Florida Short Sales Representation Follow Up
Posted Nov 26, 2008 @ 4:15 pm, Viewed by 1385 Visitors, Read 1473 Times.I wanted to follow up on our previous post on Short Sales and the Florida Foreclosure Rescue Fraud Law. In it, I referenced the following situation:
...One of these individuals recently made an interesting observation regarding "short sale" listing prices and fraud on the public. If you notice in Attorney General McCollum's statement above, "...ascertains that the fair market value of the home is less than the loan amount...", this particular complaint might just carry some weight. Specifically, the complaint is about the practice (at least in our area) of some agents listing "short sales" at values they know the lender will not accept. How do they know this you say? Well, because in many instances, they are appending a very recent appraisal to the listing that is typically thousands of dollars above the current "short sale" asking price. If you list a short sale property for $100,000 but have a recent appraisal for $200,000, how can you say the asking price is at a "fair market value?"...
Well lo and behold, it looks like the complaint may actually have some legs. Here is a question and answer session from the Florida Association of Realtors Legal Center. The questions came from an executive of one of our local Southwest Florida real estate Boards. The answers are from FAR's General Counsel Randy Schwartz. Now, I want to preface this information by saying the answers are Mr. Schwartz's opinon and I in no way want to suggest that you should take them for anything other than that - his opinion. As with all things involving a legal question, you should seek your own legal counsel as to how this information may or may not be relevant to you or your business.
As posted on the FAR website:
Q: If a real estate licensee lists a property at a below market price he knows the seller probably won’t accept, is the licensee in violation of Florida real estate license law?
A: Randy Schwartz: While a violation of the Florida real estate license law is a matter to be determined by the Florida Real Estate Commission, in my opinion, if a licensee lists a property for a price the licensee and the seller know is not acceptable, a case of misrepresentation and false advertisement can be made under Chapter 475.25(1)(c) Florida Statutes. It would not make any difference if the listing indicated that the selling price was subject to a third party lender or not; it is more a matter of advertising something that is known to not be acceptable.
Q: Is the seller in violation of any law if he states he would sell a property at a certain price even though he knew it would not actually sell at that price?
A: Randy Schwartz: I do not believe the seller would be violating any license law because Chapter 475, Florida Statutes, does not regulate the public. However, Chapter 817, Florida Statutes, might come into play for the licensee and a member of the public. Whether the seller could be held accountable for civil damages, due to his or her misrepresentation, would be completely determined by the individual facts of the case.
Where this situation will go from here is anyone's guess. From our perspective, it looks like a nightmare just waiting to happen.
Gulf Coast Associates, Realtors specializes in upscale Florida real estate in and around Ft. Myers and Naples. Contact us today at 888-617-3674.
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We're doing the same thing here (getting appraisals) and it does seem to make a difference. We have closed 4 short sales in under 45 days in the last 2 months. The numbers as a whole are picking up too. They made up about 16% of all home sales last month in the Ft. Myers area.
We do still have the problem of agents playing fast and loose though. We ran into one last week where the agent had a bank approved short sale at $410K and had it listed at $379K. We made an offer based on the listing price and then found out the truth 5 days later. All it accomplished was to waste everyone's time.
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Gulf Coast Associates is a private real estate firm specializing in SW Florida Real Estate. Benjamin Dona is the Broker-Owner. He and his wife Terry, an underwriter with 20 years experience, also own a federally-regulated mortgage banking firm, Metro Mortgage Company.
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Interesting article, we have not had this problem in California. At this point only 8% of all short sales are closing. Most buyers do not want to wait for the time it takes for a bank to make it's decision as to whether to accept the offer or not. What our company has done to accelerate that is to pay for a Fannie Mae appraisal. The lenders are using BPO's for value. Most of those are bogus and they know it so we can negotiate from a position of strength (realative term).