Brokers-Agents
Short sales and divorce situations are specialties I hope you will let me help you with since it is in your client’s best interests to receive the most professional service possible. It is not enough to merely say I am a SFR* and a REDS**. I have the certifications. But there is no substitute for experience. I stand ready to help you even if you do not want to refer the business out. The main thing is that the client is well served by our profession. I conduct seminars for Realtors who are members of the Pike’s Peak Association of Realtor’s MLS with no strings attached. The goal is for you to be more proficient and meet the needs of the public with excellence. Contact me with the following form and I will invite you to the next seminar, which is free.
*SFR is a certification awarded by NAR as a Shortsales, Foreclosure Resource.
**REDS is a certification awarded by the Financial Divorce Association, a non-profit cooperative of lawyers, CPAs, financial planners, and real estate professionals.
To have me invite you to a seminar complete the information.
IF YOU HAVE ANY QUESTIONS NOW JUST EMAIL ME AT HOWARD@HOWARDPRAGER.COM
AND I WILL ANSWER YOU AS TIME PERMITS.
SOME POINTERS:
Regarding short sales:
1. Banks will accept short sales even though the homeowner is making payments up to date. Suggesting to a homeowner to stop making payments so the bank will take the short sale more seriously has all kinds of potential legal consequences down the road—possibly for you! The package in its entirety is what determines whether the bank will accept a short sale.
2. If you are representing a buyer the best and most accurate way to explain why the sale will take extra time is as follows: In reality there are two, perhaps three or four sellers, the owners who are motivated to sell and the various parties that will take it on the chin if the sale is allowed to go through for less than is owed, which are not motivated. Rather, they are coerced by the debtor’s circumstances. The company that has direct contact with the owner and the agent who is representing him is called the Loan Servicer because generally there are other parties involved, called the Investor, and perhaps the Mortgage Insurer. The department of the Loan Servicer is generally called Loss Mitigation and the person who intakes the file usually has authority limited to making sure the file contains all of the essentials that the particular Loan Servicer wants to see before it is considered by a supervisor or supervisorial committee for a determination. The determination usually just verifies that the file is complete in its documentation and that it satisfactorily justifies the reason for the request. What it needs to include besides the Loan Servicer’s application form is a coversheet from the listing agent summarizing the entire situation, letter of need from the borrower expressing the situation that forces the borrower’s hand and requiring the sale as the only resolution outside of foreclosure, the financial statement of the borrower unless it is required on the company’s application form, a convincing CMA authored by the listing agent, reference to a contract had in hand or the contract itself or reference to a proposed contract the last of which is the least desirable with a HUD 1 statement, check stubs and tax returns of the borrower as set forth in the company’s application requirements. The owners will have accepted your offer before the Loan Servicer sees it. Your offer will have to be contingent on the lender’s willingness to allow clear title to pass to the buyer despite the short payoff. Normally the Loan Servicer has been notified by the owner and the listing agent that the owner has some reason that the owner insists is compelling him to sell the home even though he cannot pay off the entire loan balance against it. If the Loan Servicer is convinced that the owner has a hardship sufficient to warrant the short sale, its next step is to do what any seller would do. Namely get an outside opinion of the value of the property to make sure it is not selling for too little. It does this by ordering a Broker’s Price Opinion (BPO), or more than one BPO. These are ordinarily rush jobs from real estate brokers rather than licensed appraisers. Appraisals are impractical because BPOs are usually done in confidence without the homeowner’s knowledge and unless the home is open for inspection on the MLS, without entry. The bank may have ordered one BPO at the first notice either that a payment or two are delinquent or if not delinquent, notice from the owner or agent that a short sale request may be in the offing. Then when a contract that has been accepted by the owner contingent on the approval of a short payoff of the loans against it, another BPO is generally ordered, or more than one more. Once the Loan Servicer reviews the BPOs it may be required to consult with the Investor and the Mortgage Insurer since in fact they are the ones who will financially be hurt if there is a short payoff. The Loan Servicer is generally merely an intermediary without any financial stake in the outcome of the payoff except its loan servicing fees, and its potential liability to the Investor and Mortgage Insurer if it makes a mistake. It is rare, but sometimes the Investor or Mortgage Insurer may order its own BPO resulting in another delay. Each of these entities may interpret the file of multiple BPOs and the owner’s hardship and proof thereof differently. It is only when all agree to go forward with a short sale they then ordinarily delegate the terms of the short sale to the Loan Servicer who has a special staff member called a Negotiator for this purpose. Not only does the Negotiator negotiate the sales price, perhaps insisting that the buyer pay more “or the deal