When do you place short sales under contract??

By
Real Estate Agent with RE/MAX Bravo

WHEN DO YOU PLACE A SHORT SALE UNDER CONTRACT IN THE MLS???? 

I'm throwing this out there this morning to see how agents throughout the A/R community will answer.  I know I have talked to my broker about this many time and he is set firmly in his mind set.  Yet everytime I see one of these things it makes me gring. 

I have even thrown this question out at Realtor functions and received multiple answers - so I'm looking forward to all the responses here on A/R

Thanks in Advance

 

Vincent McKamy - Realtor

Coldwell Banker Elite

Serving Fredericksburg, Stafford, Spotsylvania Virginia, and the surrounding areas

www.TheGPSRealtyTeam.com

540-455-2739 

 

 

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VIRGINIA
Coldwell Banker Group
Short Sale Specialists & Pre-Foreclosure Education
Short Sales Specialists
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Rainer
27,682
Sandy Bacon
MacDoc Realty

Vince--The rule in the Massie office is that when buyer and seller have a ratified contract it becomes a contingent contract with a kick-out (third party approval), thus we can accept back-up offers.  As we all know, if a better offer comes in the bank wants to see it so the fun begins....

August 27, 2008 05:28 PM
Anonymous #66
Anonymous
Patrick

What about from the buyers perspective?  I am in a situation where the selling family accepted my contract, and then accepted a previously expired contract with an extension.  After a long wait, the bank accepted the extended contract that was, according to the slling realter, a less amount.  The house was on short sale, and even though the sale was contigent on the 3rd party approval, We signed a contract?  Is it legal for a second contract to be accepted?

February 14, 2009 08:58 AM
Rainer
32,233
Sidney Jimenez
CDPE, Short Sale Expert, 954-665-9449,
Keller Williams

PATRICK,

A lot of the answers to questions, we already know the answers. Fall back to your knowledge of real estate and the answer magically appear.

Everyone seems to react as if the lender has any say as to what contract is accepted and submitted. They don't, they are there to process and make a determination (based on their bottom line) as to their acceptance of the contract in hand. Of course they want to see everything that comes across the table, they want the most they can get. BUT go back and think what you would do if the lender was not involved. What would you do if your Seller accepted a contract and two weeks later a higher offer comes in? You couldn't do anything because the home was already under contract. The Seller didn't have the legal right to cancel his current contract and go with the higher offer. Why do agents think that a Short Sale is different?

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February 15, 2009 12:20 PM
Anonymous #68
Anonymous
Spencer Phelps

Hey guys's I enjoyed reading this thread.

I have a problem related to this happening to me right now. First, I am a RE broker.

I submitted a contract to purchase a home as a short sale purchase. The realtor submitted it to the owners and they signed the contract. It required the lender to approve within 45 days. Right now we're 3 weeks in the waiting process. 

This morning I received a call from the agent telling me that the house was sold at auction 2 days ago by the lender. .... I'm stunned. It was under contract to me!

Do you think I have any recourse here? I'm considering contacting FREC, and have asked for the agents broker to call me on Monday. 

Thanks,

Spencer

 

March 14, 2009 02:25 PM
Rainmaker
25,518
Matthew Rathbun
ABR/M, CRB, CRS, SRS, ePRO, SFR, GRI
Coldwell Banker Elite

Vincent,

I've only scanned over a lot of bad advice here.  As always is the problem on ActiveRain, many of these questions depend on knowledge of the state statutes and MLS regulations. 

First, ratification is when you have a expressed (meaning written) meeting of the minds, this goes back to archaic law brought over from an entirely different country. (Statute of Frauds)  When the Buyer and Seller (the principals) agreed to the terms, you have ratification - once the instruments have been executed and delivered UNLESS the principals have agreed to relegate to the lender's decision.  Two local Brokerages in your market are now using "subject to" clauses in their addendum's. 

I've spoken extensively to these brokers and they agree that when their addendum's are used, the buyer is free to search out other homes and the seller can collect other offers to purchase, until the lender accept terms. Thus this "subject to" clause makes the offer to purchase more of a letter of intent. (I happen to think when you capitulate and allow the Lender to become principal you're doing a disservice to all involve - that's just me)

Now, for the real question - When you do show it as "under contract" or "contract with kickout"?  Virginia Administrative regulation 135-20-190 specifically states that you may not advertise (as in MLS) that a home is active or For Sale if it actually isn't.  Because the Seller gives the Buyer equitable title upon ratification, it is no longer for sale.  MRIS MLS rules also underline and support this requirement to show the true status.

So, unless you have understanding of the principals (lenders ARE not principals) you may not show the property as active once the contract is ratified.

You can find more extensive writings from myself and a local attorney at www.FAARForum.com

Great question, I just wish more agents would ask instead of pretending to know and doing it wrong.  Regardless of the advice here - you should ALWAYS consult your broker and legal counsel before taking any action.  I typically believe in the counsel of peers, but people who are not licensed in your state, practicing under your MLS rules and being bound by your company policy are not peers.

 

 

March 27, 2009 08:52 PM
Anonymous
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Rainer
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Vincent McKamy

Realtor Fredericksburg Virginia
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Additional Information

Selling Homes in Fredericksburg, Stafford, & Spotyslvania Virginia Areas.