November 27, 2012 at 11:39 am Leave a comment

by Maria Hass –
I recently lost out on a short sale listing due to my moral judgment not to engage in a fraudulent act.

A homeowner approached me to possibly short sale his home, with the condition that he would rent back the house to the buyer while he is arranging relocation. I declined the short sale listing because it was in violation of the “Arm’s Length” requirement of the seller’s bank. Under the “Arm’s Length Affidavit” which the parties are required to sign, the seller, buyer, Realtors, title companies and parties to the transaction agree not to have any hidden terms or arrangements, written or implied, that will allow the seller to remain in the property as renters or regain ownership of the property at any time. Each signatory understands that a misrepresentation may result to civil and/or criminal liability.

I didn’t want to risk losing my license or committing fraud, so I declined the short sale.

Months later, I connected with the seller and found out that he had completed a short sale of his house with another agent under the same “rent back” condition. He is renting his house back from the investor-buyer and the Realtor who assisted in short selling the house is out doing “business as usual.”

This made me question whether the seller’s lender monitors rent-back violations at all. My search online didn’t get me confirmation that there is a system to track this type of violation. I asked my broker for his opinion on this issue. He told me that “I did the right thing” and would discourage any agent from our company from engaging in fraud.

I lost money by turning down the listing – but I feel great being able to sleep well at night.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate. Tags: , .

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