Attorneys Killing Short Sales

J Philip Faranda April 9, 2010

Here in New York we have attorneys heavily involved in real estate transactions. Their function technically is to handle contracts, act as escrowees in the holding of good faith deposits, and examine title. They are another advocate for our clients. By and large, most attorneys play it straight and do not mother hen, interfere, or sabotage. But some do. I could write posts on attorneys who take a week to send contracts out, debate language with the other side’s lawyer until the buyer walks, who won’t return phone calls, or who 2nd-guess brokers until our credibility with the client is undermined. The subtext is typically an unspoken but all too evident attitude that they are higher on the food chain than brokers. 

The latest shenanigan I am seeing is the practice of talking buyer clients out of buying a short sale. 

Let’s back up: In Westchester and the surrounding areas, it can take 2-3 weeks for contracts to be fully executed from the day an offer is accepted. Once you have a meeting of the minds, inspections have to be done (the inspection contingency is not something lawyers around here want to deal with). Once inspections are done, memos go out if they haven’t already. The buyer’s attorney then sets up an appointment to meet with the buyer and go over the contracts. Often, the contract is sent back with changes that the seller’s attorney has to review and, of course, go over with the seller. Once all that is settled, the buyers sign. If anything comes up at that point, their attorney can “hold” the contract and/or their deposit until the issue is settled, the signed contract and deposit are sent to the seller’s attorney. Most of our jobs in the first month of a transaction is, frankly, to nag the crap out of the paralegals to ask where the contracts are and what can be done to get to the next step. 

Nagging paralegals. I did not go to college to nag paralegals. But it is the only thing I can do. 

All the while, we are bound by the rules to disclose that there is an accepted offer on the house, scaring away many prospective buyers. If the deal doesn’t go together, we could lose a month of precious time on the market.

And twice in the past week, I have seen deals die when the buyer’s attorney advises the client that they should not buy a short sale. They like the house. They can afford the house. The attorney is probably too lazy to know that I have closed 18 out of the last 20 short sales I have had go under contract. They just don’t feel like holding the buyer’s hand that long. So they scare them and they walk. They piss on the herculean efforts of the agents and squash the prospects of the sellers to sell with dignity, because we not only lost a buyer, we lost time to find another buyer. I was never given any good reason, just that they know better than I do. Sure they do. They know next to nothing of the particulars of the transaction or who is working on it, and do not bother to find out. They just kill it because that’s what they do. 

And people wonder why I rant about attorneys! 

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