|
A question came up recently as to handle a Short Sale listings in the MLS when a buyer has made an offer and the seller has agreed to send it on to the lender. May the listing agent leave a listing as active until the lender has made a decision? Here is the answer:
The MLS Rules state that when a listing goes under contract, the listing must be put in either Pending or Contingent status – unless there is a “first right of refusal” clause in the contract with a time frame of seventy-two hours or less.
Thus, the question becomes: when does a listing go under contract? That is probably more of a legal issue than an MLS issue, but let me offer these non-legal thoughts in the form of an analogy. Remember, I am not an attorney and I do not have a real estate license, which means I really don’t know anything about anything. With that in mind, here is the analogy.
Let’s say the MLS Rules included a paragraph that said that the only time a man and woman may live together is when they are legally married. How will I know if the woman that steals the covers from my side of the bed every night and I are breaking the MLS Rules by living together? It’s going to be a question of whether we were married twenty-two years ago or only said nice things to each other that day in the park.
My father (who was not an attorney either) taught me that when people agree to something in writing and everyone involved signs it, then you have committed yourself to whatever was agreed upon. For the sake of illustration, let’s say that my father taught me well (please don’t ever tell him I said that).
Now, let’s say my girlfriend and I, lo these twenty-two years ago, went to the courthouse and agreed to be married. Based on what my daddy taught me, if we both signed the marriage license, odds are we were legally married (at least she acts as if we were).
Let’s say that my then-girlfriend was under the age of legal consent, whatever age that might have been, when we went to be married. And let’s say that the law at that time said that if someone under this age wanted to be married then a parent had to sign the marriage license as well as the parties wanting to get married. If my girlfriend and I both signed the license, but her father did not sign it, then we probably were not married.
The same is true with Short Sales. If you have a contract, then the listing must go into either Pending or Contingent status, but if you only have an offer, then the listing may stay active. If the lender is a party to the agreement, then the lender would probably have to sign the contract too. Keep in mind, though, that the FAR Short Sale Addendum states that the lender is not a party to the contract.
Chances are that if you have a contract to purchase with both a buyer’s signature and a seller’s signature, based on what my daddy taught me you probably have a contract.
I hope this helps. If it only confuses you, please email me and let me know.
|
|
Comments (14) :: Post A Comment! :: Permanent Link :: Email This Entry
|
 |
RE: The Long and Short of the Short Sale Status
Posted by: murray
Date: Aug. 8, 2008
Geoff, that is too funny. I was wondering where you were going with the girlfriend thing, but it comes out fairly clearly in the end. I want to see more blogs.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Chuck Licari
Date: Aug. 8, 2008
Good job Geoff... 100% Thanks, Chuck Licari
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Janice Busovne
Date: Aug. 11, 2008
Geoff,
You bring up some good thoughts on the subject of short sales. We as Realtors have to rely on the information provided to us via the MLS. When we are working with buyers (yes, they are still some out there), we MUST have all of the information on the MLS correct in order to best represent our clients.
I have recently shown a short sale to a buyer and they fell in love with it and were ready to put in an offer. Imagine my surprise when I contacted the listing agent and she informed me that she has had a contract (in writing and signed by both buyers AND sellers) for about 6 weeks. The contract is now in the hands of the lender awaiting their blessing. Needless to say, my buyer was crushed and all of this could have been avoided if the agent had disclosed that there was an accepted contract on the property and they were just waiting for bank approval. The listing agent agreed to put a comment in the agent notes so this situation would not happen again to another unsuspecting agent...
I am not sure if the listing should be put in pending or contingency status but at the very least, it MUST be disclosed that there is an accepted contract on the property awaiting bank approval. Remember, the seller still holds title to the deed and is therefore the owner, NOT the bank. And since the seller has signed a contract with a buyer, there is a VALID contract weather it ever closes or not....
These are just my thoughts on this matter...I am glad that it has been brought up because we as agents need to protect ourselves and our clients and provide accurate information to other Realtors via the MLS...
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Liz Streed
Date: Aug. 12, 2008
I agree with Janice Busovne. Once the Seller has signed off on the offer there should be a note in the MLS that an offer's been accepted awaiting the lender's written approval. I had 2 offers, of late, on 240 Elliott Rd. in Mary Esther, FL and the Seller signed both of them knowing that it was up to the bank to choose, if any, which offer they would accept. It was noted accordingly in the Agent Notes section of the MLS and the property was placed in Contingent/Pending status.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Frank Brooks
Date: Aug. 12, 2008
Geoff, your daddy was pretty sharp. My daddy said when you shake hands you have a deal.
|
 |
RE: The Long and Short of the Short Sale Status
Liz, it's good that the listing agent placed the listing in the proper status. The MLS Committee will be reviewing a request that may help the frustration when there isn't a "contract" but there are offers being considered by the bank. The request would require the listing agent to put something like "offers pending" at the start of the agent notes. Any thoughts on this?
|
|
RE: The Long and Short of the Short Sale Status
Posted by: jo
Date: Aug. 13, 2008
Noting that "offers are pending" would be a great service. Let's hope it gets approved.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: jim
Date: Aug. 18, 2008
I'm not a lawyer nor do I play one on the web. My question can the seller really sell the house in a short sale if they do not have the money to pay the short fall. I think it is a three way implied contract.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Donna
Date: Sep. 3, 2008
What if the seller refuses to sign the contract but still submits it to the bank? Do you have a "contract" then?
|
|
RE: The Long and Short of the Short Sale Status
Donna,
That's kind of the point. If you don't have two signatures on a marriage license, I don't think you have a marriage (although, again, I'm not an attorney).
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Donna
Date: Sep. 3, 2008
Right but would they still be required to change the status or post a comment in the notes... was my real question.
|
|
RE: The Long and Short of the Short Sale Status
Gotcha. In my opinion the listing agent would not be required to change the status since the only time you would change the status is if you had a contract. So really, they would be compelled to leave it active. The MLS Committee ruled that they would not require a notice when offers are pending, but it would probably be polite.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Donna
Date: Sep. 3, 2008
Yes... very polite! Thanks for the Blog btw. Very nice to have a place for everyones take and comments on things.
|
|
RE: The Long and Short of the Short Sale Status
Posted by: Nina
Date: Nov. 17, 2008
Gee, I never read so much about the matter............
but it's early a.m. so now off to work to hopefully get a short sale,
long sale, ANY kind of sale! But thanks for your comments and
especially liked your analogy & I agree with your Dad!
|
Page 1 of 1
|
Categories
Favorite Links
|
RSS Blog Feed