As distressed-property deals have gotten more complicated, real estate agents say they have reached out to local professionals to make sure short sales and foreclosures go as smoothly as possible.
These types of deals, which have become more common since the housing bubble burst in 2007, require preparation and constant communication with the bank that owns the property and must give final approval to any sale.
Paul Carboni, sales representative for Prudential Fox & Roach, Realtors, in Northfield, said he has hired attorneys in the past to work out sales on foreclosures, which are properties that have been acquired by their mortgage lenders.
In a foreclosure, the bank owns the property and has it appraised for a certain amount. But, Carboni said, sometimes the bank has an incorrect value for the home or the property has been left sitting unsold for too long and is in disrepair.
That is when Carboni has had attorneys work directly with the banks to negotiate a deal.
"The attorneys who do it professionally, they have the experience," he said. "It's the reason we reach out to them."
Carboni said the bank will usually pay the legal fees at closing and it won't cost the buyer any money.
One challenge is leaving the negotiations in the hands of the lawyers. Carboni said that means he has to relinquish control of the situation and trust in the people he hired. But that's for the best, he said.
"An attorney who's on top of things can usually make the process go smoother," he said.
Short sales are more involved and take longer for banks to approve their particulars because the current owners of the houses are still involved but need the bank to allow them to walk away from the remaining principle owed on the mortgage.
Donna Poletis, a sales associate with Balsley Losco Real Estate in Northfield, works with attorney Ken Ackerman, whose firm Ackerman & Alsofrom operates in the same building on Route 9. Ackerman and Nikki Stone, a short-sale processor for Balsley Losco, work together to process all submissions to banks.
The two make sure they have all of the needed documents, determine whether the bid on the property meets the market value of the home, identify what assets the seller has, and try to document any hardships the seller may have to get the bank to understand why they cannot pay the rest of the mortgage.
Ackerman said the bank will want the seller to pay as much of the outstanding mortgage as possible. He will also work with the bank if its assessment of the property is too high.
Ackerman said the entire process usually takes about 90 days, but it depends on the bank.
"Some are better than others," he said. "If a submission is done correctly from the beginning, the process can be very smooth."
Stone said she will also use third-party mediators such as Equator LLC that can come up with a determination if the two sides cannot reach an agreement on value.
"Banks have a general formula they use for a loss they can accept," she said. "They generally don't want to go below that."
Ackerman said the process can be tricky because he doesn't know the formula.
"If the numbers are not right, we try to negotiate until they're right," he said.
Ackerman also said working with banks has improved over the past year and a half as they move more efficiently and with a better understanding of local markets.
"It's a huge asset to have Nikki and Ken," Poletis said. "I allow them to do their jobs and I know they're on top of it."
Another benefit is time.
Kate Gatto, broker-owner of Re/Max Community in Mays Landing, said she recently hired an attorney to help her with her short sales since she's had an increase recently.
Gatto said having someone else do all the preparations and negotiations allows her the flexibility to spend more time with her clients and showing her listings.
"It can be a great help to focus on other things," she said. "If I'm out all day, I don't have the time to make a lot of phone calls (to the bank)."
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