In July the Department of Housing and Urban Development (HUD) issued new guidelines regarding short-sales and FHA insured mortgages, and it goes into effect October 1, 2013.
The new rule prohibits “dual agency“, real estate agent representing both the buyer and the seller on the sale/purchase of a home, on short-sales that involve an FHA insured mortgage.
What does this have to do with sellers and buyers? Simple answer, everything. Let’s go over a couple of examples.
Frank, a homeowner in West Chester, OH, owes more on his home that it is worth, but he is being transferred out-of-town for work. He decides to do a short-sale. He lists his home for sale with the biggest real estate broker in town. Makes sense, the biggest real estate company in town should have more reach through advertising, word of mouth, etc.
Under the new HUD rules, the buyer of this property CANNOT be represented by a real estate agent from the same broker/company.
By listing your home with the biggest real estate company in town, you have just limited the prospective homebuyers that are eligible to purchase the home.
Another example
Suzy, a first time homebuyer in Mason, OH, is in the market to purchase a home in Southwest Ohio in the next 3 months. She contacts XYZ Real Estate, the biggest real estate broker in the Cincinnati area to start showing her houses.
Under the new HUD rules, Suzy, the buyer CANNOT purchase a short-sale listing that is listed for sale by the same company, XYZ Real Estate.
So what’s the point of the new HUD Rule?
To curb short-sale fraud. And apparently to restrict homeowners looking to sell and homebuyers in their search for a new home.
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