is off” hoping to pressure the agent into trying to convince the buyer (through the buyer’s agent) to pay more, but the Negotiator may try to negotiate the real estate commission down. To make things more complex, there becomes a tug-of-war so-to-speak conducted by the listing agent, sometimes with the participation of the owner’s lawyer, trying to get the Loan Servicer to not only accept a reduced payoff for the loan, but such other points as relieving the owner of continuing obligation to make up the deficiency at some later date, and how the bank will report the transaction to credit bureaus. In addition there may be junior loans. If there is, the agent must negotiate with the junior lender(s) as well, who usually represents itself as investor, but may have an investor with whom to confer. Being in the junior position implies different negotiating issues in addition to those just recited. A junior lender is likely to be more intransigent because it will be wiped out entirely when there is a short payoff. Typically the seller must make a cash tribute to the junior lien holder, which is with the knowledge and consent of the senior lender, since both lenders communicate about the deal and compare notes. Once all of the parties have agreed to a short sale and the price, then is when the deal can go through. Usually the Loan Servicer demands that the deal goes through extremely soon, so now the Buyer must do the final inspections, finish all of the financing steps for which he would have pre-qualified but probably not applied for the loan, and often there is only ten business days to close. But as you will see below I recommend ways to extend this if the deal involves a lender that needs more time, such as CHAFA. If the buyer’s final inspection finds something unsatisfactory after all that, the deal is usually off; however I have heard of a Loan Servicer agreeing to reduce the net proceeds so the sale could go through. The seller’s agent has to send a revised HUD 1 for approval. Last minute substitutions of a higher offer are commonplace with a revised, improved HUD 1, and are typically rubber stamped by the grateful Loss Mitigation Department.
3. If a buyer shrugs and says “If they get the BPOs why is it worth all the trouble to wait for them to make up their mind?” here is the most accurate and complete answer: You will generally get a better bargain than you could get at a foreclosure and be able to finance your purchase which you can’t do at a foreclosure auction. (You will be given an actual BPO order with the name and address redacted by me when you attend my seminar to illustrate.) A BPO generally asks for foreclosures to be included in the comparables if they are available in the neighborhood. The Loan Servicer, Investor and maybe the Mortgage Insurer (depending on the terms of the mortgage insurance policy) are primarily concerned with what their cost will be if the property goes into foreclosure. Then they subtract anticipated legal fees and management overhead and expenses to arrive at a bottom number. Some sources say that FHA for instance uses an arbitrary formula that it will accept no less than 82% of the BPO or 60% of the original loan balance. I don’t know about the percentage of the loan balance because the rule they refer to was instituted more recently than when I was associated with HUD. But the 82% number has to be fatuous. This is why. While in many neighborhoods it is possible to provide BPOs based on foreclosures, there are neighborhoods where it is not possible since there are few or no foreclosures of specifically comparable homes. Thus brokers are instructed to supply most recent sales of homes from the MLS, which obviously sold at a price determined by bargaining between what may be presumed are a buyer and seller neither of whom are under duress. Therefore the BPO will come in higher. Not only do I do BPOs, I have been in the committee that evaluates BPOs for lenders. Nothing is as straightforward as an arbitrary line in the sand. Once a decision is made to accept a short sale, the price they will accept is the highest price they can intimidate, negotiate, wrangle, cajole, but as the date of foreclosure auction gets nearer and nearer, the price they will accept is anything that keeps the property from going to foreclosure if there is a price on the table that even suggests after a typical $20,000 to $40,000 legal, overhead and management expense they will fare better by taking the short sale and moving the loan off their books as a nonperforming loan rather than taking in an REO that they will prospectively have several months of administrative nightmares handling. The trick as the buyer is to get the seller to accept and present your contract offer to the Loan Servicer to get the ball rolling, if you are the first buyer to make an offer, and to cross your fingers that someone else does not come along to outbid you as they can under Colorado’s statutory requirement for the Short Sale Addendum about which we will discuss in point 5. If a package is transferred to a Negotiator, it means the Loan Servicer has been instructed to do a Short Sale. The Loan Servicers are instructed to play hard ball and even let a small percentage of short sale applications go to foreclosure when they are close enough to the point that they are ambivalent about the short sale price offer, just to show strength and build a reputation for hard dealing. But that only occurs when they are really price-ambivalent. As a buyer you are buying very close to the price that a property would sell for at the foreclosure auction but you enjoy the following benefits: You can have just enough time to close the purchase with your own financing; the seller is trying to take care of the home for you instead of trashing it.
