the transaction.
In working with SellMyShortSales, the Realtor has an immediate all-cash offer from the Investor that eliminates the waiting period. The contract authorizes the Investor’s negotiating team to talk with the lender and the Realtor moves on to find another short sale prospect without ever talking to the foreclosing lender.  The Investor’s negotiation team of trained professionals expedites a faster and smoother work-out with a much higher closing percentage than in a conventional Realtor negotiated short sale.

Q. What does the Investor do with the home after purchasing it?

A. The investor will resell the home for a profit. This is a quick process that consists of 2 back-to-back, fully disclosed and funded, stand alone transactions that usually occur within 24-48 hours from one another.

Q. How Can the Investor Sell Within 48 Hours?

One of the many conditions within the Notice of Default Purchase Agreement (NODPA) Addendum is that the Investor is given a marketable interest in the property during the negotiation period.  This “equitable” interest is recorded in a Memorandum of Agreement filed with the County Recorder’s Office disclosing the Investor’s right to market and sell the home for a profit. The effect of this marketable right is to allow the Investor to list the house on the MLS while the short payoff is being negotiated with the foreclosing lender, thereby saving months of waiting time.

Q. Isn’t flipping illegal?

A. Flipping developed negative connotation from practices such as contracting to purchase a property and then assigning the contract to a 3rd party for a profit, or by using the 3rd parties money to pay for the property while pocketing the difference. In this program that Investor is a true principal and will purchase the home prior to reselling.  He works hard to negotiate a spread and profits from the resale. This is best described as a quick-turn-around wholesale/retail method and is perfectly legitimate.

Q. Aren’t you taking advantage of a distressed homeowner?

The Investor is risking their time, money and efforts as consideration in a transaction which may or may not provide him compensation. If a spread cannot be negotiated, the Investor will step aside without compensation to allow the end-buyer to purchase the house at the negotiated price. The investor may also not profit if it is necessary to put more funds on the table to negotiate a waiver of deficiency judgment from all lien holders. In such a case, the investor has actually provided a significant value to the homeowner for free.

Q. What are the consequences to the homeowner for using your program?

Whether the homeowner decides to use our program or sell through a conventional transaction there are three negative aftermath consequences that the homeowner faces in a foreclosure and short sale scenario:
1.Destruction of credit
2.Pursuit of a deficiency judgment
3.Tax consequences for debt relief

Q. What is a deficiency judgment?

If the lender accepts a short payoff on the mortgage, the difference between the unpaid principal balance and the short payoff is called the deficiency. If the lender sues the homeowner for this deficiency in a court of law, the judge may award the plaintiff a deficiency judgment, or the right to collect an unsecured debt.
During our negotiations with the lender we will demand that the lender waive its right to pursue a deficiency judgment as part of the negotiations. If necessary, the Investor will forfeit his potential profits from the spread to negotiate away this pursuit. It is never a guarantee that the lender will agree to the waiver but it is a significant value to the Homeowner who uses our Program. It is important to realize that this leverage cannot be created in a conventional short sale.

Q. What is the tax consequence?

Debt relief is typically taxed as ordinary income and the tax consequence of debt relief is typically less than a deficiency judgment, there can only be one or the other. It is also important to consider that in many cases, homeowners who elect to short sell their houses often also elect to settle their credit card debt during the sale year. If their liabilities exceed their assets, they can file IRS Form 982 and/or declare Insolvency, in which case they are not taxed for debt relief. All homeowners are counseled to consult with a tax advisor.

Q. Doesn’t the Realtor have a fiduciary duty to show the lender all offers in a short sale?

Absolutely not. The lender is strictly a lien-holder who presents a demand for a negotiated payoff to the escrow. Why should the homeowner or his Agent have fiduciary duty to the lender who is suing him? If the homeowner’s Realtor shows another purchase offer to the foreclosing lender, that Realtor may be breaking the law.
1. By showing the foreclosing lender another higher offer, the Realtor may be guilty of “tortious interference of a contract.” The Investor is principal to a contract, and the Realtor is trying to interfere to move the transaction over to another party (higher offer buyer).
2 .The homeowner-Investor contract cannot be released without mutual consent of both principals (so even if the foreclosing lender were made aware of a higher back-up offer, the Investor is still in contract)

Q. How do I know I am not going to get cut out of the listing?

A. Because it’s your client, we want ongoing and multiple listings from you. We have to have an agent in the middle because everything we re-sell is on the MLS.

Q. Would you ever use another agent to sell the property?

A. Only if you no longer want to participate. It could be likely for another buyer’s agent to bring the buyer and that arrangement is between you.

Q. How will I be kept in the communication loop?

A. If this is a transaction where we are funding and acting as buyer, our mitigation team will update you on a weekly basis of what is occurring.

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