On the Twitter vine there has been tweets about the National MLS possibilities, with people from both sides of the fence offering opinions. I have heard the argument for it to replace all the little MLS boards around the country with one National MLS. Although the people who think it is a good idea bring up some good points, I do not agree with them and will not be discussing those points in this post. (You are more than welcome to offer up those points of view in the comment section, but I will not be addressing them here.)
I do not think that a National MLS is a good idea. Nor do I think it will work. These are my 3 reasons why:
Reason #1: If Real Estate is Local, why should the MLS be National?
With the shifting real estate market, the big, loud noise of the moment is the Real Estate is local. I yell it at everyone I yell at. (I even speak it softly to everyone I whisper to.) It is a fact. My Colorado Springs real estate market is different from Ines’ Miami real estate market, different from Maureen’s Birmingham real estate market and even different from Kristal’s Denver real estate market. Each real estate market across the nation, like life, is like a box of chocolates and each chocolate has its own disgusting nougat center and no two disgusting nougat centers are the same. (I cannot tell you HOW they are different because I have no interest in biting into the mystery nougat-y MLS of any other MLS board.)
I am a big proponent of being an area, or niche expert. When I want to find a home for sale in Miami, I do not want to wade through a biased national MLS to find one. I want to wade through Google and find the real Miami Guru. Not whomever the national MLS leader deems as important.
Also, national MLS would lump all the different MLS areas together. The different MLS boards WORK because they are local. You may say that yours doesn’t work, but I guarantee they work better than if me in my high-altitude-no-water city tried telling someone in a beach-town how to structure the MLS input sheet or create guidelines on what should be disclosed in the remarks section, or whatever random “hyper-local” nonsense we each deem as important.
Which brings me to a sub-point of this reason #1 …
Each state has different contract and disclosure laws. How on earth would a National MLS accommodate for each state’s laws?
Example #1: In California you MUST disclose if a property is “known” to be haunted. In Colorado it is ILLEGAL to even hint at the fact that a property may have, at one time, possibly had something that slightly resembled a ghost. How would THAT play out in a National MLS? The MLS would turn into a Choose Your Own Adventure book.
Is this house haunted? If you select “yes” then turn to page 6. If you select “no” then turn to page 11. If you refuse to answer, then turn to page 15. However, turning to page 15 will make you guilty by non-association.
In a National MLS, who would be responsible for making sure that each entry was inputted to state contracts and disclosure standards?
Example #2: Our MLS demands that if you have a listing agreement where you are NOT advertising the property in the MLS (aka “pocket listing”) you must supply the MLS arm of our board with a copy of the listing agreement proving that your seller has agreed to this non-entry. And yes, every HelpAssist2SellURHome4Free company (who is even still around…) complies with this. I don’t even know WHO would be responsible for making sure a protocol like this was enforced in a national MLS.
Way too much room for error. A smaller, local board is the only way to handle such intricate, local, nougat-y things.
Reason #2: Someone will get rich off this lofty idea and since it is not me, I refuse to play along.
(Thank you Teresa Boardman, for this thought.) A National MLS is a HUGE pile of mess to throw under one umbrella with one ringmaster. One person-slash-company will have the grand idea to do a MLS mashup that all agents will have to partake in, make a bunch of money off of their little game of Monopoly. Call me a whiny crybaby, but I guarantee I will not have the option of being the shoe in this game. So screw it.
No really. I mean it. I get to be the shoe or screw it.
Okay, I also mean this: The accountability for a national MLS is undefinable. What does it mean to be truly accountable for an entire nation worth of overpriced listings? I mean, really! Someone will make a whole boatload of money off of the idea and cost us agents a boatload of money.
At least when my board charges me money for whatever it is they charge me money for, I have the ability to walk, no, drive down to their office and actually speak to a human, face-to-face who will answer all of my odd ball questions and remind me not to steal their pen … again.
And why would a potential home buyer CARE if their home search in Shreveport LA also had a link to a home search in Bellingham, WA? It’s like a Blogroll. No one cares except for the people on the Blogroll.
