It started with a phone call and e-mail

This week FAAR received a phone call and e-mail from members advising that they had been turned away at the gate of Lake Land’or, in Caroline County, with buyer clients in the car.  They were attempting to show REO properties, which were, of course, vacant.  The security guards reportedly advised the agent that if the house was a foreclosure, the agent would need to go to the administrative office.  Unfortunately this was on a Sunday and the Administrative offices are only open at limited times.

The Listing Agent’s responsibility

FAAR has contacted the POA and requested their policy, it’s date of implementation and how best to relay it to you as members.  The following directions were given by Lake Land’or POA staff yesterday:

If it has been identified as a foreclosure by appropriate documentation being faxed (804 448 3725) to the Administration Office or sent via mail to 319 Land’Or Drive, Ruther Glen, VA 22546, the realtor’s card with a photo ID, if a picture is not on the card along with the listing agreement will provide the information required for entrance into the community.

FAAR Staff has e-mailed for clarification of this policy, as this does not help the Buyer Agent attempting to show the property.  We’ve been advised that the policy, nor the date of implementation are available to us.  Simply that the above referenced excerpt is sufficient.

Recommendations

FAAR understands the community’s need for the feeling of security, but is trying to recommend that the POA consider putting the burden of proof, so to speak, on the shoulders of the licensed Buyer-Agent.  We are recommending that any agent showing property in that community bring with them a copy of their real estate license, a photo ID and printout of the MLS information, showing that the property is actively for sale and vacant.

We have asked Lake Land’or POA to consider the above recommendation, as it’s not reasonable for all REO / Foreclosure agents or agents not active in that community to know that they must submit this information to the Administrative office and a buyer being turned away from seeing a property in this difficult market may persuade the buyer to not come back again.

What to do, for now

At this time, we have no other recommendations, other than to make sure that even if the home is vacant, the Buyer Agent contact the Listing Agent to ensure the Listing Agent has met the requirements of the POA and the home is fully available to show.  FAAR will be sending out this information by e-mail to local broker for distribution.

Kudos to the following members who have invested in their careers, but acheiveing designations!  Thanks to all the Brokers who support and encourage agents to become more invested in their clients, by gaining new knowledge.

The following FAAR Members have achieved Industry Designations in the past month.

GRI - Graduate REALTOR® Institute:

Victoria Jo Painter – Exit Powerhouse Realty

Janis Weller – Century21 Classic (special congrats for getting ABR and GRI in same month!)

ABR - Accredited Buyer Representative:

Janis Weller – Century21 Classic

Barbara Klien – Keller Williams

Debbie Klingensmith – Century21 AdVenture

Marie Smith – Century21 AdVenture

Jonathan Snow – Exit Realty Expertise

Chip Taylor – Century21: Battlefield

Frieda Harris – Century21 Battlefield

Carrie Braxton – Exit Realty Expertise

ASR - Accredited Seller Representative

Sheri Lutz – Exit Realty Expertise

Ella Hubbard – Exit Realty Expertise

Richard Snow  - Exit Realty Expertise

Jonathan Snow – Exit Realty Expertise

Koontz Campbell – Exit Realty Expertise

Mary Ann Bechtold – Century21 Battlefield

Ethel Lucas – Century21 Battlefield

Gena Hill – Century21 Battlefield

Lynn Harris – Century21 Battlefield

Drew Fristoe – Century21 TEAM

Stewart Spencer – Century21 Realty I

Kris Dixon – Long and Foster

Lori Feldhaus – Assist2Sell

Carol Curley - Dockside Realty

CRB- Certified Residential Broker

Shelby Harvey – Century21 TEAM

Here is a recent report on the Virginia housing market in the second quarter of 2008.

The state housing market performed better in the second quarter of 2008 than in the first quarter
of the year, particularly in terms of sales activity. At the same time, there were dramatic shifts in
some local markets across the state. The outlook is for these regional differences to widen in
the next quarter before the overall state housing market edges back toward equilibrium.

Meeting of the Minds

First the REALTOR® needs to be aware when the contract is actually ratified. This is really no different an issue than any other. The contract is ratified when you have an expressed (in writing) meeting of the minds. When the Buyer and Seller have signed all the agreements in the contract and delivery and acceptance is made, you have a ratified contract. The third party approval is a contingency just like home inspections, finance or any other. There are some new Short Sale Addendums that help define this contingency better, but it’s important in the context of MRIS’ new changes. It’s important because knowing that the contract is actually ratified when the buyer and seller agree, means that the home can no longer be marketed as active; regardless of the status of the Lender’s Third Party Approval.

VAC 135-20-190 Section C.3

a. Online listing information must be consistent with the property description and actual status of the listing. The licensee shall update in a timely manner material changes to the listing status authorized by the seller or property description when the licensee controls the online site.

Disclosures

Lem Marshall, VAR’s General Counsel, has spoken on many occasions in regards to the fact that the Seller, who is pursuing a short sale is protected in the fact that such pursuance is a confidential financial fact. Therefore, without permission of the Seller, the agent may not disclose this fact - ever. Since it’s potentially material to the time frame of the buyer, some assert that it does have to be disclosed at the point of submission, for an offer to purchase. However, it is not material to the marketing. You can see more from Lem on this issue HERE.

Virginia’s Statutory Code Section 55-2134 says the following:

3. Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the tenant consents in writing to the release of such information;

MRIS’ New Policy

The following information was copied from the MRIS FAQ last week:

Short Sales

What is a Short Sale?

MRIS is using the NAR definition of a short sale - “As used in MLS rules, short sales are defined as a transaction where title transfers; where the sale 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.”

