Should You Hire A Real Estate Attorney For A Short Sale?
If you’re facing foreclosure but have been given the opportunity to sell your home in a short sale, you might be wondering if you should hire a real estate attorney to help you through the process. For many struggling homeowners, a short sale is a last resort in an attempt to avoid more financial hardship. However, without the proper guidance, this type of sale may actually leave you in worse shape than before.
So, the short answer is: Yes. You should hire a real estate attorney for your short sale. There are many advantages in having a professional at your side during such a stressful time.
What Is a Short Sale?
Before we discuss the benefits of hiring a real estate attorney, let’s briefly review what constitutes a short sale.
Let’s say John owes $250,000 on his home, but he has fallen behind on his payments and is facing foreclosure. A buyer offers him $200,000 for the house, which is less than the remaining mortgage. If John makes the sale, he will be $50,000 short on the balance he still owes his lender. In a successful short sale, his lender would agree to release the mortgage for the $200,000.
Cutting the Deal
Before moving forward with a short sale, you must approve it with your lender. If you don’t, they may come after you later with a deficiency judgment to collect what you still owe on your home, even after you’ve sold it. An attorney can help you negotiate with your mortgage company to ensure they’re on board with a short sale.
Also, a real estate attorney will be able to help you understand the terms of your short sale agreement. Every legal document is full of complicated jargon that many people find confusing, and it’s easy to miss important details that could cause trouble down the road. Lawyers can make sure your short sale will leave you clear of any deficiency payments or other complications.
Avoiding Deficiency Judgments
A real estate attorney can also help you avoid or deal with a deficiency judgment. In Pennsylvania, mortgage companies are allowed to obtain a deficiency judgment against homeowners who complete a short sale, even after the transaction as taken place. If the lender is successful, they may collect the remaining balance through garnishing wages or going after other assets.
An attorney will tell you if you’re at risk for a deficiency judgment or help you through one if your lender files successfully against you. He or she can help negotiate a deficiency waiver or at least settle it to a lower amount. An attorney may also help you file bankruptcy to get rid of the judgment.
A Safety Net
As with all deals in life, there’s a chance your short sale could fall through. If that happens, there’s a chance your lender company could file a foreclosure against you, which was what you wanted to avoid all along. Your lawyer can help you best understand your situation and advise you on how to proceed.
Before you visit with a real estate attorney, gather up your financial records and a list of your assets, debts, and liabilities so he or she can have a clear picture of your situation. The short sale process is a complicated, often frightening one. It’s important that you have a professional on your side who has your best interest at heart.