Reason #3: My MLS board rocks!
If we were to do a National MLS mash-up, that would require SOME MLS area standards to rise, while it would cause other MLS area standards to fall, just to come to a happy medium. Kind of like in the classroom when half the class is consistently bored to death because the other half of the class (or one kid in some cases) just does not “get” it. It is not fair to either group.
I refuse to lower my standards to accommodate a National MLS. We have a smokin’ cool MLS and a smokin’ cool support staff and a smokin’ cool board with smokin’ high standards. Nothing gets by our board … Nothing. Well, not at the MLS level, that is. If a National MLS is designed to bring some “standards” to the MLS game, then why would we want to reinvent the wheel when we already are there?
“But my local board is not shiny and cool like Mariana’s!” If there is a problem with your local board, making it national is not the answer. What are you actually doing to make it better, besides complaining about it? Our board is “shiny and cool” because we all are actively involved in keeping it shiny and cool.
(Okay. I am off my soapbox, now.)
Ultimately, a national MLS is not even necessary anyway. The IDX/IDX2 options allow for the whole MLS to be accessed from almost any local real estate agent’s site anyway. I see no good reason to have access to a MLS to an area that I know nothing about. IF I were looking to relocate, I would want to search for a home in that area from an agent who actually was IN THAT AREA.
Anyway, there is already the Point2 NLS thingamagiggy which works for a supplemental umbrella MLS, even though it is still about as clear as mud in many areas.
In my oh-so-never-humble-opinion, the MLS needs to remain LOCAL and run by LOCAL boards to be effective.
Short sales: the top 3 title insurance troubles
Short sales are not without challenges, but knowing the answers to the most common obstacles and questions can aide in a less stressful transaction.
The importance of title insurance
When my husband and I purchased our first home, I was very young and very green. At the closing, our agent passed us our title insurance policy and said, “Put this in a safe place, and do not EVER throw it away.” At the time, I had absolutely no clue about title insurance, why it was important, and how it could save you from a world of trouble.
Decades later, working short sales, it’s the title reports and those dreaded liens that seem to be what gets us into all sorts of trouble. In fact, most of the reader questions that I received this past week related to title woes.
Three common short sale questions
Question: When I run the Statement of Information for my seller, it comes up with a child support lien and a mechanic’s lien. My seller says that he is aware of those liens, but has no money to make good on those debts. What should I do?
Answer: In short sales, the first lien holder will authorize funds from the proceeds to pay off a variety of expenses associated with the sale. These include commission, settlement fees, title insurance fees, and other mortgage liens. However, it is extremely uncommon for the short sale lender to offer to pay off a seller’s personal debts. Before you spend months and months processing the short sale, I’d strategize to ascertain whether you will be able to help the seller make good on these debts prior to closing. Otherwise, you should probably run like the wind.
Question: I am dealing with the IRS on a tax lien that needs to be released prior to short sale closing, and the IRS won’t budge. What should I do?
Answer: First off, it’s always a good idea to get non-institutional liens released early. At the time that you take a short sale listing, work with the title company to run a Statement of Information on the property owners. That way, if something comes up (like an IRS lien), you have plenty of time to work it out.
Generally, the IRS and the state tax authorities have mechanisms in place to remove these liens from title at no charge, since there is no equity coming from the sale. A tax attorney can guide you through the process. However, ask your title officer or title representative if they can work with you on this problem. The good news is that some title companies can help agents and you can avoid working with the IRS.
Question: I have a second lien on title with Chase Bank. Yet, when I contact Chase Bank, they tell me that the loan has been charged off and I need to contact the company where they transferred the loan. However, they do not have a record of where it was transferred. I’m between a rock and a hard place. What do I do?
Answer: This kind of chaos happens all the time with short sales, and it is very frustrating. Generally, if you contact the executive offices at the bank where the loan was held originally (in this case, Chase Bank), they can have their research department obtain information about where to call.
