MLS Management in MD/DC/VA area making Short Sale listings easier
August 2nd, 2008 by admin
NEW GUIDELINES FOR MLS LISTINGS
The giant MLS system, the Metropolitan Regional Information System (”MRIS”) covering Maryland, Northern Virginia and DC has promulgated new guidelines, definitions and rules for Short Sale listings. MRIS is the largest MLS in the country and covers about 22,000 square miles. This is welcomed news.
“SHORT SALE” IS MATERIAL INFORMATION. In the past, agents working with buyers have no assurance that a listing is not a potential Short Sale listing. It is presumptuous and thoughtless when a potential Short Sale property is not disclosed in the MLS. We have a number of relocating buyers, buyers with expiring leases, etc. that may not have an undetermined amount of time to wait for a Short Sale transaction to close. It’s bad enough that lenders have a thoughtless contempt for the needs of home buyers. It’s worse when listing agents do not disclose what this real estate broker always considered “material information”, i.e. that the property listed for sale, if sold, will be a Short Sale. The knowledge that a listing is a potential Short Sale means that we can contact the listing agent and ask if there are already offers, inquire as to the status of the lender’s approval of the owner/seller position as a potential Short Sale seller.
“CONTINGENCY” IS MATERIAL INFORMATION. One thing is for sure, “it isn’t a short sale until the lender says it’s a short sale”. That fact is often not understood by listing agents. In their zeal to list properties, many inexperienced agents fail in their due diligence and, by not disclosing that a property is a potential Short Sale, may cause unnecessary financial harm to prospective home buyers and their agents. Many listing agents have their own policy of not disclosing the potential Short Sale status of a listing. They often fear that disclosure of this material infrormation would encourage low offers. By not disclosing that a seller may only accept a contract with a contingency (lender approval), the seller is misleading potential buyers and their agents. 
WHY DISCLOSE THAT A PROPERTY IS A POTENTIAL SHORT SALE? Our market is slow. Home buyers’ time is valuable. Buyers Agents’ time is valuable. Our reputation is not helped by misleading the public and each other. It’s an unfair practice to list a SECRET SHORT SALE.
SECRET SHORT SALES
MRIS has received many complaints from agent and broker members about listings that do not disclose “Short Sale” status. The status of “Short Sale” has been available as a single keystroke for listing input for about 6 months. Yet, many potential Short Sale listings do not show that listing status. Without a strict policy for Short Sale listings, there was little the MRIS could do. That all changes this week with the publication of guidelines for Short Sale listings.
Highlights of the MRIS Short Sale policy:
Definition of Short Sale. MRIS is adopting the definition of “short sale” established by NAR - “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.”
Definition of Potential Short Sale. A potential short sale describes a property that may reasonably be expected to become subject to a short sale. Going forward, MRIS new policy is that all Potential Short Sale listings must be disclosed. The potential for a short sale is considered a material fact.
Lender Approval. Seeking lender approval is part and parcel of the typical short sale transaction. The bottom line is, if lender approval is sought, then this fact must be disclosed to the potential buyer and buyer’s agent - as any offer they write might be treated as a contingent contract subject to a third-party approval.
STATUS OF THE LISTING
This policy is one of the most important. Often we read listing that are totally silent as to (1) the listing is a potential Short Sale and, (2) there are 1, 2 or multiple offers on the property. Worse yet, often a fully “ACTIVE” listing does not disclose that there is an accepted contract on the property. It’s isn’t unreasonable that the actual status of a Short Sale listing should be disclosed in the MLS just as the actual status of any listing should be disclosed by use of the CNTG/KO or CNTG/NO KO keystroke option.
With disclosure that a property listing is a potential Short Sale, it may make a difference in the lender’s letter, price offered, terms and conditions. We would, for instance, know to avoid “drop dead” contingencies. There is little need for a seller to receive an offer that requires acceptance or a counter offer within 24, 48, hours if the offer must be approved by the seller’s lender. With the information that there is a contract accepted, home buyers and their agents can pursue contracts with properties that are fully available. What a concept.
The new guideline requirements are clear. When a potential Short Sale listing is under contract, with or without a KickOut, that too is material information and should be disclosed.
Appropriate Status. The status for any listing where a ratified contract is subject to a lender approval must be changed to CNTG/KO or CNTG/NO KO, indicating a third-party approval contingency. MRIS’s perspective is that a listing broker, in such an instance, may continue to market the property and continue to accept back-up offers. The MRIS Rules and Regulations require that the listing’s status be changed within 48 hours excluding weekends and holidays.
This policy for Short Sale listings is welcomed and will help listing agents and buyers agents conduct our business in a more orderly fashion and better serve our buyer and seller clients.
Chalk one up for “transparency in real estate transactions”.
This entry was posted on Saturday, August 2nd, 2008 at 6:01 pm and is filed under Short Sale Listing Rules. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
