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MLS verbage????

Posted by Jeff Payne on July 15, 2011 at 4:29am in Short Sale Discussions

I am always amazed at some of the MLS verbage that I see..... here is the latest.

 Any acceptable Contract must contain the term that Seller may cancel this Contract at any such time that he is asked to sign a Promissory Note, is presented with a 1099 or Deficiency Judgement

 

So let me get this right, the seller may cancel if:

  • They are asked to sign a promissory note
  • They are presented with a 1099
  • They are subject to a deficiency judgement

Would you advise your buyer to pursue this short sale? 

Oh and one other thing, it says that the price is BANK APPROVED?

 

Anyone else see any redflags?

 

The other thing that I am seeing more of is "This is a (insert your short sale designation) short sale which will speed up approval times"

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Replies

  • Jeff Payne July 18, 2011 at 4:03am
    I agree Eric.  It is too easy to get a real estate license and too easy to keep the license.  Take a few hours of a course and you are qualified to handle the largest transaction most people will ever have.

    Eric Mieles said:

    I will keep saying this I think there's great opportunity for REAL WORLD designation course that acts almost like an apprenticeship rather than a 2 day lecture.

    Imagine the impact it would have on EVERYONE, sellers, agents, brokers, buyers and the whole community. Not to get off topic but I have always wished that becoming a REALTOR would be this way too. How can we just take a 1-2 week class and help someone sell or buy possibly the biggest item in there life?

    I would rally for SSS to be the leader in the space and create the best training program in our amazing niche.

  • Pam Graham July 18, 2011 at 3:46am
    CDPE sounds like an abbreviation of some kind of disease. :) I see that alot in the MLS too, that the agent is a CDPE, which to me means nothing, since anyone who takes the class and pays, can get that certification without any experience in short sales. I'm not picking on them either, just is a little funny and scary at the same time! :)
  • Patty Da Silva July 17, 2011 at 9:56am

    Jeff,

     

    The answer is a big YES. It is so obvious that the listing agent is extremely misguided (I love the "presented with a 1099" comment).

    It seems like we often forget that I fool with a designation is just still a fool. Two days in a  CDPE, SFR, etc class CANNOT change that.

    Happy Selling to all :)

  • Stephen B. McWilliam July 17, 2011 at 6:57am

    Jeff, considering you're in Florida you will appreciate this information: the MLS remarks you mentioned are basically the conditions contained in the FAR/BAR Short Sale Addendum currently in use.

    Approval of, or agreement to, items (a) through (c) by Seller’s Lender is referred to as “Short Sale Approval”.However, an approval by Seller’s Lender which does not provide a waiver and complete release of any claim(s) for adeficiency against Seller for sums due Seller’s Lender under the Mortgage(s) as of the payoff date, or whichrequires additional terms or obligations affecting either party shall not be deemed “Short Sale Approval” unless theparty affected accepts those additional terms or obligations in writing. A copy of a Short Sale Approval accepted bySeller shall be delivered by Seller to Buyer and Closing Agent within 3 days of Seller’s receipt of such Short SaleApproval.

     

    The FAR Short Sale Addendum does not provide for this ability by the Seller.

  • Nathan Miller July 17, 2011 at 5:42am

    Here's my favorite MLS verbiage in the agent remarks, this guy writes:

     

    "Seller would like investor buyer who would be willing to provide a lease option to purchase to Seller."

     

    Why not just write "looking for someone to defraud my lender and sell me back the property!"

  • Wendy Perez July 17, 2011 at 4:56am

    Harry, good to know it runs through the end of the year.  Do you know where I may find that in writing?  And you're right.... the tax relief applies to principal residences ONLY.  I should have been more clear.  I don't deal much in investment properties and have never done a short sale on such a property, but it's good to remember that even in real estate, we must compare apples to apples and not to oranges.  Thanks for clarifying!  :-)



    Harry Clay said:

    Blanket statements can be troublesome.

    The Mortgage Forgiveness Debt Relief Act applies to the discharge of debt on the principal residence.

    However, it does not cover forgiven debt on investment properties.

    Also, the Mortgage Forgiveness Debt Relief Act is currently sheduled to sunset after Dec 31, 2012 i.e. the end of the calendar year.


    Wendy Perez said:

    Bottom line, forgiven debt is not subject to tax.

     

    I think this program runs through April 2012 or to April 1, 2012.

  • Jim McCormack July 17, 2011 at 4:47am
    In TN the standard Tennessee Association of REALTORS Short Sale Addendum already has wording allowing the seller to cancel the sale if the short sale proceeds are not a complete release of liability.  I would take this to mean any request for seller to sign a promissory note or any risk of deficiency judgment.  I am not sure how to get around the 1099 issue, other than many sellers are exempt from the forgiveness of debt tax anyway.
  • Wendy Perez July 17, 2011 at 4:37am
    http://www.irs.gov/individuals/article/0,,id=179414,00.html

     

    Bottom line, forgiven debt is not subject to tax.

    I think this program runs through April 2012 or to April 1, 2012.  Big difference and I keep meaning to find out if it's April 1 or April 30.  So yes... I think it's redundant to include that language in the contract.  As for bank approved pricing, banks often tell me what they'll take on a property especially if a buyer walked already.  Chase is great at telling you what to list it at, when to reduce, etc.

    Monique,

     

    Forgiven mortgage debt over $600 is NOT taxable.

     

    http://www.irs.gov/individuals/article/0,,id=179414,00.html

    Monique Boucher said:

    The IRS Federal guidelines state that if a debt is discharged or forgiven over $600.00 that the creditor must issue a 1099. Any Agent listing a home this way is setting their seller up for failure as well as wasting their own time. In fact - they would be better off letting the seller know that obtaining a 1099 is in their best interest, especially if it is their primary home as the current tax laws allow this debt to be forgiven. I am not an acocuntant but I have completed enough short sales to know that there is no way around a 1099 if the debt is discharged - unless of course it is less than 600.00 dollars - and then I am pretty sure it would not be a short sale LOL!! All the homeowner would need to do is google 1099 - everything you need to know is on IRS.GOV.



    Harry Clay said:

    Doesn't all forgiven debt (unearned income) receive a 1099 in the beginning of the new year following the year of the write off?

    Would not the seller receive a 1099 from the lender after the house is sold as a short sale, or it's foreclosed, or some kind of permanent modification with principal reduction is agreed to?

  • Eric Mieles July 17, 2011 at 2:13am

    I will keep saying this I think there's great opportunity for REAL WORLD designation course that acts almost like an apprenticeship rather than a 2 day lecture.

    Imagine the impact it would have on EVERYONE, sellers, agents, brokers, buyers and the whole community. Not to get off topic but I have always wished that becoming a REALTOR would be this way too. How can we just take a 1-2 week class and help someone sell or buy possibly the biggest item in there life?

    I would rally for SSS to be the leader in the space and create the best training program in our amazing niche.

  • Eric Mieles July 17, 2011 at 2:02am
    lol My fav!!

    Jeff Payne said:

    I can go on all day with this :)  Doing some market research today and have found some good ones.

    SHORT SALE!!!! The Bank is ready for an offer. 

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