NAR considers rules on short-sale listings

By: HousingWire staff
April 25, 2008 9:55 AM CST

Inman News covers a interesting topic taking up plenty of discussion among the realtor crowd these days: just how to quantify short-sales within a multiple listing service. As the housing mess has rolled on, the NAR has been having quiet discussions with MLS participants about how to set standards on listing a short sale.

The problem, according to the realtors, is that short-sales are too “fluid.” The Inman story takes up the issue, which is set to be discussed at the NAR annual conference in May:

“The (issue) that we’ve really been trying to focus on and pin down for discussion at the May meeting is: How do you define a short sale? Because technically you don’t have a short sale until it comes to closing and there is not enough money to pay off the lender,” Badagliacco said. “This can be a slippery slope.”

Here at HW, we don’t think it’s all that hard: figure out the total commissions and fees, which are pretty much standard fare, and then take a look at listing price — if its less than what’s owed, it’s a short sale. A short sale is pretty black-and-white: either the lender is made whole, or the lender is not. And borrowers aren’t going to go through the trouble of gaining authorization on a short sale just to see a realtor decide to list their property at a price that doesn’t require jumping through those sort of hoops.

We think the larger discussion here is whether realtors will even choose to disclose short-sale status, regardless of whatever standard is, or isn’t, agreed upon — after all, we’re talking about a group of people that have had no problem taking a property out of the MLS and then relisting it later, suggesting to would-be borrowers with a straight face that the property they’re trying to sell “just came on the market.”

With that as background, we have to wonder what incentive a realtor would have for disclosing a short sale — and whether borrowers would even want that information disclosed. After all, it merely puts additional leverage into the hands of a would-be buyer and their agent: the knowledge that the seller MUST sell or face the loss of their home.