NEWS UPDATE ON SHORT SALES: On November 6, 2009 we launched our new site dedicated to news and information about short sales. Go to www.short-sale-phoenix.com for all the news.
One might think we'd be in favor of having the real estate agent since we are Realtors. Truth be told, we believe a real estate agent is, in most cases, the wrong person for the job. The reasons are pretty simple. First and foremost, negotiating a change in the terms and conditions of a mortgage agreement/contract often fall outside the expertise of a real estate licensee. Secondly, some information shared by a home owner can be of a private and sensitive nature. Thirdly, the negotiation often affects the legal rights of the home owner and may be considered the unlawful practice of law.
Let's take a look at these three concerns.
Most real estate agents are not mortgage professionals. Therefore, most agents do not have the expertise and knowledge of the mortgage industry, associated documents, and industry language to properly represent the interests of the home owner. In most cases, a real estate agent is required to inform his client, the home seller, that he or she does not have mortgage expertise prior to engaging in negotiations with banks, loan service providers and investors. The question is. if I, as a real estate agent, do not have a high level of expertise, should I be performing the duty?
The same argument applies to home owners who self-represent a short sale. Most homeowners are not mortgage professionals or attorneys. Therefore, most home owners are ill equipped to provide they and their families the highest degree of protection and advice.
The second concern we hold is centered on privacy issues. Real estate agents do not enjoy protection under attorney client privilege. Information shared between a client and his/her real estate agent could be subpoenaed and used in a court of law.
Our third concern is about the actual practice of law. A homeowner who represents themselves in negotiations with a bank is free to do so. However, a real estate may is walking a very thin line under Supreme Court Rule 31 (a)2A, especially under the last bullet point noted below regarding negotiating legal rights or responsibilities for a specific person or entity. Mind you, a real estate agent is granted a number of rights when it comes to negotiating real estate documents. The question is whether or not we have the right to negotiate an existing mortgage document that the agent is not a part to.
The practice of law is defined in Arizona Supreme Court Rule 31 (a)2A:Practice of law means providing legal advice or services to another by:
● Preparing any document in any medium intended to affect or secure legal rights for a specific person or entity;
● Preparing or expressing legal opinions;
● Representing another in a judicial, quasi-judicial, or administrative proceeding, or other formal dispute resolution process such as arbitrations and mediations;
● Preparing any document through any medium for filing in any court, administrative agency or tribunal for a specific person or entity; or
● Negotiating legal rights or responsibilities for a specific person or entity.
Our take is to err on the side of caution and establish best practice policy. It is for this reason we advise clients considering selling their home via the short sale process to contact a qualified attorney to help them with the negotiation of any and all loan modifications and to provide counsel prior to signing any documents.
Hope this info helps you if you are considering selling your home as a short sale and helps you understand why the Urban Team at Realty Executives recommends that their clients have an attorney as part of their short sale team.
Gene Urban
The Urban Team at Realty Executives
602-234-5777
