Jun 25, 2009
Short sales & REOs continue to frustrate
25 Jun 2009
Posted by VAR
NAR reports that 40% of Realtors have been involved in the sale of a distressed property over the past year. With over a million transactions per year, inevitably a few will go bad, regardless of the type. But when a third party is brought into the transaction, and the deal is no longer just between a buyer and a seller, this tends to introduce several new ways for the deal to go awry.
We’re hearing from all over the Commonwealth, but particularly in Northern Virginia, that short sales are causing all kinds of issues. Everyone seems to have gotten past the fact that it takes the banks a looooooooooong time to consent to these transactions. Realtors also seem to understand very well that there’s a possibility that a bank will refuse to act on an offer, even if the offer seems to be a strong one.
Knowing this, some Realtors have been skirting, exploiting gray areas of, or outright defying certain sections of the Code of Ethics and MLS rules in order to hedge their bets and keep their clients’ options open in the unpredictable realm of “subject to third party approval.” Because the banks are held to a different ethical standard, sometimes the banks’ actions (or in many cases, inaction) can cause the Realtor to violate NAR’s Code.
So when it comes to distressed transactions, how can you make sure you’re on the right side of your obligations to the Realtor Code of Ethics and Virginia laws?
- For starters, watch this 30 minute video with VAR’s Special Counsel Lem Marshall called “Ethical Considerations in Short Sales.”
- Also, check out VAR’s Legal Resources Center, where you’ll find over 100 articles about legal and ethical issues especially for Realtors.
- Finally, agents should be talking with their brokers about these dilemmas. And brokers: If you don’t know how certain situations should be handled, call VAR’s Legal Hotline. Authoritative legal information is just a phone call away.