SHORT SALE DISCLOSURE

This week, our local MLS board voted to require mandatory disclosure of possible short sale status for homes listed in the Charleston Trident MLS. The mandatory disclosure requirement will apply only to information available to agents, not information available on public sites. The Seller and their real estate professional will have the option of disclosing the potential short sale status to the public, but that disclosure is not mandatory. Some re-programming of our current MLS database will be required before the mandate can be fully implemented.

The decision was made after months of study, surveys, discussions and recommendations by committees and user groups. Agents and Sellers and Buyers weighed in on both sides of the issue, with Sellers expressing concerns that the brand "Possible Short Sale" is almost an open season sign to invite lower-than-market offers, and Buyers expressing satisfaction that now they can make more informed decisions earlier in their home-buying process.

Yes, "possible short sale" does invite lower-than-market offers. I think this is probably more a factor of the cost of lost opportunity due to the incredibly long wait for bank responses, and the unpredictability of bank requirements if the short sale is approved, than it is attributable to investors / buyers looking for a "steal". I believe these factors, as they are in are current market, justify a lower-than-market offer. If lenders could improve their response time on short sale offers, I believe this discount factor would significantly decrease.

Why is this a good decision for Buyers? It's rare in our market that a home will actually sell for 100% of the list price. Before submitting an offer on a house, a Buyer should have as much information as possible about the likelihood of the offer being accepted, the amount of time between ratification and closing, and the negotiability of such conditions as closing cost assistance, repairs, etc. Buyers who enter into a short sale transaction, fully informed, are more likely to see the transaction through.

Why is this a good decision for Sellers? Too many times I've had clients accept and ratify an offer, and then spent hours, days, weeks - educating Buyers and their agents about the short sale process, even though they signed a short sale addendum, and then ultimately back out of the transaction before bank approval is recieved. Buyers who back out of short sale offers also cost Sellers marketing time, and lost opportunity from other potential buyers.

More information, more disclosure - a win-win for everyone!