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Q&A With Tim Sherman

By Derren Peters

How many years have you been working in real estate? How does your experience aid your clients?

I have been a real estate attorney for over 8 years, it's the primary area of my practice. It's really all I do. For the last 3, I've been doing it from my own firm. Those 3 have been a bit slower in real estate, but it's given me time to really see the details of the market, see how the market can fluctuate and go up and down. I've bought and sold 5 or 6 of my own properties throughout that time, and I think that's important as far as your experience goes. You learn best when you do it for yourself, so I take my own experience, and I bring it in to the law arena. I have probably reviewed over a thousand Purchase and Sale Agreements (P&S) over the last 8 years, I've done, I'd say, 3000 closings. So I've seen the good, I've seen the bad, I've seen the ugly, and the ugly does happen. That's when you need a real estate attorney to protect your interests. Even though I've been doing it 8 years, you see something new every day. 99% of the issues I've already seen, but that 1% might come up, and that's really when you as a real estate client need someone looking out for you to protect those interests. Everyone can do the things that come up everyday, the common, frequent questions but its going the extra mile for my clients that I take pride in making sure that their investment is protected real estate is probably the biggest investment you're going to make in your lifetime so you want that in the hands of an attorney that is looking out for you and wants to make sure that you're protected no matter what else happens.

What does a real estate lawyer do for their client?

The biggest thing is communication. When you have an attorney working for you, you need to be able to reach that attorney, pick up the phone, call them and get them, or send an email and get a reply within half an hour, because in real estate things can move fast. You might have a home inspection at 9 o'clock on Friday morning and you might need to sign a contract at 3 o'clock on Friday. You need to be to get a hold of me or your real estate attorney and that's where I come into play. Responsiveness is my number one thing, and it's what you should look for in any professional, but especially an attorney because things can move fast. Obviously you want someone with experience Personally I have over 8 years, a thousand P&S agreements, I'm confident I know what I'm doing and can protect your interests.

When you're buying a property sometimes the title can be issue, and prevent you from closing on that property working with someone like myself I can identify that very early on for you, and save you timer and money going forward if there's a problem, and that property is not a good buy because of the title I can identify that right away so you're not spinning your wheels, you're not wasting a month of your time you could be finding the next home of your dreams. Negotiating with your realtor, and all the other parties involved is key. With a real estate transaction there are so many parties involved, just off the top of my head, there's a buyer, a seller, a buyer's agent, a listing agent, probably a buyer's attorney, a seller's attorney, a home inspector, a bank. That's about 8 right there, there's 8 parties involved in a transaction. You really need someone to sort of take charge and steer that transaction toward where you want to go, which is buying that property, and doing it to protect yourself.

What are common challenges/pitfalls/mistakes you've seen early in the home buying process?

One mistake people can make is that they fall in love with a property. You've probably all seen the home shows, you see the happy couple find the home of their dreams, and great, they're all happy they're ready to move forward, buy that home no matter what. That's a mistake. You can't fall in love with a property because things can happen. Everyone should always get a home inspection. And if you're in love with a property you may be willing to overlook some things that come up in a home inspection, or you may not have your realtor fighting as hard as they need to protect you. The home can be great, but if the electrical system is 90 years old, and needs updating, you want to know that and not just overlook it. Doesn't mean you shouldn't buy the home, but maybe the seller should update the panel box, or something to that effect, where your interests could be protected with an attorney involved early on in the process.

How you address contingency/term conflicts with your client and the seller's representation?

With any conflicts or issues that come up, again, communication is key. You obviously have two parties, the buyer and the seller, so we want to come to an agreement. Depending on who I'm representing, if that's the buyer, we certainly want that agreement to be as favorable for the buyer as possible. So right up front, identify the problem, begin to address it. If it's a home inspection problem, that's one thing, if it's a title issue, that's another thing. And frankly, personalities can come into play, too. You just could have a sentimental seller who doesn't want to give at this point, and they're stubborn, they're going to dig in their heels. Well, maybe you can let go on that point, but get two things in return. So it's understanding the personalities involved. It's not just a legal background that I bring, it's 8 years of experience, and seeing how parties interplay with each other throughout the process.

What is some counsel you give to clients buying or selling short sale property?

The biggest advice you could ever give is patience, patience, and more patience! Because there's no set time line. No matter how much you want that property, and you want it on August 1st. It might not happen. And you need to understand that from the beginning. That being said, there are great advantages to short sales. The banks these days are letting properties go for below market value in some cases, because they just want them off the books. And the banks are getting better about approving those short sales, so the time frame is tightening up a little bit, but you're not on your own time schedule and relinquishing control of something can be hard for a buyer.

Let me explain what a short sale actually is. Essentially, when someone owns their home and are "upside down" in equity, they owe more on the property than the current market value is. So the bank is faced with a decision: Do we foreclose on that property, or do we let that person sell the property at the actual market value, and we take a loss as the bank? It's actually a win/win in many cases, because the cost of foreclosing on a property is so exorbantly high these days, that the bank doesn't want to foreclose, they'd rather come to an agreement that everyone's happy with, and move on. And that's where you as the buyer can take advantage of that, because there's motivation on the other side, and that's rare in the real estate world.

