Yesterday I got a copy of the California Department of Real Estate memo on Short Sale Fraud in my email inbox. The Department of Real Estate (DRE) memorandum came our way due to the increasing questionable (and sometimes unlawful) practices related to ‘requiring’ or ‘compelling’ (I live that word) the buyer of a short sale to pay the Short Sale Negotiator’s fee.
I snickered just a little bit when I received the memo. You see, a few months back, I had an experience just like the one that was described in the memo. An agent in my office represented a buyer on a short sale. The buyer and seller agreed to open escrow at the very beginning of the short sale process. Approval was received with the buyer’s name on it, and we thought we were good to go. But… then an addendum to the purchase contract was received in which a request was made for the buyers to pay a short sale negotiator fee.
With regard to this particular transaction, I was surprised to receive this addendum. The approval took several months to obtain and allegedly there was never any mention of a charge for short sale negotiation services. When I spoke with the office manager, I mentioned that there was already an approval and that buyer and seller were under contract, he responded by telling me that the listing agent had other buyer, just in case the buyers being represented in my office were not interested.
That’s why I love the word ‘compelling.’ This listing agent was attempting to ‘compel’ the buyers from my office to agree to pay the short sale negotiation fee in order to avoid losing out on the property. After our conversation, we were able to close this transaction quite amicably. However, I wish this document had been around several months ago.
Thanks so much to my friends at the Department of Real Estate for writing this stern memo about short sale fraud that described my little dilemma to a tee.
Below, I have shared a copy of the nine page memo. It’s a pretty interesting memo for all of you short sale aficionados. You may want to make yourself a cup of hot cocoa with marshmallows, put on your Snuggie, sit down on your sofa right next to a roaring fire, and have a read! Or… just take my word for it. There is lots of short sale fraud out there. Some is intentional and some is not. Be careful and think before you act.
Short Sale Fraud Warning
Short Sale Expeditor
