WASHINGTON - April 25, 2008 - When the National Association of Realtors®' Multiple Listing Issues & Policies Committee meets in May, members will discuss a standard definition of "short sale." The discussion stems from disagreements within the industry with regard to when properties can be labeled as short sales, and how to disclose them in the Multiple Listing Service.
Committee Chair Colleen Badagliaccosays that most MLSs allow Realtors to disclose real estate-owned properties, and whether sales are "subject to lender approval" or "subject to court confirmation." However, banks often discourage disclosure of potential short sales because more potential buyers submit low-ball offers.
Badagliacco says that listing agentshave a fiduciary duty to sellers, including REO properties, and suggests that encouraging a short sale might not be in the seller's best interest. On the other hand, as potential buyers focus on the properties currently available for sale, they want to know which ones have the potential to be a short sale. Disclosing "potential," however, can be difficult. "Are you potentially pregnant?" asks Badagliacco when describing the problems Realtors face if selling possible short sale properties.
"The (issue) that we've really been trying to focus onand pin down for discussion at the May meeting is: ‘How do you define a short sale?'" says Badagliacco. "Because technically you don't have a short sale until it comes to closing, and there is not enough money to pay off the lender."
Source: Inman News (04/24/08) Roberts, Jr., Glenn
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I'm buried in short sales now, 25 listed, 8 pending/contingent, showing buyers on a regular basis now. I'm confused as to why we need a rule for this.
Is it because most areas of the country have not dropped 35-50% in value like here?
If I go into a listing appointment knowing the customer is going to be short at closing, does that count?
or should I wait to find out they doen't have the money?
How do you evaluate a listing for a short sale?
When do you label it a short sale?
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