4. What about the Colorado law situation involving the short sale addendum? In Colorado the legislature and real estate commission did what they thought would be best for the entire system (i.e. the lenders and the borrowers) and set it up so that it would be impossible for the first contract to commit the seller to not accept subsequent contract offers for presentation to the Loan Servicer. Language in the state mandated addendum establishes that the contract cannot commit the seller not to supplant that contract with a better contract. However both sides can bow out for any reason or no reason until typically the Loan Servicer accepts the contract. It is also generally in the seller’s best interests because it is likely that the seller is stuck with liability for the deficiency, and the best offer reduces the deficiency liability. It might seem that this is more reason to be discouraged from making an offer on a home. I say much to the contrary. Make offers on many homes! Make it a free for all! Since you can bow out of any deal if one comes through and you can’t afford to buy two, cancel all the other deals. Do this even if you are intending to buy only one home and move in, but want a bargain! Should you feel guilt about letting the seller down? No! The system the state adopted has made your strategy. Think of the system as a slow motion auction. One bidder bids and the ball gets rolling. There are some BPOs being done. Maybe there are other bidders. The seller should –but is not required to—let the original buyer re-bid to match or beat the second offer. Either way, the top bid can eventually win, and pay off as much of the bank note as possible. In a way of thinking, functionally for the lenders, the foreclosure auction is being held early, without an actual foreclosure, and with buyers being able to get financing, lastly with the borrower cooperating to keep the home in whatever condition he can afford to accommodate the sale. You can end up being the ultimate buyer even if you are a Johnnie-come-lately bidder. So another strategy could be like bidders do at eBay. They wait until the last hour and put in their bid, often the winning bid. All of this will require extremely good communication between the new buyer’s agent and the seller’s agent and there must be a willingness of the seller and seller’s agent to share the appropriate details of the progress with everyone or it won’t work to the way which I believe the legislature and real estate commission intended. For example I believe there is still the possibility of the first contract writing in a confidentiality agreement thereby preventing the seller from sharing details of the contract itself –such as price-- and the progress of the transaction—such as the fact that or when a Negotiator was appointed, what the Negotiator demanded, etc. Future buyers would not have the information they need to make last minute bids nor to shave their bids a little higher than the existing contract. Nevertheless they can still bid, calculating their bid by their own wits and timing it by their own wits, which is possibly the outcome the legislature and real estate commission want. Again, it’s just a molasses-slow auction! It’s my opinion that this will become the model for the rest of the country!
5. What would you recommend a smart buyer put into the additional provisions of the contract? When representing a buyer writing an offer on an active (represented on the PPAR MLS as“A” ) listing in the multiple (versus one for which a contract has already been entered into and submitted to the lender (represented on the PPAR MLS as “A+”) I always recommend to the buyer to put in a provision that requires the seller to let my buyer see a copy of any subsequent contracts. Nothing I know of in the short sale addendum prohibits the provision and it prevents being sandbagged with false alleged higher other bids as well as allowing for detection of other’s bids that are one dollar more than yours or some other slight increase that may be prompted with complicity of the listing agent or seller. One might say there is no practical way to seek damages against an empty pockets seller. But the same is not true about the seller’s agent. If your contract is accepted you will know about and see any other contracts that are accepted by the seller subsequently. That gives you the opportunity to bid more or drop out with full knowledge if everything is on the “up and up.” Another provision I recommend to the buyer of an active (“A”) listing is to specify that the seller’s agent will not send subsequent contracts or references to them to the lender until after the later of (A) my buyer seeing it plus X business days and (B) a Negotiator being appointed to the case by the Loan Servicer. The reason for wanting my client with a time delay before sending it is obvious. The reason for committing the seller’s agent not to send any improved contract until after the Negotiator has been approved is that if subsequent contracts are presented piece meal as they come in the file is put to the bottom of the stack each time, prolonging the process, whereas the best contract in-hand by the seller’s agent only becomes relevant when a Negotiator is appointed. Some less experienced short sale agents may make the mistake of presenting all subsequent improved contracts when they come in, which is a mistake. If I am writing a contract that is subsequent I recommend putting in the same provisions since it is unlikely that the previous contract had them and if my client’s offer is above the previous contract, from that point forward I will have as much control of the deal as it would appear the law allows. I do not author the provisions since I am not a lawyer. I recommend that the buyer client consult his own attorney, or if he feels capable, to frame the language himself. I plan to ask Oliver Frascona to include provisions that accomplish these in his clauses, which his firm sells. The language should apply equally to my subsequent offer not being presented until after a Negotiator is appointed. If I can get the confidentiality and the “free look” provisions accepted in my subsequent contract when the bidding war starts, at the time the Negotiator is in charge of the file, my side will have all of the intelligence about what to bid and the other side will have none.
