Jeff Davi, California's commissioner of real estate, has announced the issuance of a consumer alert by the California Department of Real Estate (DRE) warning consumers and real estate agents about the potential pitfalls of short sales.
‘The number of short sales is on the rise, and many consumers do not understand the consequences of such a transaction,’ Davi says, adding that the alert educates consumers and real estate agents on recognizing the elements of a fraudulent deal.
When it comes to what borrowers should be on the lookout for, the DRE advises consumers that short-sale negotiators must be licensed real estate brokers (or licensed real estate salespeople working under the supervision of their broker).
Any and all payments must be fully disclosed and made part of the escrow documents, the DRE adds. If there are any fees to be paid "outside" of escrow, this may be the red flag that the payment is illegal, the department warns.