Can You Protect Yourself From Short-Sales That Don't Disclose?
Have you ever thought a property was a "regular resale" only to find out it was a "short-sale" at the last minute? If you have, you were probably disappointed and possibly upset. You may have even thought that the seller and listing agent/broker were lying to you and the general public by not disclosing it was a short-sale.
Before you go off calling the seller and listing agent/broker "interesting names", let's look at a few things first that will help you understand why this happens so you know how to best protect yourself...
- Listing agents/brokers are not allowed to disclose "confidential financial information" about the seller without the seller's written permission. Announcing to the public (you) that the it's a short-sale situation is considered to be disclosing "confidential financial information" about the seller. If the seller does not allow the listing agent/broker to do so, they can't. (I wouldn't accept a short-sale listing if the seller wouldn't let me disclose, but that's me)
- Though most sellers know that it's much worse to not disclose that it's a short-sale than to disclose that fact up front, some may keep silent anyway. Sellers aren't obligated to disclose that they're in a short-sale situation. In fact, the burden is on the buyer to do their homework and find out.
- What about the ones that are right on the cusp? These are the sellers right on the brink of owing money once all the costs of selling their property are paid. If they accept an offer at their current asking price, they'll be fine. But if they accept an offer lower than their asking price, they won't have the money to make up the difference in what they owe. This means that the "regular resale" just turned into a "short-sale".
Is there a way to protect yourself as a buyer? The answer is yes.
There is language you can add to your offer that, if the seller accepts it, will force their hand and tell you if they are facing a short-sale situation. An experienced and knowledgeable Buyer's Agent will know what that language is and where in the offer to put it.
-Danilo
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