6. Do you recommend what to offer? If my buyer is an investor the first thing is not to forget to use the contract with the large bold type (CBSF1-7-09) along with the Short Sale Addendum SSA38-9-08, Seller Warning (SWF30-7-09) and Notice of Cancellation (NCF34-7-09) all in bold type. I would do a CMA as though a lender ordered a BPO, using foreclosures as comps if available, which of course I cannot get from the MLS software. So I do everything manually, which is what I have to do for my BPOs, except that most BPO intermediary service companies have software that can help in the process. I arrive at a value if the property is foreclosed that will predict its sale price at the foreclosure sale. I do not recommend an offer price but I happily show my appreciation and approval if the investor offers that amount. I have seen BPOs come in as much as 20% higher and seen the lender accept the short sale contract rather than go to foreclosure. Of course there may have been something convincing about my CMA or unconvincing about the BPO. If my client is not an investor, and checks the box that says he plans to move into the premises I use the forms that are not bold, and I use the same CMA but because his motive is different, he may be willing to offer more. I just give him the information. Invariably his motivation will determine what he offers. An important thing I would do is explain to my buyer and the Loan Servicer how I selected the comps. The buyer needs to know to be assured he is getting a good deal by bidding “the value.” The lender needs to know that it is getting what it would get at foreclosure sale sans foreclosure legal, overhead and management expenses. Then everyone can arrive at an informed decision.
7. What if a buyer is reluctant to have his earnest money tied up for the duration of the lenders’ deliberations? I suppose you could put a provision in that says the check won’t be cashed or a note can be used until SSA. It was recommended at a CAR sponsored class led by a real estate attorney, who recommended entering a provision in section 26 Additional Provisions defining SSA as the lender’s Short Sale Acceptance and defining all Dates and Deadlines (section 2.3) as “ SSA+the given number of days.” It used to be that lenders read the contracts and cared about such details. That’s when there wasn’t as much volume as there is now. I am told that now they don’t have time. They only look at the HUD 1. They decide if there is enough money in the deal and figure it is the brokers’ responsibility to get the deals done. If I am representing the seller I am interested in knowing the buyer is capable of completing the normal deal; however the circumstances beg for leniency since I am going to be soliciting offers elsewhere anyway.
8. What if a buyer objects to the potential of other offers coming in after he has waited so long? The objection would be more valid in a seller’s market. In a buyer’s market it is unlikely there will be any competing bids, and if there are, they are not likely to raise the price much.
