Q: Do I need an attorney to bid on or purchase a short sale real estate condominium?
A: In some parts of the country, using a real estate attorney to close a residential purchase isn’t the norm. In other areas, hiring an attorney is an accepted and necessary part of the process.
As Sam is a real estate attorney, when we’re asked this question (which is fairly frequently), we always tell people that we believe that anytime you’re making a large, complicated purchase, you ought to hire someone to represent your best interests.
When it comes to short sales, we double down on that advice, because the process of buying a short sale is complicated and, often, very slow.
As we all learned during the Great Recession, short sales can be a real pain. They happen because the seller owes more to the lender than the property is worth and doesn’t have enough cash to bring to the table to close on the sale of the property. When that happens, the seller is considered to be “short” of funds to close, hence the term “short sale.”
In this situation, the seller or the seller’s attorney or representative must negotiate with the lender to pay off the loan for less than what is owed. This process can be tedious, time-consuming and complicated. And it could take a lot longer than you realize. You might put in a bid for the home and have to wait months before the seller comes back to you and gives you an update on where their lender is in the short sale process. Sam once worked on a short sale that took nine months to complete.
That’s why we think you should find someone who has experience in short sales to assist you through the process.
Here’s something else that commonly happens with short sales: The lender takes so long to make a decision that the buyer decides to move on and buy a different property. But sometimes, buyers hold on, thinking that if they just wait another week, the lender will recognize that the property is worth less and will take their offer. That doesn’t generally happen until the lender has lost a buyer or two, which is difficult for any buyer to gauge.
So, make sure you hire an attorney who is smart and savvy, and who has plenty of experience with short sale negotiations, if you hope to get this purchase to the closing table.
(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)
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