Making Your Own Short Sale Rules

By
Real Estate Broker/Owner with Mint Properties, Tni LeBlanc (805) 878-9879 CalBRE #01871795

Making Your Own Short Sale Rules

It only takes a few people breaking the rules to make things worse for the rest of us.  Today, I took my puppy, Etta, to the dog park for the first time.  There was a tremendous lead up to this event. She had to receive every one of her required shots, have flea and tick treatment applied, get her a dog license, be fixed, and I had to let her wounds heal for two weeks.  So, I was really looking forward to our first trip and to giving her an opportunity to finally mingle with other dogs.  Both local dog parks (Woof Pac Park and Rice Ranch Community Dog Park) have a small dog area and a large dog area.  However, inevitably some inconsiderate person believes that it is okay to bring their large dog to the small dog side.  Usually, they tell you “it’s a puppy” or “”my dog is gentle as a lamb,” as their rationale for obviously being on the wrong side of the park.  

Now the sign doesn’t say “For Small and/or Wimpy Dogs” or “Teeny Dogs and Overgrown Love Bugs Only,” it says “Small Dogs” and “Large  Dogs.”  I suppose a medium sized dog owner could get a little confused, or maybe they would be inspired to petition the city/county for “Medium Sized Equal Rights.”  But, I digress.  Clearly, if your dog weighs, say 50 pounds, and all the other dogs weigh less than 10 pounds, maybe, just maybe, you are on the wrong side of the park.  And, perhaps if your dog can’t make it on the big dog side even though they are in fact, a big dog, maybe they just aren’t doggie park material.  There I said it.  After following so many rules before even bringing my dog to the park, it was beyond annoying to have her first doggie park visit cut short by a huge and overly friendly pit bull mix whose owner had no regard for the rules.

In a way, short sales are similar.  Most people jump through a lot of hoops to get a short sale and they have to follow a lot of rules to get to the finish line.  Recently, I was contacted by a man who wanted to know whether it was ok for him to short sell his home to an investor, rent it for a couple years, and then buy it back.  I told him that it was probably not ok -- that his particular bank would make him sign an addendum saying he wasn’t in fact doing that very thing.  And, unless it was disclosed fully to the short sale lender, it would be fraud, and very easily discoverable fraud too since his address would remain the same and his name would go back on public records in a couple years.  He explained that, he really didn’t want to move, that his circumstances were special, and that he felt it justified him being able to participate in this improper scheme.

So, I explained to him that maybe, just maybe, a short sale is not for him.  Generally speaking, a short sale is for someone who is willing to move out of their house after the short sale is complete.  A short sale is for someone who wants a fresh start.  A short sale is not for someone who wants to ignore all the rules.

I suppose this is the reason why short sale sellers have to sign affidavits under penalty of perjury stating that they will vacate the property after the sale, that there are no hidden and undisclosed agreements to rent back the property, and why I have to deal with negotiators who are suspicious of short sale fraud at every turn.  Because no matter how many signs are posted, some people just think the rules do not apply to them.

Before deciding whether to short sell your home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE), Short Sale and Foreclosure Resource (SFR) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.

Copyright© 2012 Tni LeBlanc *Making Your Own Short Sale Rules*

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Ambassador
1,010,462
Harry F. D'Elia
Precision Real Estate Inc. - Phoenix, AZ
Investor , Mentor, CSSN, Radio Coach, REOs, ABR

It is best to follow the rules of the land or one better be ready to face the music

Aug 20, 2012 08:50 AM #24
Rainmaker
552,778
Gary Frimann
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
California Broker and REALTOR

Yeah, it is frauding a lender to do that.  I've seen many buy and bail schemes, and I saw one recently where it appears the father bought out the son, which is really confusing to me as to why the lender would allow that.

Aug 20, 2012 09:00 AM #25
Rainmaker
1,382,274
Donna Harris
Donna Homes, PLR - Austin, TX
Realtor, CDPE & ASP - Hill Country Lakeway Austin

Great stories. There is always going to be that percentage of the world who don't want to follow the rules. The world revolves around those people, didn't you know that?!

Aug 20, 2012 09:11 AM #26
Rainer
200,519
Cheryl Thomson, REALTOR, Retired (U.S. Army)
Buyers Advantage Real Estate Corp. (c: 703.216.5635) - Woodbridge, VA
Real Estate in Northern Virginia

Tni, there is always someone who will play with fire...and will be BURNED.  

Aug 20, 2012 09:19 AM #27
Rainmaker
392,074
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Hi Tamara!  Glad to see you are back!  Short sales are ever changing but some things about them never do!

Very true Harry, very true.

Gary - If it is disclosed and approved by the lender it could be legit.  They can waive the arm's length requirement.  

Donna - Must be nice for them.  LOL.

Cheryl - So true.  I think these folks think that they can play ignorant and get out of it.  Very hard argument when you are directly benefiting from the scheme. 

Aug 20, 2012 09:35 AM #28
Rainmaker
336,893
Lynn Pineda
Imagine Your House - Coral Springs, FL
Coral Springs REALTOR- Promises Delivered

Hi Tni, when I first read your blog post title I thought, oh how I would like to make my own Short Sale rules as a Short Sale Realtor: I'd tell the Lenders exactly how to expedite Short Sales for prompt approvals! Then I read your post and realized that wasn't your topic today but rather how there are some Sellers who would like to try and game the system.  Perhaps it's these Sellers that just are having such a hard time facing their situation and are trying to determine any way in which they can stay in their home, as this just can't be happening to them. I can understand it, however the Short Sales rules aren't written for everybody else and not them, so they must comply or risk further troubles in their lives with fraud. I wouldn't want to go down that road because if they thought financial stress was bad just imagine adding a little fraud to that. Good post - love your doggie references too!

