Consult an attorney before listing a distressed property

By Elizabeth Erickson | Feb 13, 2013

In the last five years we’ve seen a cottage industry arise, spawned from the economic crisis and housing market collapse. “Short sale negotiators” and real estate agents “specializing in short sales” are plentiful – some reputable, others dismally ineffective.

In the last six months, one in six sales in Mukilteo and Edmonds was a short sale. (A short sale occurs when the current value of a home is less than the mortgage amount, leaving a homeowner “short funds” to pay off mortgage.)

Too many options are often challenging for already stressed homeowners. For a long time, I’ve debated whether to suggest, in print, simply one good option.

My decision to do so is statistical: The Northwest Multiple Listing Service currently lists 60 active or pending listings as short sales in Edmonds and Mukilteo alone, and there’s many more upcoming.

Even as all indications show 2013 to be a sellers market, there are many owners who will not reap these promised rewards. They’re simply hoping to emerge at the end of this year relatively whole.

Homeowners’ first instinct is to call a real estate broker. They list for less than what is owed, based on the obvious current value. Real estate brokers are not (nor should they be) financial counselors.

How you approach the lien-holder can have far-reaching consequences for your financial place at the end. Simply hoping the lien-holder will accept the proceeds of a sale as “payoff” and forgive the debt owed – is simply backward.

Far too often, it’s a painful waste of time for sellers and frustrated buyers.

McFerran & Burns, P.S. has six offices, in Everett, Northgate, Kirkland, Tacoma, Kent and Silverdale, and many attorneys specializing in loss-mitigation for homeowners. This firm is well-known, respected and reputable.

Ed McFerran specialized in real estate law long before the housing crash. The firm’s current loss-mitigation department exists to assist distressed homeowners in sorting out their legal, credit and tax issues.

Phone consultations are free. A one-hour consultation appointment with an attorney is $150. (Yes, that’s licensed attorney for just $150.)

During that consultation, sellers’ concerns are heard, their situation analyzed, advice given.

Typically homeowners walk away with what Ed McFerran calls “a legal prescription” in hand, empowering sellers. Often a partnership is forged to allow the firm to negotiate on a seller’s behalf with the lien-holder.

There is no pressure, but advice given. Compassion is included for no additional cost. Their goal is to minimize the stress and address tax and personal liabilities.

They’re usually able to get their modest negotiation fee (under $2,000 in many cases) from the lien-holder; if not, later from the seller.

You are not alone in this difficult circumstance. A listing with “Price approved by lien-holder!” and “No fee to buyer” is far ahead of “We’ll talk to the lien-holder when we have an offer from a buyer.”

And the empowerment of knowing where you’ll be at the end of this difficult process is immeasurable. It’s not your fault.

The McFerran & Burns, P.S. website has Ed’s educational videos and a good place to begin: HYPERLINK "http://www.mbs-shortsales.com" http://www.mbs-shortsales.com. Or call Ed McFerran at 253-284-3838 (Press 1).

Elizabeth Erickson is owner and designated broker of Gallery Homes Real Estate. Contact her at erickson@galleryhomesre.com or at the office: 425-212-4300 or direct: 425-508-1405, or go to www.galleryhomesre.com.

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