While browsing through listings of foreclosures in a certain area, I discovered that a house my client sold over a year ago, using another agent, was foreclosed. When I mentioned this to my client, he was surprised. It turns out that at the advice of his agent at that time, he agreed to loan $20,000 to the buyer of his home so that they can close the deal in December 2006. It was a $1.1M house. So it was rather surprising that he would need to lend money if the buyer can afford a house at that price range. Red flags should have been fluttering widely at that time.
My client recorded the loan but only after the buyer started missing payments.
On October 2007, the house was offered as a short sale. When it didn't sell, it was foreclosed, and is now offered at $899,000. At no time was my client informed of the short sale or the imminent foreclosure. So months later, he finds out only after I told him. Had he known it was being foreclosed, he may have opted to buy it back.
So....what is the seller's recourse? Did his former realtor violate her fiduciary duty/responsibility?
What would you have done? And is there anything the Seller can do? Or should he write off that $20,000 as a loss?
