DEAR BENNY: A couple of months ago, we put our house on the market with a real estate agent as a short sale. We have received several offers and are just waiting on the bank’s approval. Two weeks ago we received foreclosure papers from the lender’s attorney. We vacated the home two months ago knowing we could not afford to keep it. We have kept the home and lawn up meticulously. Now that we have received foreclosure papers, what are our responsibilities as far as the home, lawn, utilities being left on, etc.? Your help would be greatly appreciated. –Kimberly
DEAR KIMBERLY: Why banks want to foreclose and risk ending up owning the property (because no one may buy at the foreclosure-auction sale) is beyond me. You and your real estate agent should advise the bank’s attorney that a short sale is pending and that it makes no sense to pursue the foreclosure. A short sale makes sense for you and the bank. Your credit rating will not be affected as much with a short sale, and the bank (although it will lose money) will not potentially be stuck with your house.
To answer your question, I have to be cynical. Since the bank — while presumably considering the short sale — instituted foreclosure proceedings, I am not sympathetic with them at all. Accordingly, my initial impulse was to tell you not to spend any more money on the house and let it just sit there. However, since the short sale is still a possibility, I suspect that your buyer will balk if the house is not in the same condition as of the date the contract was signed.
Thus, you really have to find out if the short sale will be approved. If so, then continue to take care of the house. If not, then just walk away and let the bank take over.
DEAR BENNY: My elderly parents, who moved to California a year ago to be closer to their oldest two kids, are trying to sell their home of 54 years in New York. We have engaged an agent but do not know if she’s doing a good job.
There have been a few open-house days, but here’s what troubles me: The house was left a wreck. We knew it and she knew it. She said it was deadly to show in that condition. I agreed and asked her if she knew anyone who could come in to clean it up (for which we would pay, of course). Her response was that it needed more than tidying, and to get top dollar it needed tens, if not hundreds, of thousands of dollars of work.
While I’m sure the house needs work, wouldn’t just a scrub help, and isn’t it odd that she could not find someone to do that for us?
The real question is this: How do I know if an agent is good, and/or how do I find a good agent at all when I’m 3,000 miles away? –Jeanie
DEAR JEANIE: You are really asking two questions. First, what work will be required so that the house can be sold at a good price? I know you are far away, but it would make sense for you (or at least a good friend or relative) to inspect the house and have a couple of other real estate agents give you their take as to what really is needed. Candidly, unless you just want to sell it at a "fire sale" price to anyone who makes you a halfway decent offer, I don’t believe that just a "scrub" will do the trick. …CONTINUED
Your second question: How do you know if this is a good agent? That’s a very tough question; everyone has different perceptions as to what is "good" and what is not.
You should have a long talk with the agent. Express your concerns and see how she responds. If you are still dissatisfied, tell her that you would like to get another agent and would like to cancel the listing. She may want you to pay her some money for any out-of-pocket expenses she may have incurred, but clearly if a principal is not happy with her agent no court will force the relationship to remain.
And from my experience, if the agent understands that you are not happy she would be well advised to allow you to get out of the relationship. Otherwise, you will remain unhappy — and that’s how lawsuits begin.
DEAR BENNY: Why do mortgage applications take so long? What things should I be considering before going ahead? –Lacey
DEAR LACEY: In recent years, some lenders — especially those you can find on the Internet — are claiming that they can process a loan application in just a few days.
I take no position on these types of lenders, although personally I prefer to have direct contact with a local lender.
Lenders have to make absolutely sure that (1) you can qualify for the loan and (2) that the house will have sufficient equity above the amount of the loan. This takes time. The lender must obtain a credit report on you, and verify your job and income status. The lender also has to obtain an appraisal of the property, and in recent months — based on new rules — that is taking a lot of time.
To expedite the process, talk with the lender and find out what information it will need from you. Make sure that you gather all of the required information and documentation, and fill out all applications promptly and accurately. Cooperate with the lender but periodically pester the lender to inquire as to the status.
But before you select a lender, make sure you shop around and compare terms and rates. Also, you will have to make a decision on what kind of loan you will take: a conventional, an adjustable, VA or FHA loan. The various lenders you talk with should be able to assist you with this decision.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@sandbox.inman.com.
***
What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.