Why does MRIS use the term potential short sale?

Since a sale of a property is not technically “short” until settlement, the term “Potential Short Sale” is used to describe a property that may be subject to a short sale.

Why must a potential short sale be disclosed?

If a seller is seeking the approval of a third-party to sell a property short, MRIS considers this a material fact. Failing to disclose a material fact may be considered misrepresentation.

Is disclosing a potential short sale a violation of my fiduciary responsibility?

Your fiduciary responsibilities and other professional obligations are between each broker/agent and his or her client. Although the listing agent does have a fiduciary responsibility to the seller, it may be argued that a disclosure of short sale does not violate the fiduciary responsibility since the fiduciary obligations may not relieve the licensee from their statutory obligations to other parties. However, MRIS does not provide any opinions or guidance on your fiduciary responsibilities and recommends you consult with your broker and the appropriate authorities regarding any such issues.

When does the property need to be disclosed as a potential short sale?

The listing broker/agent must disclose that 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.

How can I indicate that a listing is a potential short sale in MRIS?

MRIS will be making changes to Keystone^® and Matrix^® to enable agents to disclose a potential short sale and the requirement for third-party approval of the contract. Until these changes are complete, listing agents must disclose a potential short sale in the General/Agent Remarks by stating “Potential Short Sale”.

When must I change the listing status while waiting for the bank to provide its approval?

The status must be changed within 48 hours once the buyer and the seller have signed the contract even if it has a contingency such as lender approval.

What should the new status be?

Once the contract is signed by all the buyer(s) and the seller(s) with a third-party approval contingency, the status must be changed to either CNTG/KO (Contingent with a Kick Out) or Contingent No Kick Out (CNTG/NO KO).

What happens if my seller wants me to keep it in ACTIVE status?

As a licensee, you have the obligation to treat all parties (buyer’s, buyer’s agents, etc.) fairly. Failing to disclose the accurate status of the property may be misrepresentation. The listing broker and seller may continue to market the listing and accept back-up offers.

Can the amount of compensation owed to cooperating brokers in a Potential Short Sale be changed?

The offer of compensation indicated in MRIS in the compensation field is unconditional. MRIS’s policy is that language in any Remarks field or any other field does not trump what is indicated in the Compensation field. Compensation may only be displayed as a percentage of the gross sales price or a specific dollar amount.

The selling broker is not precluded from electing to accept compensation other than as stated in the compensation fields. However, that issue is one to be negotiated directly among the brokers to the prospective sale.

To whom should I complain if the amount of compensation paid at settlement is not what was stated as unconditional compensation on the listing?

Issues regarding the amount of compensation paid at settlement are always referred to an Arbitration Board. Short Sales are not an exception. Your local REALTOR^® Association handles arbitration requests. MRIS does not arbitrate or adjudicate compensation disputes.

Summary

It’s important for the Practitioner to remember that MRIS serves several states, so their opinions regarding disclosure is not Virginia specific. REALTORS® are encouraged to always consult with their Brokers and Corporate Counsel in regards on how to define this policy from MRIS, if there is an unclear issue.

I did call MRIS compliance for clarification and they are, in fact, stating that if the Seller declines to disclose that they are pursuing a short sale; they may not be listed in MRIS.

Otherwise the MRIS is fairly clear on issues such as status changes and the fact that commissions cannot be defined anywhere other than in the Commission Field and such things as “commission subject to third party approval” in the ‘remarks’ area are no longer valid.

Are You Paying Attention

Daily I receive phone calls from agents who are having issues keeping their license. It has nothing to do with disciplinary action and it has everything to do with paying attention to DPOR’s requirement for re-licensure.

It’s somewhat disconcerting when an agent does call days before the expiration date of their license trying to get help sorting out what they need and how to get it. FAAR’s Real Estate Career Academy holds routine classes and is becoming one of the most relied upon real estate school in Virginia. RECA’s staff is happy to help, but what we’re finding is that agents are taking classes from many different sources and not really creating a plan for how these credits will be obtained.

Keeping Track

A current trend has been agents calling about classes they’ve taken through a “coaching” program, settlement company or vendor touting that they are giving credit. The agent then finds that the class wasn’t really approved, doesn’t meet their required hours or that the credits never get filed. This results in agents panicking at the last minute trying to make up their hours. Here’s an example: Agent sees a free Ethics class offered by a vendor or coaching service who is using education as a way to introduce their service. The agent takes the one hour class and doesn’t follow up to see if the credits were applied. The agent also forgets that they need a minimum of three hours for Ethics. On top of that 3 hour requirement, if the agent is a REALTOR®, then they also have to take NAR Ethics training.  RECA and most other schools have incorporated these classes into one, three hour session to meet all your requirements.  Association schools work hard to present meaningful training in an easy to use program.  It’s why most classes are three hours.

Things to Watch Out For

Here are a few questions to ask when you are planning to take a class:

1.)  Is the course covering required CE/PL topics?

2.)  Does the marketing reflect the category of training?

3.)  Is the instructor qualified in the topic they are teaching?  (Such as a technology vendor offering a Fair Housing class…)

4.)  Are the topic hours taught meeting the minimum required hours for the catagory? (If you are taking an Ethics class, does it meet the 3 hour requirement set out by DPOR)

5.)  Is the education really designed to benefit you as a practitioner, or solicit business from you?

6.)  Do you already have the class or topics that are being offered?

7.)  Has the school shown a history of follow-up and dependability in submitting your credits to DPOR?

There are a number of good real estate schools in Virginia that offer quality training.  If you are in doubt, please give staff a call at your local Association and they’ll be happy to help you!