What are some challenges working with banks and modifying loan terms?

A pre-approved letter is the starting point of your financing. It's you sitting down with a mortgage professional for the first time, going through your income, going through your tax statements, making sure that you're qualified to purchase a property of that price range. But it's not worth as much as you'd like it to be. Unfortunately, over the last five years, the mortgage industry in this country has taken a lot of hits. It was broken, frankly, and the government is trying to step in and fix it. As hard as the government may try to do the right thing, oftentimes red tape is created, more bureaucracies, and frankly the laws keep changing on a weekly basis in the mortgage industry. So your pre-approval letter that you got four weeks ago, well that program might not exist right now. On the other side, there might be a better program than four weeks ago, so it's very fluid. Obviously, interest rates are fluid. The world economic market can factor in. The earthquakes in Japan could have an impact on your interest rate. A good mortgage professional will let you know that upfront, but you need to be careful. It's not as cut and dry as you'd like it to be.

What are common hitches in drawing up P&S agreements, and how you address them?

The biggest difficulty in a P&S agreement tends to be the home inspection and the items that come up that you as the buyer may want addressed, that the seller does not want addressed. They don't want to spend $3000 to fix the plumbing in the upstairs bathroom because they're selling the home, they just want to get out. Well, ok, you obviously don't want to buy a home with bad plumbing, but they just want to get out. How do we come to an agreement there? Do we make them get it done prior to closing, or do we give you the credit to get it done at the closing? What works for you? Do you have a plumber you trust, maybe you don't trust their plumber, maybe you don't want to deal with it. It's listening to my client, asking them the right questions, listening to their answer, drawing on my experience to best craft a solution for them. Every situation is different. Real estate, if nothing else, is unique; no property is the same as another, no piece of land is identical. No condominium unit has the same view or the same floor plan as another unit. Real estate is very unique, and it needs to addressed as such.

You also run a real estate school ? how does the process of becoming an agent begin?

Again, another example of the government getting involved and changing rules, and that happens. As of right now, April 2011, you need to take 24 hours worth of class time to become a real estate agent. Unfortunately, as of June 1st, 2011, that is going up to a 40 hour requirement. So from 24 hours to 40. Right now, 24 hour class, a school such as mines can structure it so that you can knock that out in one weekend. Two 12 hour days, and you're done. Granted, that's a long weekend -- it's hell, it's boring, you'll hate it, but you'll be done. In, out, done. So step one is to take the class, step two is to pass the test. A good real estate school is certainly going to prepare you for that exam. It's a multiple choice exam, approximately 150 questions. It's not an easy test. But if you take advantage of the classroom time, spend a few hours on your own, you'll be able to pass the test. You can take it, I believe there's about 5 or 6 locations throughout the state that offer the test. It's on the computer -- you go in, 2 or 3 hours, 150 questions, get 70% right, and you're a realtor. And it's as simple as that -- but it's not simple. There is work involved, and there's time. I recommend it, real estate's a great world, but it's not easy. The real world is tough, and you'll go from there.

What type of attributes and qualities do great agents have?

I think the biggest thing these days is for an agent to take advantage of the technology that's available for them. There's so much information out there, it's harnessing that information and using it for your client's best interests. Asking your client questions, listening to their answers, using technology to facilitate coming to a good resolution for them. There's so much data, there's so much information, there's so many web sites, there's so many social media outlets. It's really someone that's well-versed and can utilize technology instead of drowning in it.

Technology is one thing, responsiveness is another. As I've said, things move fast in the real estate world, you need to get a hold of your agent. A home comes on the market that you've been waiting on for a long time, you want to see that property as quick as possible. Maybe you like it, you want to make an offer as quick as possible, you want to beat the competition to that property. Certainly you want an agent that you can get a hold of that will protect your interest and be responsive.

Finally, there's a fine line between you falling in love with the home, and coming to a price that makes sense. A good agent can do both -- they can find you that perfect property, yet try and get that property for fair value for you. You don't want to overpay, you want a good value. It's a big investment, you need sound advice.

Is there personal satisfaction in completing the process with clients buying their first home?

Definitely, that's a great question. I like to say that being a real estate attorney has its ups and downs, but the "up" is being involved in one of the best days of someone's life. Buying your first home, that's a great day in someone's life. Walking into that home, I can remember it myself, realizing "wow, this is mine. This is my brick, my windows, I own this." It's a real sense of, "I'm an adult now. This is the real world, and I own something." And it's a great pride for a homeowner, and it's great for me to be involved in that process. A lot of my colleagues and friends from law school, they're criminal lawyers, they're divorce attorneys, they spend a lot of time in court. Unfortunately, they're involved in maybe the worst day of someone's life. I get to be involved in the best day of someone's life. And I take pride in that, and I want to make sure that I live up to that responsibility.

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