Notes from the MAR Legal Hotline
Steve Ryan, MAR General Counsel
Margy Grant, MAR Associate General Counsel
Michael McDonagh, MAR Associate Counsel
OFFERS & Distressed Property
Q: I submitted an offer on an REO (bank-owned) property. The listing broker has stated that it is too low (it is 20% under asking price) and their client has instructed them not to present it. I thought the law required all offers to be presented!
A: You are correct that license law requires that all offers be presented forthwith. This regulation, however, has an exception if the seller instructs you not present the offer. Sellers have the right to determine the contents of the offers they wish to see. So a lender who owns a property has the same right to refuse to review offers if they do not meet a certain price.
There is a misconception that REO properties will sell for dramatically less than asking price. That is usually not the case. Most REO properties are subject to not only CMA’s but also a Broker Price Opinion (BPO) which takes into account the amount of any necessary repairs. REALTORS® are well served to educate their clients that very low offers will most likely not be accepted.
Q: I represent a buyer who wrote an offer on a short sale a week ago with a contingency that the lender for the seller approves the offer. We still have no answer, should the buyer withdraw their offer? They are more than frustrated and blame me for the lack of information.
A: Maybe. Short sales are extremely complicated transactions because of the process the lender requires to approve the transaction. Listing brokers have very little control over the timeframe a short sale is or is not approved; rather they must be diligent to provide all information to the lender as quickly as possible. If your buyer needs to close by a certain deadline they may wish to reconsider their offer. When you represent a client who wishes to purchase a short sale make sure you have enough information on the process that you are comfortable advising them.
To help REALTORS® through this market and educate them on the ins and outs of distressed property sales, the Massachusetts Association of REALTORS® is offering a new certification class on loss mitigation. This class covers REO sales, short sales, and auctions. This day long class entitled Loss Mitigation Certification is being offered in all seven regions of Massachusetts. For more information please contact the board office.