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Short-Sale Listing Agents May Be Misusing Nevada Forms!

Some short-sale listing agents may be circumventing the intent of NRED Form 636 and 637 which went into effect under SB69. They are presenting offers directly to the seller's lienholders. Their intent appears to be avoiding having an offer presented and accepted by their seller's subject to lienholder(s) approval, thus, requiring them to place the listing in a contingent status, according to local MLS rules. Consider the following: Nevada Real Estate Division (NRED) Form 636 Waiver Form states, "In representing any client in an agency relationship, a real estate licensee has specific statutory duties to the client. Under Nevada law, only one of these duties can be waived. NRS 645.254 requires a licensee to "present all offers made to or by the client as soon as practicable." This duty made be waived by the client. Last May 2008, it came to my attention that some Nevada real estate licensees were using Form 636 so they could submit offers directly to the Seller's lienholder(s). According to Mr. Jan Holle, Compliance/Audit Investigator/Nevada Real Estate Division, "The intent of Form 636 was to allow limited service brokerages to be in compliance with NRS 645 that states 'All Offers Must Be Presented.' The intent of Form 637 was to allow a mechanism for a buyer's agent to deal directly with a seller if this was in agreement with the seller and the seller's agent." The question was posed, "so the seller signs NRED Form 636 which allows the listing agent not to present all offers. Who presents the offer to the seller? Mr. Holle stated, "It could be the buyer's agent or an unrepresented buyer. In the case of a buyer's agent presenting the offer - Form 637 Authorization To Negotiate Directly With Seller would need to be in place along with Form 636. If a buyer was unrepresented, Form 637 would not be required... there could be many scenarios depending upon whether or not there are licensees involved on the buyer's side, seller's side, or both, and what type of services are provided by the brokerage(s). NRED Compliance/Audit Investigator Jan Holle was asked about this scenario: The seller is represented by a full service brokerage. The listing agent has the seller sign Form 636 only! The listing agent places the listing in the MLS and then advertises it in various media. The agent receives an offer from a buyer's agent to purchase the property. How does the seller know of the offer, receive the offer, or respond to the offer, since they waived a duty owed to them to have offers presented to them? The buyer's agent can not talk to the seller without written permission from the seller and their broker. Mr. Holle's reply to this scenario was, "Using the form [636] in this manner and having the seller's agent receiving the offers was not the intent of the waiver. Using this form in this way could place the seller's agent in violation of NAC 645.632 as he/she for whatever reason is receiving the offers. If the seller's agent is receiving offers, then it is his/her duty to have the seller respond to the offer, and provide the buyer or buyer's agent with written notice of acceptance or rejection per NAC 645.632. If the seller has waived the right for the seller's agent to present all offers than the seller's agent should not be receiving the offers. If the seller has waived the right for the seller's agent to present offers than the MLS should state that buyer's agent is to present offers to the seller. If the form [636] is not being utilized correctly, then the Division should be notified via a complaint form."

Posted by Steven Kitnick on 03/01/2009 05:44 PM

Comments (4)

Real Estate in the ActiveRain Channel

short sales, short sale listings, nred form 636, nred form 637, presenting offers

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4 Comments on Short-Sale Listing Agents May Be Misusing Nevada Forms!

MAR

Steve,

I could not agree more with your sentiment. That said, by filing a complaint because I don't like the way the listing agent is playing the game is a sure-fire way for my client to be excluded from purchasing the property they want. At the end of the day, it is my client who needs to buy a home that trumps my wanting to file a complaint against the listing agent.

That said, I hope some licensee (or 20) will file a complaint with the Division. I would love to have a commission hearing and hear a listing agent explain why they felt they could make up the rules as they go along.

MAR

This is clearly an abuse of the intent of this form as detailed above! Many who try this have not even thoroughly read the forms or the relevant statutes. For example, few agents truly understand that the waiver prevents the listing agent from presenting ANY offers! Presenting offers is an all or nothing proposition!

Now there is another situation where the form may be useful, if not advisable! Some REO listings require the buyer's agent to go to bidselect.com and upload all offers directly to the bank and exclude the listing agent in the process. Thus there is a argument to be made that this REO agent is working from a limited service model when taking on these listings. In fact, the listing agent will only ever know about the accepted offer, but not about any other submissions. This bothers me greatly from a compliance perspective as the listing agent will not have documents and records that are subject to Nevada's five year records retention requirement.

But to reiterate what David Boyer stated above - We cannot be making up rules as we go along! We must seek clear direction and proceed accordingly. That means - Stop asking every agent in the office; that's merely a great way to get multiple wrong answers! Consult with your manager, management team, broker, GLVAR attorney, NVAR attorney, or some other credible resource for getting it right! Winging it only offers you a great opportunity to sit in front of some hearing panel and learn the lesson in a potentially painful, expensive manner. And of course, if you pick the "right" venue - we all get to read about it!

MAR

David,

I hope you get an opportunity to "hear a listing agent explain why they felt they could make up the rules as they go along." Congratulations on being named Commissioner for the State of Nevada Real Estate Commission!

Forrest,

Thank you for your insight in pointing out the REO Scenario! I fully concur with your sentiments that agents should "consult with your manager, management team, broker, GLVAR attorney, NVAR attorney, or some other credible resource for getting it right!"

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