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Please visit my other blogs concerning short sales:

December 21, 2007 at tgif-legal-tip-mortgage-debt-relief-for-foreclosures-short-sales

October 12, 2007 at tgif-legal-tips-financial-help-for-those-facing-foreclosure-short-sales-etc

August 17, 2007  at short-sale-reduced-commissions

and May 4, 2007 at tgif-legal-tip-short-sale-seller-perspective

The most similar to today’s blog is the May 4, 2007 entry where I discussed the Seller’s perspective.

From the listing agent’s perspective… let’s talk about how to handle and orchestrate a short sale.

First don’t forget the basics…remember again, prior to taking the listing and entering it in the MLS as a short sale review with our client how a short works.

Memorandum_Of_Warning_Concerning_Seller_Performing_A_Short_Sale 

Also protect yourself by amending the MLS Co-Op offering, “….Transaction … subject to …. upon bank approval; … compensation … will be reduced if the lender(s) reduce … commission…reduction to be split 50/50.”  See short-sale-reduced-commissions.

Once you do have an offer ….. and your seller accepts the offer, you should place the listing into the contingent “C” status within two days of the sales agreement being mutually executed (signed by all parties) while you wait for the bank’s approval and once you gain the seller’s lender’s approval, change the status to pending or “P” if all other contingencies have been met, within two days of receiving approval from the bank.  See MLS_Tip_2008-02.

You should have your Seller orchestrate the deliver of the offer and I suggest the fact that there is an actual opened escrow to the lender of the Seller as soon as you.  As discussed above, try to find out this contact of the Seller’s lender prior to receiving an offer to make good use of your time.

What if you receive an offer while the bank is reviewing your offer, you should let the prospective purchaser know that there is already an offer.  But they should know this as it is in C status.  You can inform the prospective purchaser that they are able to submit an offer, but it will be a back up offer, subject to the cancellation of the prior by the Seller and subject to the bank approval.  Your seller can entertain accepting this offer, but remember the Short Sale Addendum to Purchase Agreement  allows for a three (3) day first right of refusal, prior to your seller being able to accept such a back up offer and even open escrow, always subject to the prior being canceled by the Seller and bank approval. 

Can you send the offer to the lender?  Can you make the lender of the Seller aware that there is another offer?  Good question.  I telephoned the Nevada Real Estate Division at 702 486 4000 and asked this question and was informed that you can, in fact, inform the Seller’s lender of the other newly received offer and you can share the offer with the Lender.  I cannot find within the NRS, NAC, or REALTORS® Code of Ethics a guidance that prohibits the Seller or the Seller’s REALTOR® from disclosing information to the Seller’s lender. (Of course keep in mind Standard of Practice 1-9.  While it is true that this disclosure of a secondary offer may affect the Seller’s lender’s decision in whether or not to accept the first buyer’s offer.  But this is result of the offer being rendered subject to bank approval. 

3 day first right of refusal in the Short Sale Addendum to Purchase Agreement

The Buyer in first position, per the Short Sale Addendum to Purchase Agreement, has a 3 day first right of refusal.  ‘Buyer is informed that the property will be placed in “Contingent” status after the Purchase Agreement is executed, while the transaction is subject to Lender Approval. The Parties are informed that additional offers will be presented to the Seller.  If the Seller receives a written offer, which the Seller is willing to accept, the Seller will give Buyer written notice of the offer including the material financial terms and conditions and the Buyer shall have the right for 3 business days to meet the price and terms as contained in the third party’s offer.’

What about NAC 645.605(6)?   NAC 645.605(6) says each licensee must “deal fairly with all parties,” to the transaction.  I asked the NRED about this and was informed that NAC 645.605(6) does not say, it is improper to share with the Seller’s lender the fact that another offer has arrived.  Lets not forget the other side of the coin which is NAC 645.63.  All offers must be presented and once the Seller elects to share the new offer with the lender it must be done.  Also if there is a rejection of any offers this must be presented timely per NAC 645.632.

A short sale signed by a Seller is a subject to contract.  And the subject to is as powerful as the Buyer’s typical contingency of “financing.”  The Seller’s right to work with their lender, to share that other offers have been made must be viewed in the same way we respect the Buyer’s control of his/her financing.

As long as the sale is “subject to bank approval” the transaction is subject to twists and turns buyers are not used to and are not subject to in a transaction ‘not’ subject to bank approval.

See also the April 2008 MLS Terms of Use Memo from the Greater Las Vegas Association of REALTORS

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