Dear Michael: My son and his wife asked if we could co-sign their loan for a new house. I have no issues doing this for them, but would not want to endanger my assets. I am retired and have heard that under California law, a lender’s collection in the event of default is limited to the real estate property securing the loan, and the co- borrower’s assets are not at risk. Is that true?
Answer: State laws vary widely. About half of the states have “judicial foreclosure,” where foreclosures happen in court and lenders are allowed to sue borrowers when the proceeds of a foreclosure or short sale does not cover everything that’s owedwhich is known as a deficiency. Other states put restrictions on lenders ability to pursue such a debt.
California is a “non-judicial foreclosure” state and its courts typically aren’t used for foreclosures, and lenders are not allowed to sue homeowners over mortgages used to purchase homes. But the protection is limited if a homeowner has refinanced a loan and has a second mortgages, such as home equity loans or lines of credit. When you have a second mortgage, the chances are greater that you’re going to get sued. Just the fact that a lender can sue you, however, doesn’t mean that they actually will.
There are no statistics showing how many lenders are pursuing borrowers for debt and some say the lawsuit threat is overblown. Lenders often don’t pursue borrowers for deficiency judgments because it’s usually not financially worthwhile.
Dear Michael: What is the difference between a real estate agent and a real estate broker?
Answer: A real estate broker has a more senior license and supervisory obligations and permissions from local licensing authorities than an agent. As such, a real estate agent is a licensee who works for or under a real estate broker’s license.
In California for example one may not obtain a real estate broker’s license until they’ve been licensed as a real estate agent for at least two years and then complete a separate broker training and testing requirement. Separately, a real estate licensee who is a member of the national lobby called the National Association of Realtors is a real estate agent who has permission to use the name “Realtor” due to being a card-carrying / dues paying member.
Dear Michael: My home has been listed for four days and I have already received an offer over what I am asking. My Realtor wants us to wait until he has properly marketed the house before accepting the offer. Do you suggest we wait? I am afraid to lose this buyer.
Answer: Your buyer is not going anywhere. We are in a fast moving real estate market. Buyers are scrambling to buy homes, properties are selling with multiples offers and far over the asking price.
Your agent likely has a strategy that involves showing your home to as many prospective buyers as possible. This means properly marketing your home by completing a broker’s open house and a public open house. These steps take approximately seven to 10 days.
Once the marketing effort is completed and you receive no other offers, then you can negotiate the price and terms of your current offer. If multiple offers are submitted, then you and your agent can negotiate all offers and come to accept the most favorable one. Keep in mind that the higher priced offer is not always the best offer. Ultimately the decision to accept an early offer is yours alone.
Your agent is there to guide you and help you make the right decision so take his/her advice seriously. The main reason you hired your agent is because you trusted him/her.
Michael Kayem is a Realtor with REMAX Estate Properties serving Culver City and the Westside since 2001. You can contact him with questions at (310) 390-3337 or email them to him at: homes@agentmichael.com