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A Legal Overview of Buying a Short Sale Home: An Interview with attorney Daniel Watkins of the Watkins Firm

By Daniel Watkins

Tell us a little bit about your company and the services you offer.

The Watkins Firm is a full-service real estate, business and employment law firm. We provide our clients with lawyers who know the law and understand the practical consequences of legal strategies. Our San Diego real estate attorneys bring together extensive and varied experience under one roof. We can help advise you on most legal issues at the time of your call.

What makes short sales an attractive choice for home buyers?

Buyers typically buy a short sale property for the same reason any buyer wants to buy a particular home: because they fell in love with that home. Short sales can complicate the buying process but often the complications and waiting time outweigh the negatives. Also, the price justifies the hassle. Buyers want a good deal and there are bargains to be found when shopping for a short sale.

What role does an attorney play in the purchase of a short sale home?

An attorney's role in the short sale process is completely up to the client. It can be limited to reviewing the release documents between the homeowner/buyer and their banks, and providing a legal opinion on those documents. An attorney may also be hired to manage the entire process from hiring a realtor to locate potential short sale properties to negotiating the terms with the bank, to document review and closing of the sale. Attorneys can manage the entire short sale process with minimal cost to the homeowner. The buyer can rest easy knowing that their attorney will protect their interests in the purchasing process.

When should someone who is considering buying a short sale consult with a lawyer?

A buyer should hire an attorney early on in the process to ensure their interests are being protected. Oftentimes an attorney can negotiate a better deal with banks and financial institutions because they know the proper channels to go through. In some cases, hiring an attorney can also speed up the buying process.

What are some of the biggest challenges with the contract that a potential short sale buyer faces?

With any home purchase, a buyer faces several challenges along the way. Short sales often fail due to unreasonable demands by the second and third lenders. While a first lender agrees to the sale price, the second/third lender does not and the deal is dead. Additionally, short sales fail due to tax liens, UCC filings and judgments on the prospective property. Hiring an experienced real estate attorney early on can improve your chances of a successful purchase. Attorneys can perform the due diligence ahead of time so there are no surprises during the negotiation and escrow process.

Do you have any advice about what to be cautious about when buying a short sale home in California?

Buyer beware! It is unlikely that cash-strapped sellers have given the home a cosmetic facelift for several years. Short sellers are required to fill out the standard disclosure form but it is important to verify that information. While short sellers are motivated to sell and repair their credit, they might have skimped on routine and essential maintenance of the roof, heating/air conditioner, swimming pool and hot water heater. It is imperative to hire a licensed home inspection company to perform a proper home inspection. You may wish to call in specialized inspectors to check for mold and structural damage, or termites. Buyers need to do a little extra research on the home's condition so there are no surprises later.

What's the best way for people to contact you and your company?

We offer obligation-free consultations via phone at 858-535-1511. Email info@watkinsfirm.com.

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