What foreclosure means to REALTORS®
While the rise in foreclosures is concerning to the housing industry it also
presents a challenge to REALTORS® who are listing homes which are in foreclosure
or buyer agents with clients interested in purchasing one. How to handle
transactions where the property is either in foreclosure or headed for it must
be handled carefully.
As
a listing agent are you required to disclose that your listing is in
foreclosure?
No. Actually it may be confidential information. Foreclosure notices are
published in local papers and compiled by a variety of sources, therefore it is
public information and potential buyers may already be on notice. If, however,
the foreclosure is going to go to auction after a property is under agreement,
but before the closing date, you do need to disclose to a buyer that the deal is
not going to close.
What are your options if you represent a property that is facing or is in
foreclosure?
It is possible that you can postpone the foreclosure and negotiate either a
“short sale” (this is when the proceeds of the closing are not enough to cover
the mortgage) or simply an extension on the proceeding. As a broker you should
try to become directly involved with your client’s lender to attempt to postpone
the process. If you have a buyer and are about to go under agreement let the
bank know so they may have incentive to let the deal close. Keep in mind there
are administrative steps for the lender to get approval for extensions so don’t
wait, act immediately, otherwise you may not be able to prevent an auction.
What if you are a buyer agent and have a client who is interested in a home that
is in foreclosure?
You should make them aware of all information you have that is not confidential.
Make sure they understand the risk in putting an offer on a listing in default
and that they may pay out money for a home inspection only to have the home
auctioned off prior to the closing. Stay involved with the listing broker to
receive updates on the foreclosure process and be aware if you are dealing with
a short sale.
There are
many levels of complexity in foreclosure sales. Continuing education courses are
available on foreclosures and REALTORS® who work on these listings are best
served by getting as much education they can on the matter. Keep in mind if you
are not a lawyer to avoid giving clients legal advice regarding the status of
the proceedings. Stay diligent and you may actually find yourself in the middle
of a very successful transaction.
Compiled by MAR General Counsel Stephen
Ryan, Esq. and Associate General Counsel Margy Grant, Esq.
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