Our MLS has a great way to handle short sale listings.
If a short sale is at the beginning of the process, it is listed as a Short Sale: Price Subject to 3rd Party Approval.
If a bank has officially approved a short sale purchase price, and for whatever reason, the buyer is no longer around, the listing can be categorized as Short Sale: Price Previously Approved.
This is genius and wonderful for clients who would like to attempt a Short Sale purchase, but who don't want the process to take months and months, or to be enticed by listing prices well below what the lender(s) will actually agree to only to find they wasted a bunch of time.
My experience has been that when a price has been previously approved, there is a greater *chance* that the sale of the property could go through in a 30-45 day period. I say chance because we all know there are things that can come up to start the process all over again.
The policy regarding short sale categorization has been that when listed as "Price Previously Approved" the list price should reflect the price that was previously approved. If the list price is NOT the price that has been previously approved, it should be listed as "Price subject to 3rd party approval", not "Price Previously Approved." This is true even if the bank has previously approved *some* price. If the price it is listed for sale at has not, in fact, been previously approved it should be listed as "Subject to 3rd party approval."
The policy states,
"If the lender has already approved the sale price the home is listed for, then the listing should be classified in the MLS as "Short Sale, price previously approved" ; and
If the listing price has NOT been pre-approved by the lender, the property should be listed as "Short Sale,price subject to 3rd party approval."
I'm finding that listing agents are attempting to game the system. They do so by listing homes at prices below the bank's approved price, but calling them "Price Previously Approved". Others haven't even submitted an offer to the bank and they say the price has been previously approved.
From 9 search results matching a downsizing client's search criteria for a small condo, 3 should not be classified as "Price Previously Approved", and 1 other is questionable. 1/3 of the homes should not be popping up in our list.
Here are the examples:
A. Listed at $122K. Actual Approved Price by the Bank: $130K (As stated in the remarks)
B. Listed at $125K. Actual Approved Price by the Bank: $135K (As stated in the remarks)
C. Listed at $120,000 as "Price Previously Approved", but remarks say "List price is what bank said to list for... Just need ANY offer to get going." These guys DON'T EVEN HAVE AN OFFER YET and they are listing it as "Price Previously Approved". Ridiculous.
D. Listed at $124,900 as "Price Previously Approved" but remarks say, "Verbally approved Short Sale" and "We need an offer"
It IS possible that this last one has actually had a buyer that failed and that the bank has verbally agreed to sell it at the listed price, but it's also possible that it is not. Who knows? I know a simple phone call can clarify, but it is just a further example of information that should be made more clear in the listing itself.
As an agent with a downsizing client looking for condos under $125K who does not want to go the full 4-6 months+ for short sales who haven't made it to "Price Previously Approved" status, I find it unprofessional and unethical for these listings to be popping up as HOTSHEETS for my client when they aren't really price approved in the price range we have set our cap for. I'm speechless that such blatant disregard for the rules is so prevalent and is allowed to continue.
I can't imagine that my 3-of-9 experience is just an anomaly. I have asked the MLS to inform infringing agents and brokers that they must correct such behavior immediately or be fined. And that because the infractions appear to be numerous and wide-spread, a broadcast message to the agents and brokerages at large would be appropriate.
That the MLS allows listings to be categorized as "Subject to 3rd Party Approval" and "Price Previously Approved" is a great thing. But it becomes a useless thing if unscrupulous agents and brokerages are allowed to list properties in such a way to *attempt to* gain an advantage based on misrepresentation. It also tarnishes our credibility and integrity with our clients and members of the public at large. It is perceived as shady and dishonest. And in my opinion, it is.
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