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Would like a reaction to a real estate agent putting his own house on the market without revealing in the MLS that house was about to be taken over by the bank due to 8 months in arrears.
Unethical? Illegal? or OK?
Would like a reaction to a real estate agent putting his own house on the market without revealing in the MLS that house was about to be taken over by the bank due to 8 months in arrears.
Unethical? Illegal? or OK?
When you say the "house was about to be taken over" what do you mean?
It's still his house, right? He is the owner, right? Is he trying to do a short sale, which would need to be approved by the bank? Or is he trying to sell it for a price that would allow him to pay the full note? If he need to get bank approval on a short sale, then yes, that fact should be disclosed, as it will impact the timing and the terms the buyer might offer.
If he is going to sell it, and he is the only one who needs to approve the sale, why does it matter that he is behind in his payments? If the house is his, and he doesn't need the banks approval on a number, then advertising the difficult vut irellevant fact that he is behind on the payments will only hurt him when he is marketing & negotiating. Why do you feel he should reveal this fact?
And for the record, this has nothing do do with the fact he is a real estate agent. I believe the same rules apply to non real estate agents.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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As long as the property hasn't been foreclosed, the person on title is still able to convey title up to the point of the actual foreclosure. The motivations for selling a property are immaterial as they could include such things as a divorce, illness, or financial difficulty.
I see nothing wrong with listing a property that is about to go into foreclosure, we see short sales all the time on properties that end up not selling and going into foreclosure. Obviously the listing is invalid between the seller and the real estate agency once the property is foreclosed.
In Washington State, real estate agents aren't allowed to dislcose information about the seller without the sellers permission. So if the seller told the agent not to disclose they are behind on payments, the listing agent can't disclose that.
I do think an agent should decline a short sale listing (money from sale of house won't cover loan amount) if the seller won't allow the listing agent to disclose it. There needs to be a level playing field.
When you say the "house was about to be taken over" what do you mean?
It's still his house, right? He is the owner, right? Is he trying to do a short sale, which would need to be approved by the bank? Or is he trying to sell it for a price that would allow him to pay the full note? If he need to get bank approval on a short sale, then yes, that fact should be disclosed, as it will impact the timing and the terms the buyer might offer.
If he is going to sell it, and he is the only one who needs to approve the sale, why does it matter that he is behind in his payments? If the house is his, and he doesn't need the banks approval on a number, then advertising the difficult vut irellevant fact that he is behind on the payments will only hurt him when he is marketing & negotiating. Why do you feel he should reveal this fact?
And for the record, this has nothing do do with the fact he is a real estate agent. I believe the same rules apply to non real estate agents.
You are on the right track Bill because the realtor (who was also the seller) had received notice from the bank's attorney that he was in default. The first time I found out about the default was from the seller's attorney during the attorney review period when I received a letter from his attorney saying that, BTW, this is going to be a short sell. When I confronted the Realtor/Seller about failing to disclose the bank's involvement he said he didn't see the problem and did not consider it a short sale because my buyer was offering more than he owed on the mortgage. So his plan was to pay off the bank before they foreclosed and walk away with the rest.
I believe the fact that the seller is a realtor should be taken into consideration because as a real estate professional he should know the process and the rules.
Last edited by NORMGLO; 12-05-2008 at 12:21 PM..
Reason: insert
how can it be a short sale when the purchase price is for MORE than what is owed to the bank? that is not a short sale.
and no, I do not believe the owner (even as an agent) has to disclose that they are in arrears, as long as they do not have to obtain anyone else's approval to sell ThEIR house.
I have sold many homes that the owners were in arrears and needed to sell quickly, but weren't short sales. They took the proceeds, paid off the banks including the fee's etc, and pocketed the remainder.
A NOD has nothing to do with anything as long as the seller can clear title. So what you are saying is that the offer is more than he owes on his mortgage so he can clear title. I am totally confused because you said he was offered more than he owes, but then you say it is a short sale? Can he clear the title with the offer he received?
how can it be a short sale when the purchase price is for MORE than what is owed to the bank? that is not a short sale.
and no, I do not believe the owner (even as an agent) has to disclose that they are in arrears, as long as they do not have to obtain anyone else's approval to sell ThEIR house.
I have sold many homes that the owners were in arrears and needed to sell quickly, but weren't short sales. They took the proceeds, paid off the banks including the fee's etc, and pocketed the remainder.
shelly
This is what is bothering me: this deal could take a very long time to close because the realtor/seller isinsisting this is not a short sell because my buyer is paying more than what he says he owes on the mortgage - the realtor/seller's attorney notifies all parties that this is a short sale and needs bank approval - my buyer says why wasn't I told this was going to be a short sale before I made my offer (after her attorney explains what that means) and I have to say the I didn't know. I know that at this stage there are probably additional fees attached to the sale (bank attorney, seller's attorney, back taxes, my commision, etc) that COULD require the seller bring $$ to the table at closing or negotiate a settlement with the bank. But for the seller's atty letter after the contract to purchase was signed by both parties no one even thought about this being a short sale.
This is what is bothering me: this deal could take a very long time to close because the realtor/seller isinsisting this is not a short sell because my buyer is paying more than what he says he owes on the mortgage - the realtor/seller's attorney notifies all parties that this is a short sale and needs bank approval - my buyer says why wasn't I told this was going to be a short sale before I made my offer (after her attorney explains what that means) and I have to say the I didn't know. I know that at this stage there are probably additional fees attached to the sale (bank attorney, seller's attorney, back taxes, my commision, etc) that COULD require the seller bring $$ to the table at closing or negotiate a settlement with the bank. But for the seller's atty letter after the contract to purchase was signed by both parties no one even thought about this being a short sale.
If this really is a short sale then yes indeed it would be misrepresentation, as the bank approval is material to the contract. I guess I would ask the seller why their attorney sent out a letter notifying the parties that the house was a short sale, if it really isn't.
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