The Department of Housing and Urban Development (HUD) has released a list of new rules scheduled to take effect October 1. The intended purpose of these rules is to reduce fraud in HUD short sales and deed-in-lieu of foreclosure transactions. One of the rules also hopes to increase the net proceeds from short sales.
Currently, real estate agents can only represent either the buyer OR the seller in a HUD short sale but not both. That rule will not change. The change is that no agent from the listing agent’s office or brokerage will be allowed to represent the buyer. That is a very important piece of information for homeowners considering a short sale on their FHA financed home.
Think about this: Homeowners want to short sale their Bend, Oregon home and know an agent who works for one of the bigger offices in town. This agent is HUD certified and has handled more than 100 short sales. She and some of her fellow agents have a nice clientele of buyers for short sales and would likely be able to get the home sold quickly. As of October 1 they won’t! The new short sale rule would exclude any of the other ninety plus agents who work for the same brokerage, whether they work in Bend, Redmond or Sunriver, from representing a buyer for this house. If the homeowners give their friend the listing they could be making it much more difficult to short sell their home by eliminating all those potential buyers.
It is always wise for homeowners to do their homework when selecting a listing agent to sell their home. Now it could be even more important for those with a FHA mortgage considering a short sale. Experience listing short sales could be just as important as the size of the brokerage the agent works for.
Update 9/27/13: HUD announced today that they would re-issue the July letter (linked above) without the “Dual Agency” language that prohibits real estate agents belonging to the same brokerage from representing the buyer and seller in a HUD short sale. This does not mean the issue is dead. It just means that HUD is willing to talk with the National Association of Realtors® about the proposed change. No date has been given for when the two parties might agree on a solution.