January 18th, 2011 at 9:08 pm
We have received? numerous calls about escrow companies who, in a short sale transaction and? in exchange for the escrow, are offering to negotiate the short sale for “free.”? There are numerous problems with this practice and it should be avoided at all costs.? First, as you know, short sale negotiators must be real estate licensees since the DRE believes that negotiating? a short sale is “licensed” activity.? Unfortunately, most escrow officers that I have dealt with are not licensed and therefore cannot perform this function.? Next, and perhaps? more importantly, the escrow is required to be the neutral third party in our transaction.? Since negotiating short sales is licensed activity, by doing the negotiating the escrow officer would essentially be representing the seller.? That representation is obviously a breach of their duties to the buyer.? After all, how can an officer? maintain? their neutrality in the escrow process when? they have an extra? relationship and fiduciary duty to only one of the parties to? the? escrow?? ? The conflict of interest should be obvious.? As a result,? please do everything possible to avoid? using an escrow officer? as a negotiator and, if the client insists on doing so, please advise them of these problems, in writing.? These concerns are obviously greater when we represent the buyer but should apply regardless.? This is just a terrible business practice that we should not condone.
Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.
