I’m joined by 600 of my closest friends in Scottsdale, Arizona at the Scottsdale Center For The Performing Arts for Old Republic Title Agencies “Short Sales Exposed, Insiders Tell All. Old Republic Title Agency has assembled a who’s who panel of industry experts/insiders for a discussion about short sales. The panelists include Jim Sexton of John Hall and Associates, Neil Thomson of Thomson Conant Law Firm, Steve Chader of Keller Williams Integrity First, Duane Foutz of Homesmart and Michelle Lind, General Council for the Arizona Association of Realtors or AAR. John Foltz of Realty Executives is our moderator.
Neil Thomson is a well known attorney here in Phoenix, his firm Thomson Conant was one of the early firms involved in short sales. Neil said:
“Get Educated, become knowledgeable to protect yourself and your client. Some factors that will help you increase your level of success in closing short sales: Deficiency Liability.
Neil polled the audience: “Who Thinks Arizona Is A Non-Recourse State?” {50 hands go up} Neil continues: “When it comes to residential loans in Arizona, ALL loans are full recourse to the borrower, which means there will be legal liability to the lender, so the issue is not whether a loan is recourse or non recourse, it’s about eligibility for anti deficiency protection. Neil continues…..So, if you are going to take a short sale, you should do your due diligence to ascertain if any of the loans your client may have, expose them to deficiency liability. You should form strategic alliances not only with Old Republic Title Agency, but also qualified legal council. Do the hard work upfront and ascertain the points of exposure to better assist your client in the short sale transaction.
The short sale opportunities are going to be with us for sometime. Possibly another 4 years. You [Realtor] should embrace short sales and become more familiar with them to increase your closing ratio
Is your client(s) eligible for anti deficiency protection? You need to assess if the loans your client has expose them to any deficiency. You should employ competent legal council. The Last thing your client wants is a surprise at closing, it usually shows up in the form of a cash contribution at closing. Inform and educate your clients of the likelihood of a cash contribution. It makes for a more pleasant relationship between you and your client.
Deficiency liability vs tax liability
There will be a tax consequence! There is no way, to avoid this unless the mortgage is paid in full. Eliminate the surprise, don’t allow your client to experience that shock and awe because of a short sale. Empower your client, get them to the appropriate professional.
#1 problem Neil See’s is the 2nd lien holder. The 2nd now says in addition to the money the 1st is going to give us, we want a cash contribution of $5000 to $50,000 to close this short sale. 2nd feels they are absorbing a higher percent of the loss. The transaction can’t close without the 2nd moving out of the way. Neil calls it “Green Mail”-2nd holds out their hands and require payment to allow the closing. Your client should be prepared to make a cash contribution. That is the highest probability.
There will be a webinar in June with Mike Orr of the Cromford Report specifically for clients of Old Republic Title Agency. Stay Tuned for more information.
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