9. What is the most important thing in short sale brokerage? Doing a thorough and complete job at what might be called the “back office work.” That’s not only assembling, reviewing, and providing the paperwork, but maintaining a cordial businesslike calendared contact schedule with the person assigned to the file at the Loss Mitigation center. This means being in coherent or cognizance of the implications of everything in the file. For instance well before the date the file goes to foreclosure auction it is necessary to remind the Loss Mitigation person/specialist or whatever title he has, to notify the foreclosure department to delay the foreclosure. And then remind him the next day. Try to get a written confirmation that he has done so. Sometimes that is not good enough because the foreclosure department does not read its own mail even though it acknowledges it. So if you are allowed to try to get in touch with the foreclosure department yourself. When your contract has a longer buyer’s contingency than can be done as swiftly (think CHAFA or FHA for example) as the Negotiator would want, you have to inform him in advance that you need 25 days, not 10 days to close, for example. This becomes important since many Negotiators are scored on a calendar month’s activities, so they make deals on the 20th contingent on closing no later than midnight the 30th. If you explain to the Negotiator that he is getting a higher price than would otherwise obtain because the buyer is getting financing that is needed to make this deal “fly” that requires extra steps, you might have to explain the ins-and-outs of a 203(k) FHA program to him, and impress on him that he needs his decision made by the 5th of the month if he wants to close by the 30th. Rather than rely on an outside “back office” contractor you might consider signing up for Short Sale Commander (http://www.shortsalecommander.com/newSite/) software. Just like when you have to do the details of a listing even if you have a human assistant, by the time you are finished assembling the details you could have entered everything on the MLS with hardly any more time input, the same is true of Short Sale Commander, except that it organizes YOU. Input the data and when it is complete you have a pretty good file ready to go. I am personally reluctant to have personnel who do not have the same stake I have in the deal communicate with the various parties since I lose touch with the deal. In addition if I farm the back office work to a third party organization, no matter how conscientious, once I have had my seller sign documentation that they are responsible for representing him with the lender if I am unhappy, getting control of the file again is messy. However if I use convenient software to keep me organized and if my volume ever gets beyond my personal ability to handle, I can farm out tasks I do not want to handle, like mailings, printing documents I have already prepared, etc. Fortunately the lenders usually want everything sent electronically which Commander is set up to facilitate. I see no reason why I couldn’t handle 50 files with Commander and do my normal brokerage duties as well. Well not exactly. I would send someone out to put my signs up and take them down, print my brochures, etc. even enter my listing info in the MLS once I compile it, and maybe to take superfluous calls.
10. What else would you say is very important in short sale brokerage? If it is possible to get the lender to waive the recourse provisions of the loan documents you will be a hero. (Otherwise after the short sale your seller still owes the deficiency.) It is possible depending on the case. A junior loan may, if paid a partial payment in a lump sum by the seller, which has to be with the knowledge and acquiescence of the senior lender. If there is only one loan and there is a risk that the borrower may go the route of bankruptcy sometimes that may act as an incentive to the lender. However the lender’s application form elicits enough information to determine if a bankruptcy attorney would consider the form of bankruptcy that leads to foreclosure rather than one that leads the borrower to being able to stay in his home. So this is tricky. Rely on a bankruptcy attorney to tell you if bankruptcy is a viable threat given the status of the client’s financial and other considerations, none of which you or I will have the expertise to determine. However if the bankruptcy attorney tells you it is a viable threat, use it, since it is also something the attorney would recommend in case the lender doesn’t go along. Of course if there is a bankruptcy the odds are you lost your listing. Another possible bargaining point is to get something other than what is customarily entered in the credit bureaus to designate a short sale has taken place. I have never successfully achieved this goal when the seller does not take responsibility for the deficiency. If the seller voluntarily says “I am going to continue making payments even if they are slow, I have seen a lender actually renegotiate the note, stopping the short sale entirely, and let the borrower remain in the home. That happened in California, where the buyer sued the seller for specific performance, and the court ruled against the buyer, saying specific performance is a motion in equity (which means fairness doctrine is uppermost) and although the buyer did nothing wrong, neither did the seller, and the court refused to honor the specific performance action. The lender actually paid for the seller’s defense! Usually however, the lender will write an unsecured note for little or no interest, with negotiated payment amounts, and not report anything to the credit bureaus, which is as close to ideal as I can think of. However if the borrower doesn’t make those payments, they will report the worst report to the bureaus.
1. Determine if prospective clients are considering divorce. If they are, a whole new world of considerations in your real estate practice comes to the fore. There are potential new time wasters, new liabilities, and new duties as well as new ways for you to lose your real estate commission, or have it reduced. I usually ask open ended questions about why they are selling, where they are moving. If they are ambiguous it raises a flag for me since some couples do not want to share their matrimonial difficulty with the local Realtor® whom they think has no stake in knowing the information. Many people will share the information readily. If I am in doubt I explain the stake their Realrot® has and ask directly if they are considering a divorce.
2. Determine if prospective clients are common law married. There may be a duration requirement on the state where they say the common law marriage status was achieved (if achieved, which is by holding out to others such as insurance companies or the public that they are married). Only divorce or death can end the marriage once achieved. Dismissal, death or court order are the only ways start of divorce motion can be ended. Don’t believe one of the parties who says “we are no longer married” just because one of them doesn’t want to be married any more or says the law says they can be. Ask for a certified copy of the court’s order. The listing will be tainted and there will be a cloud over the title, and if the property is successfully sold, the buyer may look to you for damages since the seller may be long gone.
