New RAM Policy on Short Sales

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The Realtors Association of Maui announced a new policy regarding how Short Sales are displayed on the MLS. The change in policy has and will continue to impact how Short Sales are presented on the search results for this site. The short sale process typically entails the seller approving an offer. The seller in turn submits the offer their lien holders for approval. The buyer typically does not have any real obligations to the property until lien holder approval. Under , the old RAM policy sellers were allowed to continue to display and market their property as active until they received lien holder approval. Until the lien holder gave their approval, the property remained fair game so to speak and the seller and their agent are allowed to submit additional offers to the bank. The new policy requires the seller and their agent to change the properties status to pending.

The change stems from observations on bank policies regarding additional offers. While banks will accept additional offers to review, many banks are taking the stance that additional offers and additional paper work bumps a property back to the end of the queue for review and approval. As a result, some real estate brokerages were adopting a policy of not forwarding additional offers to the banks. What does this mean for buyers? Buyers should not dismiss short sale listings that are showing as pending. As with any pending property, no deal is done until all contingencies are satisfied. Bank or lien holder approval is an especially big contingency in this market. Also, not all banks have the same policies regarding offers on short sales. There may be additional opportunity to submit an offer to the bank depending on the individual bank’s short sale policy.

The one other thing to note is that this new policy does some damage to one of my favorite metrics for gauging market activity. I have been keeping tabs on pending sales as one of the signs of market health. A steady increase in pending sales earlier this fall was a good sign of increased market activity. The change in policy has led to a big surge in pending listings. This is making it harder to judge activity levels in the market as we approach the start of our buyers season.

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