NAR reports that 40% of Realtors have been involved in the sale of a distressed property over the past year. With over a million transactions per year, inevitably a few will go bad, regardless of the type. But when a third party is brought into the transaction, and the deal is no longer just between a buyer and a seller, this tends to introduce several new ways for the deal to go awry.

We’re hearing from all over the Commonwealth, but particularly in Northern Virginia, that short sales are causing all kinds of issues. Everyone seems to have gotten past the fact that it takes the banks a looooooooooong time to consent to these transactions. Realtors also seem to understand very well that there’s a possibility that a bank will refuse to act on an offer, even if the offer seems to be a strong one.

Knowing this, some Realtors have been skirting, exploiting gray areas of, or outright defying certain sections of the Code of Ethics and MLS rules in order to hedge their bets and keep their clients’ options open in the unpredictable realm of “subject to third party approval.” Because the banks are held to a different ethical standard, sometimes the banks’ actions (or in many cases, inaction) can cause the Realtor to violate NAR’s Code.

So when it comes to distressed transactions, how can you make sure you’re on the right side of your obligations to the Realtor Code of Ethics and Virginia laws?

• For starters, watch this 30 minute video with VAR’s Special Counsel Lem Marshall called “Ethical Considerations in Short Sales.”
• Also, check out VAR’s Legal Resources Center, where you’ll find over 100 articles about legal and ethical issues especially for Realtors.
• Finally, agents should be talking with their brokers about these dilemmas. And brokers: If you don’t know how certain situations should be handled, call VAR’s Legal Hotline. Authoritative legal information is just a phone call away.

What’s the Point of the Story? In recent months I’ve adopted Jim Duncan’s response to people who complain about other agents. I saw him ask “How did the complaint process go?” to a commenter on a blog; and I thought that it was brilliant.  I can safely say that on an almost daily basis one continue...

Yes, if you’re covered by VAR-endorsed insurer Pearl. Find out about the risks involved in these transactions and how the Pearl Insurance Real Estate Errors & Omissions Program can help protect your firm against claims arising out of these sales—right-click this link and select “Save target as” to download Does your Real Estate E&O Policy continue...

I suspect VARbuzz readers will answer with a resounding, “Yes!” so let’s get on to the second question: What would a mentoring program look like? Fortunately for us, members of a Leadership Academy jointly sponsored by the Prince William, Fredericksburg Area, and Dulles Area associations of Realtors are working on a proposal, a draft of which continue...

It’s kinda like a real estate-specific version of TweetLater, and it’s called TweetLister.com. Basically, you sign into TweetLister with your Twitter account and enter a bunch of standard information about your listing: Address Type of property Beds/Baths Square feet Asking price URL with more information Then, you tell TweetLister how often to send a Twitter post about the listing.  You can select daily, continue...

The comments on yesterday’s post regarding the potential Catch 22 arising from NAR’s amendments to SOPs 15-2 and (presumably) 15-3 are worthwhile reads. A few more posts about the topic have popped up for your reading pleasure: Notorious-ROB asks (among other things) who has the burden of proof? The Pennsylvania Association of Realtors wonders what happens continue...

If you’re a Realtor blogger, you definitely need to be aware of this new rule. At their Midyear meetings last week, the NAR Board of Directors approved amendments to the Code of Ethics affecting Realtors who participate in social media. Here’s an excerpt from a NAR newsletter distributed to Realtor association executives this morning: Standard of Practice continue...

Kenneth Harney wrote a story in The Washington Post on Friday about a recent court challenge to a real estate broker’s "add-on" fee. Call them what you will:  "admin fee", "add-on fee", etc…….they’re basically junk fees.  There, I said it.  I used the "J" word. In the past 5-10 years, it had become a rather common practice continue...

Blogmaster’s note: Please welcome VAR’s Associate Counsel, Blake Hegeman, as the newest VARbuzz contributor! Did you know that VAR has a library of commonly asked legal questions? It’s called the Legal Resources Center, and VAR members can access it on VARealtor.com after logging in. As calls come in to our Legal Hotline, Lem Marshall and I track continue...

When selling a bank- or real estate-owned (REO) property, some disclosure laws don’t apply. That’s what we hear from the handsome and talented Blake Hegeman, our associate counsel. Apparently the Legal Hotline has been receiving a lot of questions about this subject. Here’s the skinny: Foreclosure and REO Properties: To Disclose or Not to Disclose…. The Legal Hotline has continue...