3. Determine if they have a prenuptial agreement. A spouse may want to sell the property while the other spouse is away or silent, and a prenup may prevent it. Prenup may preclude anyone from selling it until some anticipated event. When you find out you will have wasted a good deal of time. It may be at the closing table! There is the same potential liability if the seller has disappeared and you are the only party the buyer and/or other spouse can find to sue if the sale goes through. Remember a property may be held in one spouse’s name even though it is marital property since there may be a prenuptial agreement covering who may dispose of it.
4. How will separation or divorce agreement affect the listing? It is the agreement that determines who gets property, if property is to be sold, and so forth. I try to get the certified copy since that tells me whether I will be wasting my time by working with the wrong spouse or if the property can be sold at all. A spouse is not above misrepresenting this information to a Realtor® since they believe they have the God-given right to dispose of the property as they see fit. If that former spouse has received title to the home in a divorce decree or separation agreement he or she is likely to satisfy the title company that the house will not have a cloud over its title, and can be sold; however the other spouse may be able to prevent the sale from taking place since the family court wanted the children to live in that house for a certain duration. Thus all of my effort will have been wasted. The reference to the children’s living conditions is usually in the parenting plan, so I look at that too.
5. How will the parenting plan affect the listing? I try to get a certified copy of parenting plan and separation agreement. I am looking for terms that say if one spouse keeps the house and if the reason is so the kids can live there until a certain age. That may imply a prohibition against selling it and I may have my listing, or worse, the transaction interrupted when the other spouse goes to court to stop the sale since it was intended that the children stay at that location for certain duration. If that former spouse receives title to the home in a divorce decree or separation agreement he or she is likely to satisfy the title company that the house will not have a cloud over its title, and can be sold; however the other spouse may be able to prevent the sale from taking place since the family court wanted the children to live in that house for a certain duration. Thus all of my effort will have been wasted. I have been advised by counsel that it is not necessarily good enough to have the other spouse sign something at the time of the listing giving permission to the sale since the permission can be revoked at the last minute and there is nothing I can do about it. A sample scenario is the selling spouse promises the permission granting spouse that he won’t have to pay support if he grants it. He finds out that he can’t be relieved of the duty to pay support by her , and he finds out she wants to move with the kids to another city. So he revokes permission. Don’t say it can’t happen. It did!
6. When a divorce action is filed, an automatic injunction , stay or court order prevents both spouses from disposing of marital property. What about non-marital property and its affect on what I do? Regarding marital property it is just a waste of time trying to list property during the pendency or at the beginning of a divorce proceeding without either a court order (sometimes called temporary orders or a stipulation a written agreement usually authored by attorneys which is certified by the court with the judge signing off to show his approval. Unless you see such a document –if not signed by the judge, signed by both attorneys if you know for sure who they are-- assume the summons controls. I have personally accepted the word of one of the attorneys on multiple occasions at my own risk. So far I have never been sorry. But tomorrow may be different. The summons contains the terms of the injunction. So I ask for a copy of the summons. If it is not specific about describing the marital property, and says “no property” or “all marital property” I may be left in the dark and not know if it is marital or non marital and I risk losing my time, or worse, being exposed to liability for not ascertaining that there might be a prohibition that my client is ignoring or unaware of. So the summons may not be deter-minative if something is non-marital but it probably will be specific about the addresses of properties alleged to be marital, unless the spouse for the other lawyer filing the petition does not know about the property (which is not necessarily evidence that it is non-marital). There is probably an elastic clause that includes any and all known or unknown marital property. If it says merely “all marital property” or the elastic clause I ask a lot of questions about when and how the property was acquired, and request or obtain documentation from the title company or elsewhere sufficient to satisfy my attorney that it is non-marital if it is not crystal clear, before proceeding to a listing agreement and all of the effort in marketing that it implies, let alone the liability exposure.
7. Colorado, which has equitable distribution of marital property, may affect the listing. There is not a presumption that property is marital. It must be proven/disproven. And if it is marital and the other spouse does not agree to the sale it won’t happen because the court can stop the sale.
8. There is a waiting period in divorce in Colorado. If I am contacted by one or both parties at the beginning of their marital strife, it may be premature if a divorce filing is in the offing. On the other hand there are situations where the divorce filing never eventuates, so however I prognosticate, I am risking effort versus risking turning down possible business. I do not own a Ouija Board. I don’t study astrology. I just go with the gut.
