Listing House on MLS while still negotiating short sale

Recently the Realtors that we work with regularly on our short sale business have taken their active listings down on homes where we are still negotiating the short sale with the lender. They state that it is illegal for them to have an offer under contract when we have not yet gotten short sale approval from the bank. Further, they now state that with the new laws taking effect in 2010, that they cannot even list the house on MLS until we have owned the home for 90 days. Does anyone else know anything about the laws surrounding this issue? I mostly concerned with the issue of marketing the property while the short sale is still being negotiated. We fully disclose in our purchase and sales agreement that we are an LLC and intend to buy and sell the house for a profit.

That doesnt sound correct… As a Broker I havent heard anything like that out here in California

I agree, this don’t sound correct. Part of the banks short sale requirements is that the house be listed. We do this 2 ways, we can have have the current home owner sign the list agreement or we will. We use an option contract, file the option with the county clerk, then we have interest in the property. This also serves as a little failsafe because if the short sale don’t go thru and the bank takes the house back they have to have us remove are option before they can sell the property. The only way we will remove the option is if the bank pays us.


I’m an agent in Texas and although each state can have different laws and I can only speak about Texas, there really shouldn’t be any difference based on your question…The question is really simple, although in a couple of parts.

First, is the home able to be listed? That actually breaks down into a couple of other questions…What type of listing is it? The reason that I’m asking is because lets say you want to list the home for $100,000. The agent is offering a home to the public for $100,000, when in fact, you may not have approval to list the home for $100,000. Naturally, the listing must say “subject to lender approval”, just to CYA…This is why most agents don’t like showing short sales that haven’t been approved by the bank…A little over a year ago, I had a buyer that made an offer on a home and 5 months later, they finally withdrew the offer. Obviously, the listing agent didn’t have a clue. It’s deals like this one that give short sales a bad rep…

The next implication is the terms offer and under contract…You can’t have both…There is either an offer to purchase a home, or a contract that has been accepted…So I’m confused with this sentence…Maybe I’m not reading it right, but that’s my take. Now if it’s an offer, well, no options reside on the MLS for an offer, so the listing should remain “Active”. And naturally, if it’s under contract, depending upon the state, there is either a “Contract Pending”, or a “Pending” option…In that case, it shouldn’t be taken down, but should show up as either of the options for “Pending”.

Next, if you’re still “negotiating”, well, your negotiating, and again, nothing should be taken down…In fact, there’s a belief in some states that multiple offers may actually benefit the seller, so if the agent is working, as he/she should be, then it shouldn’t be taken down.

I have many people that called me and asked if there was anything working. My pat answer has always been, “At this time, the home is available”. As is implied, I’m working for the Seller…If I tell them that we’re working something, they may not submit an offer and their offer may be better than the one on the table…

The fact that you may not have gotten short sale approval from the bank can be a gray area…There are many here in Texas that would argue that if you don’t have approval, the home really shouldn’t be listed…The main argument is that the listing agent may be wasting everyone’s time until approval has been obtained…But that is argumentative at best…

I, like Michael above, know of no new laws taking effect in 2010 that state that one has to own the home for 90 days before one can list it for sale…Actually, there is a HUD policy that states a home must be “seasoned” (meaning held for 90 days if the title to the home has changed before a new FHA loan can be taken out). This may be the 90 day rule they are talking about…

I hope this helps…Good luck
Ken Tate

The first suggestion is to work with a Realtor or broker that is an investor, they will understand what you are doing and better be able to assist you. I think that the reason you are having issues is that you are not dealing with an educated agent or they are more concerned about their commission than your relationship.

I work with a broker and we have negotiated a flat fee for having the property put on MLS. It is just a cost of doing business.

Hope this helps,

altered due to rules violation

Ken Tate – I beg to differ with your statement, “Obviously the listing agent didn’t have a clue”.

No, actually, it’s not obvious to me that this is true.

I have been working on one SS for over 18 months. We had an offer within 3 months of the property being listed, yet rather than it being the listing agent who didn’t have a clue, it was the 2nd mortgage company not agreeing to a reasonable settlement for a release of lien, and the first mortgage company refusing to come to any kind of settlement until that 2nd lien holder had agreed to release, which indicated to me that neither of these lien holders had a clue.

Subsequently, the 1st lienholder has closed the file multiple times, and the property is now listed for $22,500 LESS than the accepted offer we had, over 15 months ago. The file has been closed multiple times, only to be reopened again, presumably by someone with a stronger work ethic, and then closed again for some minor technicality.

I’m convinced that there is a reason the financial services sector got into the mess that many of them are in. One example is sending the purchase agreement along with the appraiser when they are doing a residential appraisal – IMO, that shouldn’t occur until AFTER they come up with a valuation. On this subject house, the appraiser flat out asked the borrower (who was doing a refi), what did he need the appraisal to show?

Excuse me? Since when does a borrower’s opinion of their own property, an input required to determine value?

RE:>>“It’s deals like this one that give short sales a bad rep…”

Then you should be complaining about the LENDERS, not the listing agent. I work a lot of SS’s and have yet to lose one. If the bank operated more like a business rather than the Republican Party, i.e. the party of “No”, these deals would go a lot faster AND the lenders would ultimately make more money!

Jumping to the conclusion that “the listing agent didn’t have a clue” fails to acknowledge that the vast majority of the variables controlling whether a short sale gets approved, or not, are largely outside of the listing agent’s control.


OMG “I have been working on one SS for over 18 months.” WHY? Kick that thing and more on … The long drawn out deals arent worth the frustration and life loss.

I do a have to agree with the lack of “Get the deal done” mentality at some of the lenders… I scratch my head at times trying to figure them out. But in the end deals get done…

Good job


Here in Florida the rules depend on which board you are with. Some MLS boards allow someone with “equitable interest” ie. the Option Contract, to list the property, some others do not and insist that it be marked “pending”. I have not heard of any 90 day seasoning thing for the MLS! Find a Realtor who is Investor friendly.

JOHNELAW - What state do you live in? That if the bank takes the house back they are going to pay you to release the Option Contract? Even second mortgages are wiped clean! I think you better double check your facts.