Broker wants fairness in short sales

Re: 'NAR considers new short-sale disclosure rules' (April 24)

Dear Editor:

There are numerous problems concerning short sales and REO properties other than the ones you state. I was just involved in a potential short sale wherein the seller accepted an offer already but, of course, the lender still has the right to review other offers. I had a hard time getting the listing agent to confirm that an offer had been accepted. It was, and so that primary buyer still retains the first right to purchase property even if the lender overrides the primary offer for a backup offer. I was representing the buyer.

This is a very complicated contract arena and really should be handled in conjunction with legal counsel. I find that agents don't understand the contract distinctions and really view the lender as the seller! You are so right about disclosure problems being a large issue. If the lender chose a backup offer then the primary offer would still be subject to cancellation. When I am a buyer's agent I am afraid that cooperating agents (handling the listing end) do not understand this.

The second enormous problem is with the ambiguous, proprietary contracts and addenda that the REO lenders require the buyers to sign AND you never really know when an acceptance takes place. Many times the counter-offers come back to us unsigned and the buyer is supposed to respond without any final assurance of getting the house. Also, even when the offer gets signed by the lending institution or asset manager there are often escape clauses wherein the REO bank can, at the last minute, sell the property to another buyer who will offer more money.

I just talked to an office manager wherein this just happened to a buyer at the last minute. NAR needs to STAND UP and address these issues or we will have an avalanche of lawsuits over and above the avalanche of foreclosures going on. If all the agents stood up to these seller-banks on the REO sales and demanded the use of our forms (in my case California Association of Realtors contract forms), there would be less conflict. Even the proprietary REO addenda that are used truly override most of the really important CAR contract provisions that give the buyer some ACTUAL contingency rights. I have even read REO contracts that state that the seller-bank has the right to read an objectionable property inspection and BE THE JUDGE as to whether the buyer has the right to cancel based on property condition. This is MOST UNFAIR! How can this be addressed?

I am the broker-manager of my office and I have been licensed since 1972. I endured the foreclosure cycle of the 1990s, but this is a far greater cycle of foreclosure and pre-foreclosure homes and the contract issues are far stickier. The consumers need protection from the short-sale lenders and REO-banks in respect to disclosure and one-sided contract demands. Whatever happened to fairness?

JoAnna C. Lafler
Broker-manager
Lafler Real Estate
Gustine, Calif.

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