9. A notice of Lis Pendens can affect the listing since there is a probability one party’s lawyer will file it. A lawyer representing either side may file a Lis Pendens to prevent the sale by the other spouse of property that the other side has reason to argue is marital. A Lis Pendens recorded at the County Records will surely turn up as an important exception on a title insurance policy that is probably going to kill any deal! Essentially it says someone is going through a court proceeding to assert a claim to the property. (I would think a lawyer would do so automatically but I am told that many don’t –I can’t fathom why -- to include property that may or may not be separate property as long as there is at least a doubt or reason for doubt.) I could have wasted my time if a Lis Pendens is filed and if a divorce is in process I regard the probability as high that it will happen. What is really bad about the Lis Pendens is it takes more than only being released by dismissal of the divorce case or a court order. That is insufficient as far as title companies are concerned. It still stays in effect for a while after that until the appeal period is gone. It is all the more important to me to update my O & E frequently to see if a Lis Pendens has been filed. If so, my listing agreement should have a provision that entitles me to stop marketing the property.
10. Getting consent of non-owning spouse on the listing is not enough. It can be revoked. I am repeating this fact here because it needs to be stressed. Just because both spouses sign the listing agreement you are not in the clear. If one later files for divorce, the summons contains automatically language that prohibits the disposal of marital property without the judge approving. If I have suspicions that there may be marital strife I periodically check with the court to see if there are any cases involving the parties, although this is not foolproof. The wife may use her maiden name while she is married, so the case may not be Jones v. Jones. It may be McIntosh v. Jones, in which case I never learn the bad news even though I have been as careful as possible. Fortunately if two spouses have signed, the filing spouse makes haste to inform me, since s(he) knows that I have a contractual relationship to her and the property and s(he) has some undefined responsibility to warn me off. I imagine the attorney tells the spouse to inform the broker since s(he) knows about the deal having entered into it. What’s tricky is when both want to sell, but one filed for divorce. When that has happened I have not been warned, one changed her mind about wanting to sell later after a buyer offered as-listed, but that spouse discovered that with the spousal support she would be awarded she could afford to stay in the home, and all my effort became for naught.
11. Temporary orders may affect what you need to do. But so do lack of them. I always ask for temporary orders that permit the sale of the property. Or get a stipulation or agreement between the parties providing allows them to sell; I even ask for it to specify me as broker. (It never hurts to ask.) Without a certified copy of the temporary orders I may be wasting my efforts.
12. How the financial disclosure is important –When one of the spouses turns into a buyer getting the financial disclosure is where he will provide truthful information about his situation. Until then he is likely to hope he can bluff his way into a new purchase, not realizing that the lender is going to scrutinize his situation because of his recent divorce. (I don’t care what the lender says.) So ask for it. And I recommend that the loan applicant buyer offer it as documentation for his loan. I have never seen a lender turn it down.
13.I always ask the lawyers to insert a request to gain access to the real estate so I can do such things as take measurements, photos, show the property to buyers, etc. It is called “request for entry upon land.” Otherwise the spouse who may want to discourage the sale may prevent me from doing my job. This is something that the attorney for the spouse who is motivated to sell the house should insert in his moving documents. I cannot do anything like that. I am not a party to the case.
14. The risk of an appeal: One party can post a bond for example to make the sale of the real estate be on hold. Appeal process can take years.
15. I never do a free CMA, so parties thinking of getting a divorce should seek a free CMA from someone else. Parties preparing for divorce use them to combat each other, not list their property. I deduct the CMA fee from the listing contract fee if they list with me. If you want to do a free CMA for them, send me an email and I will set you up, sucker!
16. I charge an hourly fee against a minimum and maximum commission. Frequently in contested court cases one side says the broker isn’t doing the job right, not do the CMA right, nor market the property right, nothing right just to promote their own agenda. I keep methodical records on my time spent as well as my assistant’s time spent on a file, and I am prepared to document it.
17. I am prepared to justify my hourly fee as well as my expert witness fee. In many cases I probably need to write report, supply my CV, and list of all publications I authored in real estate, and of previous cases I testified in, case numbers, parties, lawyers. Anyone intending to focus on divorce real estate should be prepared to do the same.