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Old 09-18-2008, 02:19 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 19,109,609 times
Reputation: 6378

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Our office has a client who has been looking at homes for awhile and he came to the office the other day asking us why we hadn't shown him a property he found on Realtor.com. We had it listed earlier this year for $285,000 and when the listing expired, we couldn't find the seller.

A quick check showed it had been listed by a real estate company 90 miles away for $179,900 and with a quick google of the MLS# got us to an advertisement on Intero real estate's website.

"This property is NOT a short sale or foreclosure" is stated on the webpage.

We wrote a full price offer on the property as it represented a really good value at that price, delivered it electronically and got a reply that the seller had signed it but it needed to have lender approval as it was a short sale! The notice of default for $183,000 was filed on June 26, 2008 and the property was listed on July 4, 2008. Our buyer was really stretching his finances to make the original offer and we're not that far away from a trustee's sale.

Our buyer is more than a little miffed at the situation and I consider the offer made under a substantial misrepresentation. If we had known the status, we wouldn't have made a full price offer and we would have used the appropriate form for this kind of transaction. Fortunately, The CAR legal attorney tells us that the notice of lenders approval (not on an approved form, but as a note on the faxed back offer) is a counter offer and we're not obligated to continue.

The lender won't talk to us unless we get sellers approval, which isn't going to happen anyway. Right now we're going to gamble and let it sit to see if it goes all the way to foreclosure.

Any comments are appreciated.
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Old 09-19-2008, 12:11 AM
 
Location: Montana
2,203 posts, read 8,379,449 times
Reputation: 1099
So few of these ridiculously priced short sales ever make it through escrow. It sounds like it's probably close to auction. Do you know if an auction date has been set? I think the better deals (and definitely less stressful deals) are on bank owned properties. Sounds like that's where this is headed. What the bank decides to price it at is the big question? However, at least you know that you actually HAVE a deal once the bank owns it.

Definitely a case of non-disclosure. It's a material fact. Anything that has not been disclosed that would affect what a buyer is willing to offer is a material fact. And in this case it was not disclosed.

In Arizona we have a standard Short Sale addendum, and it contains a clause which allows the buyer to cancel the contract any time prior to bank notification of short sale approval. It also covers the buyer with regards to when the inspection period begins, etc. I wouldn't do a short sale without one.

One thing that I've found very helpful is to check recorded documents prior to making an offer to see what loans are out there. If it looks like a possibility of a short sale (because of when the home was purchased and the original or refi mortgage amount), then that sends up some red flags. At that point I always call the other agent and ask if the seller is "close to a short sale" because of this or that that I've discovered. Most will 'fess up if it's getting close to short sale. If it's already in short sale status they'd better be disclosing that to a potential buyer!
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Old 09-19-2008, 07:00 AM
 
Location: Virginia Beach, VA
2,124 posts, read 7,934,229 times
Reputation: 813
Boy, I would love to get a copy of that addendum!! I would take it to our MLS. I am surprised that our MLS (who has an addenda for sneezing, lol) doesn't have something like this....

Shelly
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Old 09-19-2008, 07:54 AM
 
1,305 posts, read 2,151,552 times
Reputation: 238
Since I'm not a real estate agent, I don't have the ability of complaining to MLS.

So my suggestion for non-agents is to write to the state board of real estate agents and file a complaint of misleading advertising. It's obviously wrong but the seller knew that few people are interested in short sales since they almost never close, so the seller chose to lie about the condition of the house. The board can investigate.

I don't think I'd recommend this for current agents since you might get blacklisted by others or get a bad reputation, but you should have other (less painful) alternatives available.
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Old 09-19-2008, 08:42 AM
 
Location: Martinsville, NJ
6,162 posts, read 11,208,807 times
Reputation: 3957
Quote:
Originally Posted by bigtrees View Post
I don't think I'd recommend this for current agents since you might get blacklisted by others or get a bad reputation, but you should have other (less painful) alternatives available.
That's a misconception that many people have. As a real estate agent, and especially as a Realtor, you are ENCOURAGED by most of your peers and by ALL of the organizations, to report this sort of activity so it can be stopped & dealt with. The overwhelming majority of professionals in the field will appreciate this sort of thing being reported. The whistle blower will NOT, in the overwhelming majority of cases & places, be blacklisted, shunned, or spoken of in an ill manner. They would be thanked, becasue they did something that we should all be doing.
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Old 09-19-2008, 11:08 AM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 19,109,609 times
Reputation: 6378
I left out that the other agent claimed a clerical mistake as well. He also said when he listed it it was for more money and that made it not a short sale.

For Shelly; Our form is a statewide form available from the CA Assn of Realtors and built into our online forms. Obviously our laws may vary from yours.
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Old 09-19-2008, 11:33 AM
 
1,305 posts, read 2,151,552 times
Reputation: 238
Quote:
Originally Posted by Bill Keegan View Post
That's a misconception that many people have. As a real estate agent, and especially as a Realtor, you are ENCOURAGED by most of your peers and by ALL of the organizations, to report this sort of activity so it can be stopped & dealt with. The overwhelming majority of professionals in the field will appreciate this sort of thing being reported. The whistle blower will NOT, in the overwhelming majority of cases & places, be blacklisted, shunned, or spoken of in an ill manner. They would be thanked, becasue they did something that we should all be doing.
That's good to hear. My profession is engineering, which is also regulated by the state. We're required to report unethical engineering practices to the board for them to investigate as part of our duties as a licensee.

I'm glad to hear it's the same in the RE business.
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Old 09-20-2008, 06:14 AM
 
Location: Palm Coast, Fl
2,249 posts, read 8,042,973 times
Reputation: 1002
Quote:
Originally Posted by shellytc View Post
Boy, I would love to get a copy of that addendum!! I would take it to our MLS. I am surprised that our MLS (who has an addenda for sneezing, lol) doesn't have something like this....

Shelly

Shelly, we have the same thing here. If you want a copy PM me.
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