(Blogmaster’s note: You MUST read the comments below to see clarification of the MRIS Policy regarding disclosures)
Personally, I have had a very bad experience with a “Short Sale.” However, perhaps I should use a term which is more appropriate. That term is “Potential Short Sale.” As a result of that bad experience, I have been avoiding them. Today, however, a good client has asked me to show them a home that is a potential short sale. I will comply with their request but only after having warned them of the prolonged period of time that may occur prior to settlement if they get a ratified contract (which will, of course depend on third party approval).
Technically, according to many sources, a sale is not “short” until settlement. MRIS defines “short sales” as “a transaction where title transfers; where the sales price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.”
Just today I previewed a property that had a comment something like “Third party approval required.” in the remarks section. Hopefully, the listing agent did not know that there was a field where is can be disclosed that a property is a potential short sale. In my opinion this field should always be entered where the owner of a property is negotiating with a lender to allow a short sale.
According to MRIS “The listing broker/agent must disclose (emphasis added) the property is a potential short sale once the listing broker/agent is aware that a property reasonably might become subject to a short sale. The reasoning is that this is a material fact; it could be determined that failure to disclose it may be misrepresentation.
Let’s make it easier on each other. Don’t make us work any harder than we need to. Cooperate with your fellow agents and brokers.
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{ 2 comments… read them below or add one }
One phone call to the listing agent should take care of that. If not, there’s always that wonderful form that we can fill out dealing with MRIS infractions.
The MRIS rules did say that the Listing Agent must disclose, however the revised regulations specify that the disclosure is only required where it isn’t other prohibited by law.
Virginia considers the pursuit of a short-sale to be a financial issue and this it is confidential – always. The Seller is never compelled to disclosure that they are looking into a short sale – ever. The listing agent MUST keep that information confidential, unless the Seller has directed otherwise. (I don’t agree with the rule, but it’s the rule non-the-less)
Because I’ve had this conversation so many time, I know that you can find this requirement to hold it confidential in 54.1-2131. I’ve also had conversations with VAR’s legal counsel to confirm. VAR’s counsel is a primary reason why MRIS had to modify their policy. Evidentially, Maryland and DC (other areas served by MLS, do not consider it confidential.
You can read more on this matter here: http://faarforum.com/2008/07/mris-short-sales-commissions-disclosures-and-you/
The bottom line is that without the Seller’s consent, the pursuit of the shortsale or consideration of one is taken to the Listing Agent’s grave; unless the Seller feels compelled to give up the legal protection.
We have more lengthy conversations and ways for Buyer Agents to investigate and flush this out in our Short Sale classes at RECA. Regardless if it is disclosed as a short sale, or not; the Buyer Agents should approach almost every non-REO listing as a potential Shortsale, in this market.
Be careful when using that MRIS complaint feature. Filing a false complaint, could backfire on you!