Another option might be to ask the lender for a “zero demand”. If they charged off the loan and show a balance of zero, then maybe they will send a zero demand and not further short sale negotiation would be necessary for this lien. Hey… without a second lien on title, maybe this won’t even be a short sale any longer!
How to avoid short sale buyer frustrations
Minimizing the frustrations that come with a short sale is often seen as a mythical possibility, but with these simple tips, any short sale transaction can go more smoothly.
Short sale frustration all around
Representing a buyer in a short sale can often be very frustrating. Primarily, that’s because of the unknowns associated with the short sale transaction. For one, nobody knows how long it’s going to take to obtain short sale approval. Actually, you don’t even know if you will get short sale approval. Not only that, but you also have to wait a fairly long time to learn the approved terms of the purchase. It’s frustrating to wait and wait, and then learn that the direction of the short sale is not the direction that the buyer is interested in taking.
Good communication is the key to short sale success. It’s vital for short sale listing agents to make communication with the buyer’s agent a regular and systematic part of the week. No matter how insignificant the short sale task, it is important to communicate with the buyer and the buyer’s agent and let them know that there are baby steps towards short sale approval.
One significant step towards short sale approval often comes after the bank’s valuation (BPO) when the bank makes a counter offer. Depending upon the short sale lender, this counter offer can come via email (in an email message), via telephone, or through an online platform such as Equator.
And then there are the counter offers…
Buyer’s agents and buyers often request to see the counter in writing. However, depending upon the short sale lender, this is often just not possible. Bank negotiators have contacted the short sale agent via phone, reviewed the settlement statement, and alerted the short sale agent as to what they will approve and what minimum net they might take accept in order to move forward with the short sale.
Since these counter offers usually do not come in writing, it’s important for the buyer’s agent to set the buyer expectations accordingly. Make buyers aware that there is lots of ‘verbal’ back and forth during the process. Many times it is only the short sale approval letter, the document that allows them to close, which comes in writing.
If buyers are willing to wait and keep the faith and understand that this process is a little more challenging and unique then most, they may find that they are getting a great deal on a wonderful property—often in better condition than the abandoned REO down the street.
Short sale: are there situations when agents can’t earn a commission?
Short sale: are there actually situations where an agent would not get paid? There are some complicated situations when it comes to short sales, and we address one here today.
A short sale listing agent recently reached out to me to ask whether an agent principal can earn commission in a short sale transaction. This agent, Agent Alice*, was told that there are certain situations where licensees cannot earn a commission when buying a short sale.
Agent Alice received an offer on her listing from Agent Alex. Agent Alex is both the buyer and the principal. Agent Alice wanted to know whether the bank would pay a commission to Agent Alex at closing, since he is both the buyer and a principal.
All of the major lenders including Fannie Mae and Freddie Mac employ some sort of arm’s length affidavit in which the buyers, the sellers, and the agents acknowledge (often in front of a Notary Public) that none has a business or familial relationship with another party outside of the transaction. Between this affidavit and investor guidelines for short sale commission, it is uncommon for the short sale lender to permit a commission to be earned by an agent principal.
Agent Alice then asked me whether Alex’s Broker, Broker Bob, could represent Agent Alex and earn a commission. While I do not work for the short sale lenders and cannot predict each short sale lender’s response, I’d say that it would be best to avoid this scenario, since the two have a business relationship outside of the transaction.
My two cents:
When I recently posed these scenarios to a group of agents, many shared creative ways to obtain a commission for Agent Alex. Remember that any creative solution whereby Agent Alex earns commission must also show his commission on the HUD-1 that is approved by the short sale lender prior to closing. As such, it is highly unlikely that there is a legitimate workaround for this problem.
The easiest and safest way for Agent Alex to purchase Agent Alice’s listing is to seek representation outside of his brokerage. Not only will this assure that the buyer’s agent earns a commission, but it will also assure that all parties comply with the requirements of most lender short sale addenda.
*The names of the agents and the brokers in this post are pure fiction. Any relation to real listing or buyer’s agents is merely coincidental.
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