Aug 20, 2012 10:11 AM #29
Rainer
5,947
Terry Tracy
CRM Construction Inc - Orange, CA

Short sales has become a key source for investors to buy fix and flip and rental properties for bigger profits than any other strategy. But I too agree that before deciding of short sale legal and tax advice, and consultation with an experienced local short sale agent is very essential.

Aug 20, 2012 10:35 AM #30
Rainmaker
1,245,524
Wanda Kubat-Nerdin
Prado & Kramer Real Estate, St. George, UT 84770 - Saint George, UT
Your Preferred St. George Area Real Estate Agent.

You'd think when the word 'fraud' comes up, everyone would listen up...most do but there are still a few that go rogue. Great post Tni!

Aug 20, 2012 11:22 AM #31
Rainmaker
392,074
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Thanks Lynn! - I, too, understand the impulse, and after all some people are receiving better offers from lenders as far as loan modifications and some people no offer at all.  It can feel arbitrary to people.  I understand that.  However, you still do have to play by the rules. 

Terry - It's true.  I'm glad this guy called me.  At least now he knows.  He may not want to know, but at least now he had fair warning about the dangers of getting in to that kind of arrangement.

Hi Wanda - Yes, there are some that just go rogue and decide that the rules don't apply to them.

Aug 20, 2012 12:49 PM #32
Rainer
71,550
Pat, Ben and Martin Mullikin
Mullikin Family Realty Group Realty Executives - Integrity - Brookfield, WI

They must be smarter than everyone else - yes??

Aug 20, 2012 06:52 PM #33
Ambassador
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Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

Tni

I love this analogy but it really works, and it's not just about short sales. There seem to be a some out there who feel they are not obliged to follow the rules and protocol, and it's not just real estate, and that their situation justifies an exception.

It's part of the reason the banks have gotten so strict about written verifications, the 4506T form for loans, and more. Yep it's a pain but those not following the rules have created the problems and caused the lack of trust. And there are certainly plenty of fraud cases out there.

Jeff

Aug 20, 2012 09:10 PM #34
Rainmaker
73,532
Wayne Bennett
Remax Executive/Charlotte,NC 704-293-3931 - Charlotte, NC
Short Sale & Foreclosure Resource - Charlotte

Great analogy/ comparison...I work many short sales with both buyers and sellers.  I run into these same type of folks weekly unfortunately....I dare not take the risk and ALWAYS advise my customers and clients that it's NOT worth taking the chance.  You WILL be caught, sooner or later.

Aug 21, 2012 08:08 AM #35
Ambassador
1,900,024
Nestor & Katerina Gasset
International Properties and Investments LLC - Wellington, FL
Realtors, Wellington Florida Homes For Sale

Hello Tni,engaging article here.I can't agree with you more.Some people just don't know how to follow rules that applies to them.I like your advice to him.Thanks for a great share! Best of luck to you and continue doing great as Santa Maria Short Sale Agent.

 

Aug 21, 2012 08:56 AM #36
Rainmaker
78,845
Jim McNinch
Trademark Loss Mitigation - Spring, TX
Short Sale Specialist, Texas

Unforetunately, we see that all to often.  Sellers and buyers (not to mention a few agents) seem to think they have their own set of rules. 

Aug 21, 2012 10:32 AM #37
Ambassador
1,564,018
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Tni - Many sellers are trying to understand what they can and can't do; then there are others who just want to push the rules.

Aug 21, 2012 10:04 PM #38
Rainer
279,694
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Leesburg, VA

Those are the same type of people who will work with " investors" and half way destroy their properties thinking they'll be able to sell it cheap to the investor, and also buy it back cheap. These type of "investors" usually also ask for permission to negotiate the short sale deal with the bank. Unfornatunely, many short sale agents /" experts" also think they can make up their own short sale rules, so foreclosures continue and continue.

Aug 23, 2012 10:07 AM #39
Rainmaker
392,074
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Pat, Ben and Martin - That's right!

Jeff - I thought this type of scheme had gone away.  But sadly it hasn't.  I think about this stuff every time a bank comes up with yet another ridiculous certification or affidavit for my clients to sign.

Wayne - I agree. If they are doing these deals legitimately -- great!  However, I would be very wary of getting involved with this type of arrangement.  When you stand to gain, it's hard to argue that you are innocent.

Hi Katerina - Thanks for stopping by!

Jim - Well they sure make things harder for the rest of us!

Christine - That's true.  I actually think they should allow something like this.  And, there are talks of making this possible, etc.  After hearing what I had to say this guy actually hung up on my face.  So, I suppose he really didn't want to hear about any of the risks.

Jeff - It is unfortunate.  There are always those who are scheming!

 

Aug 23, 2012 10:55 AM #40
Rainer
71,505
Bas Panch
SCV Home Buyer - Valencia, CA

Hi Tni,

I just have to say how much I truly admire your writing skills. You always tell a compelling story, and your down-to-earth style and analogies make real estate and short sales easy to understand for average people who may not know a lot about either topic. Really awesome. Keep up the good work as a top Santa Maria short sale agent!

Aug 24, 2012 08:49 PM #41
Rainmaker
605,825
Petra Norris
CDV TransAtlantic, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Great story here Tni.Sad to say but there will always be someone who will not follow the rules.Great Feature! Keep it up being the best Santa Maria Short Sale Agents. 

Nov 14, 2012 06:31 AM #42
Rainmaker
1,913,540
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Anyone cosnidering a short sale in Santa maria should hire you as their agent. You are the expert.

Jun 30, 2013 04:29 AM #43
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Tni LeBlanc

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