This article is written by Peters and Associates.
Great question, Frank! The money your neighbor received typically is called Cash for Keys. It is relocation assistance and available to most homeowners as part of a short sale, provided they keep the home in “broom-swept, move-in-ready condition.”
The amounts vary bank-to-bank, but they usually range from $1,500 to as much as $33,000 and are part of the negotiation process your short-sale attorney will handle. As of January, the typical amount for a short sale through the Home Affordable Foreclosure Alternatives program was increased from $3,000 to $10,000, and most of our clients are qualifying for that larger amount.
In addition, it is important to mention that if you’re a nonborrower tenant of a rental property and the property is sold at short sale, any Cash for Keys money goes to the renter, not the homeowner/landlord.
Question: I hired a real estate agent to do my short sale. He said he’d handle the whole thing but made me sign a document that said there might be legal and tax consequences and I need to talk to an attorney, too. The agent said I didn’t really need to see my own attorney and that I could talk to his attorney. What should I do?
— Kathy W., Las Vegas
The document you reference is required by the Greater Las Vegas Association of Realtors (GLVAR) and is called the “Addendum to Listing Agreement — Short Sale.” In it, it says that your real estate agent “cannot provide legal advice,” explains there is “no guarantee” they’ll be able to complete the sale and states in bold that the “seller agrees to seek advice from an attorney.”
The GLVAR requires a signature and initials to protect its members (your agent). I encourage you to reach out to your own attorney to understand the legal issues involved with a short sale. Your agent’s attorney is just that, your agent’s attorney, and must look out for your agent’s interests above yours. To know whether you are represented by an attorney, ask yourself this simple question: Did I sign a retainer agreement with a law firm? If the answer is no, you have no attorney representation.
Any reputable real estate agent will welcome help from your attorney. With actual legal representation, the agent’s client’s legal interests are protected, allowing the agent to focus on what he or she does best — finding a buyer and selling the property!
The real estate agent limits his/her liability, is allowed to focus on finding a buyer and receives the same amount of compensation. It’s a win-win for the agent!
It’s true — some people think hiring your own attorney to do a short sale is a “waste of money.” In most cases, however, the Cash for Keys money we negotiate will more than cover any attorney expenses and still put several thousand dollars in your pocket at closing.
To answer your question plainly, Kathy, you signed a legal document that said you’d talk to an attorney. So, talk to an attorney and don’t let anyone talk you out of it.
If you have a question you’d like to see answered by an attorney in a future issue, please write to questions@PandALawFirm.com.
Please note: The information in this column is intended for general purposes only and is not to be considered legal or professional advice of any kind. You should seek advice that is specific to your problem before taking or refraining from any action and should not rely on the information in this column.