That’s a question that any savvy buyer should ask before putting in an offer on a “deal that seems too good to be true”. In fact, the seller and the realtor brokering the sale both have a legal duty to disclose that the home they are trying to offload is a short sale. That’s the law in California ever since a prospective buyer had a deal fall through when they offered to buy a home for the asking price of $750k.
The fact was that there were loans in the amount of $1.141 million dollars outstanding on the property from 3 different lenders. These lien holders had no intention of cooperating with the short sale – and the seller and broker both knew it. There was no realistic chance that the seller could deliver free and clear title to the home. The courts determined that the seller and the broker both withheld critical information that would have allowed the buyer to make a more informed decision about the risks of making an offer.
· As a buyer, you should ask point blank if you are looking at a short sale house. If that’s the case, get your own experienced short sale real estate specialist to represent you. Always have a title search done before closing just in case.
· If you are selling a home, have your short sale specialist negotiate with the lenders in advance. That way, you know whether or not you can bring a deal to the table that really works for everyone.