Over the last 18 months, Auction and similar bidding
platforms like Hubzu have drawn significant attention for all the wrong
reasons. From questions about shill bidding to general,
but severe discontent with the process, the pressure on servicers to end
the use of these platforms continues to increase.
California Association of Realtors
(CAR) has taken the lead by addressing the use of Auction directly
with the California Bureau of Real Estate (BRE) and
Nationstar, a servicer that has consistently required short sales be worked
through Auction. Kevin Birmingham, Transaction Issues Chairman for CAR.,
has even announced that the Board of Directors voted to amend AB 2039
(Muratsuchi) to prohibit the use of so-called “shill” bidders working for an
auction company. This bill will likely be a catalyst for the introduction of
similar legislation across the country. You may view text of the amended bill
at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB2039.
Despite the push-back, the BRE has
informed CAR that Nationstar’s program does not violate any laws. Furthermore,
CAR has confirmed that Nationstar will continue to use Auction on its short
sales.
As a result, agents must take a
pro-active approach to working short sales through Auction to serve their
clients and grow their business. Once again,
CAR has taken the lead by offering tips on how
to effectively manage the site.
Among the most sensible pointers
offered by CAR is that “Realtors should also be aware that Nationstar’s
market validation program requires both the listing agent and seller to sign
documents which could impact their legal rights. Realtors should advise
their clients to seek legal counsel to interpret any clauses in such agreement
that may raise concerns as to possible costs or risks to sellers for
participating in the process.”
Always
keep in mind that there are 2 negotiations in a short sale. The 1st negotiation
is between the buyer and seller in coming to an agreement on completing the blanks
on the Offer to Purchase and Contract which is exactly what real estate agents
do best. The 2nd negotiation is getting the lien holder(s) to agree to
settle for less than what is owed and what will happen with the loss
(deficiency judgments, 1099, and credit reporting) which generates stacks of
legal documents that must be signed by the seller and therefore is considered
to be THE PRACTICE OF LAW. The listing agent and seller documents referred to
by CAR fall into this 2nd category and should be handled accordingly.
Whether or not your client’s short
sale is being worked through Auction, it is always important to get legal
protection for your client, your broker, and yourself through the process.
For more great tips from CAR on
working short sales through Auction, please visit http://www.car.org/newsstand/news/nationstar/.
