We’ve all received paperwork or been told about things that contain fine print requiring a Sherlock Holmes-like magnifying glass to decipher. It can be very confusing, let alone hard on the eyes.

But it’s starting to pop up more frequently as more real estate transactions are handled with short sales and through the foreclosure process. No matter what side of the transaction you’re on, some extra charges can find their way into the bottom line. Waiting until the end of the deal to decide who pays what is too late in the process. Talk to your Realtor, lender, title insurance representative or escrow officer early on to make sure you have the details on who pays for what. If not, a buyer risks losing his or her deposit and a seller could disintegrate the deal by laying some late and unexpected news on the buyer.

Examples of some extra or hidden fees include the cost for a short-sale negotiator, if one is needed; extra money for unpaid HOA dues, which can add up if there have been late, penalty or attorney fees accrued; extra money for unpaid property taxes; or other liens and issues for unpaid items that could impact the transfer of ownership.

Besides these potential additional fees, a recent report by the National Association of Realtors shows that a growing number of lawsuits are being brought by disgruntled buyers or sellers against each other, with many of the cases surrounding short sales and foreclosures.

Property condition disclosures are a significant source of disputes in these instances, with ones involving underwater owners being deemed the most significant. Often, according to the report, the upside-down seller “sees no benefit” in giving up any information about the property. And sometimes, because the short-sale process takes so long, the property’s condition changes while the contract is pending.

Short sales and foreclosures aren’t necessarily a new phenomenon, but their numbers have increased dramatically over the past few years, particularly in the Southwest. It takes a new level of expertise and awareness for all parties involved – lenders, agents, buyers and sellers – to make sure the process goes as smoothly as possible. Sellers and buyers should ask agents about their history with short sales and foreclosures to make sure they’re the best people to work with, and agents need to bone up on the processes because they’re not likely to go away anytime soon.

But even when the house is not a short sale or foreclosure, property disclosure is still a big issue, according to the report. Especially troublesome are structural defects, such as mold or water intrusion, discovered after the deal is done.

We live in a litigious society, but if everyone does their homework and their part along the way, real estate transactions don’t have to fall into that arena.

Short-sale transactions can be anything but short in terms of length from start to finish, but they do require your long-range attention if such a move is being considered.

There’s also a sense of immediacy to the issue, even if you hope to ride out the storm for a while. There are good points and bad to bothwaiting and doing something now regarding a short sale. A real estate agentwith experience in these matters can help navigate the landscape, but setting acourse of action is up to you and revolves around the question of where youwant to be when everything is said and done.

Before you start, you need to see the finish line. So whether you start the process now or wait a couple of years, you have to have an aiming point.

Some of the pros of waiting are staying in your house longer, keeping homeowner tax deductions, leaving the door open for possibly keeping the house and not suffering any disruptions regarding proximity to work or pulling your children from school. Cons include tax uncertainties, a drawn-out credit recovery and looking for a bank that will allow a short sale to proceed.

Continue Reading