When looking at a particular home, the process associated with a short sale might not work for some buyers, who either have a timeline for which to complete their move or may not want to enter into an agreement under those conditions. These buyers need to be aware of
short sales from the outset.
TREND recently
updated its Rules and Regulations in regards to this issue.
Defining a Short Sale
TREND is using the National Association of REALTORS® (NAR) definition, which states short sales are a transaction where:
- The title transfers, AND
- The sale price is insufficient to pay the total of all liens and costs of sale, AND
- The seller does not bring sufficient liquid assets to the closing to cure all deficiencies.
Since a sale of a property is not technically "short" until settlement, the term "potential short sale" is often used to describe a property that may be subject to a short sale.
Prevalence of Shorts Sales in MLS Blue
Since January 2009, the percentage of potential short sales in active listings in the MLS has remained steady at 5.3 percent. In compiling these statistics, TREND searched the Remarks fields of active listings for variations of terms, such as "short sale," "foreclosure," "corporate owned" and "third party approval."
Disclosure is Your Responsibility
As a listing agent, you must disclose the property is a potential short sale once you are aware that a property might become subject to a short sale. You have the obligation to treat all potential buyers and their agents fairly.
Although the listing agent does have a fiduciary responsibility to the seller, it can be argued that a disclosure of a 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, TREND does not provide any opinions or guidance on your fiduciary responsibilities and recommend you consult with your broker and the appropriate authorities regarding any such issues.
State regulations in Pennsylvania and Delaware already require sellers to disclose if there are liens or other encumbrances that cannot be satisfied by the proceeds of the sale.
Entering Short Sale Information in MLS Blue
You should disclose short sale information in the Agent or Public Remarks fields. TREND is also evaluating additional fields in the MLS that would make it easier to search and record short sales and other transactions requiring third party approval.
Changing Offers for Compensation
Changes in compensation that are the result of a short sale may be entered into Agent Remarks ONLY.
The offer of compensation indicated in MLS Blue in the compensation field is unconditional. TREND's Rules and Regulations state that the information entered in the compensation field dictates the terms, compared to information from any Remarks or other fields. Compensation may only be displayed as a percentage of the gross listing price, a specific dollar amount, or a combination of the two.
Cooperation is the Key
Being forthright about short sales in the MLS is the key to successful collaboration between members. Disclosing this information as soon as you become aware of it will make it easier for all parties to the transaction.