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Coming Soon: An Easier Way to Enter and Search for Distressed Properties

July 12, 2012  |  by Tim

Unfortunately, due to market conditions, there are a number of distressed properties on the market.  A distressed property is a home that is underwater (short sales); pending foreclosure; or has been foreclosed and is lender owned. Each of these distressed property types has distinct legal and financial obligations which impact the sale of the property.

As a listing agent, you want to be able to accurately describe your distressed property and you want buyers to be able to find these properties.  Distressed property information in Keystone is located in different sections within Keystone.  Currently, there is a yes/no field for Potential Short Sales and Foreclosure, and the listing agent has to go to the Current Financing picklist to find REO and another entry for foreclosure.  Under this set up, a customer needs to look at all of these options to find the properties in Matrix.  Conversely, the customer needs to eliminate all of these properties if their buyer was not interested in a distressed property.

We are working on providing a consistent, more accurate method for entering data and for searching for properties that meet this market problem as well as a consistent definition of the distressed property types. After reading your comments on our blog and talking to agents from all areas that specialize in distressed listings, we’ve come up with the following solution. We are creating a new field titled “Transaction Type”. This field will include the options of Standard Sale, Short Sale, Foreclosure, REO, and Undisclosed/Other. It will be a single select field in Keystone. This means you can only have one option selected.  It will be a multi-select field in Matrix, meaning you can search for listings that are EITHER Short Sale or Foreclosure or REO and display the results in one column that differentiates each step in the process.

Definitions of Transaction Types

1. Standard sale refers to a property which is available for sale without third-party involvement or approval.

2. Potential Short Sale refers to any property that is underwater and the sale is subject to bank approval.

3. Foreclosure refers to a property that is subject to foreclosure proceedings. Until the foreclosure proceedings are finalized, the seller still owns the property.

4. REO (Real Estate Owned) properties are bank or lender owned.

5. Other/Undisclosed should be selected when you do not have your seller’s permission to disclose the property as a distressed sale.

We hope that this new field will clear up any confusion around entering distressed properties.  If you have questions, please comment below.

Stay tuned for the official release next week! 

Posted in Blog, Featured, Keystone, Matrix

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34 responses to “Coming Soon: An Easier Way to Enter and Search for Distressed Properties”

  1. Nouman Mirza says:

    That's a great add on. Will the current Short Sale and Foreclosure fields disappear? Another thing that should be added for short sales is "Approved" or "Not Approved" fields.

  2. Tim says:

    Hello Nouman, great question and suggestion. The fields Potential Short Sale Yes, No, Undisclosed and Foreclosure Yes, No are going away. Additionally the options of Foreclosure and REO Property are being removed from the Current Financing field. All of the current listings will be mapped to have the appropriate options selected in the new Transaction Type field. So if you see a listing that currently says Foreclosure Yes today, after the 30th it will say Transaction Type Foreclosure selected. The options of Short Sale Approved and Not Approved need to be worked on a little. They are situational fields based on answering Transaction Type with Short Sale.

  3. RIck says:

    One very small suggestion is that Realtors have been using the term 'Regular" sale, not the proposed "Standard" language.

  4. Kim says:

    Im happy to hear they are making some changes but I am not happy to hear they are taking away the "potential short sale" and "foreclosure" fields. that allows me at a glance to find what I am looking for and be able to tell clients without having to read everything.

    It may help on the entering of properties but I dont think it will help in the search for properties. I guess I will have to wait and see.

  5. Chris Laurence says:

    I agree with the comment that "Regular:" sale is being used more regularly, not "Standard" sale. Also, I fear confusion and errors in listings, trying to differentitate between "Foreclosure" and "REO". Currently we all refer to a foreclosure as a home that *HAS BEEN* foreclosed on and is bank owned, *not* one that is "undergoing foreclosure while remaining owned by the owner". This will lead to huge confusion. I think the terms should be "REO/Foreclosure" to mean what we all currently understand it to be; and "Privately owned but subject to Foreclosure Process". It will also need a lot of drumming in to that (unfortunately) large number of agents who either don't understand or who don't try to understand. It is their incompetent inputs into the system that can cause much confusion in searches etc.

  6. Appraisers require transparency and must disclose whether a sale is REO, Short or Arm's Length. Those are the 3 categories appraisers use for appraisal. The information is required and must be disclosed for every sale and sales comp. The categories (REO, Short and Arms Length) affect value, so it is very important that a property's status always be correctly and clearly disclosed.

  7. Hembrey says:

    Will it be a requirement to disclose if a property is a foreclosure?

  8. Hill Slowinski says:

    Instead of "Foreclosure" I suggest MRIS look at NAR as an example. NAR uses the status of "Preforeclosure" indicating the foreclosure process has been started but not been completed. NAR also notes whether Notice of Sale (Notice of Default) has been issued or Notice of Lis Pendens has been filed.

  9. Ruth Seib says:

    Many Short Sale properties are also in the foreclosure process. I think the Transaction Type field as you've described is a generally a good idea, but "Short Sale" and "Foreclosure" are not mutually exclusive. I believe that the fact that a property is in the foreclosure process is considered a material fact, and must be disclosed to a potential purchaser (who may go through the offer/acceptance/inspection process, only to have the property sold out from under at a foreclosure auction), so this still leaves the question of how to disclose that a short sale property is also in the foreclosure process.

  10. […] Coming Soon: An Easier Way to Enter and Search for Distressed Properties Unfortunately, due to Market Conditions, there are a number of distressed properties on the market.  The distressed property is a property that under-water (short sales);… […]

  11. Craig Rosenfeld says:

    I believe that this change will cause significant confusion for the general public who believe that a foreclosure and REO are the same. What criteria should an agent or homeowner use to distinguish between a potential short sale and foreclosure? Will a short sale homeowner have to be current on their payments? The term foreclosure has a astigmatism attached to it that will offend many homeowners. I don't like these changes

  12. Ray Barnes says:

    Other/Undisclosed if listing agent does not have the sellers permission…this seems funny. Given the choice, wouldn't most sellers not disclose their distress status? For that matter, given the choice, I suspect most sellers would not disclose defects in the physical structure of the property that they know about. Should sellers and listing agents have the option to flush the other designations down the drain?

  13. Ray Barnes says:

    Agents in 4 or more states use MRIS. Maryland alone has three different ways of foreclosing…judicial, assent to decree, or non-judicial. Public filings will vary. Yet, there is some commonality I'm sure from state to state…some kind of a baseline thread designation(s) that would hopefully apply in all places served by MRIS. What happens to agents who don't know to log in to MD Judciary Case search and look for circuit court filings under the sellers name for foreclosure? Many listing agents are ignorant of this. They should be made to go to the courthouse and read the file! But in the meantime, MRIS is there to help agents serve their clients/customers…don't weaken the MLS by allowing sellers and listing agents not to disclose. More knowledge may also encourage third parties to fall in line as well…since many seem to act in such an arbitrary fashion.

  14. Dottie says:

    Could you please add a "Auction" yes, no button?

  15. David says:

    What happens to the information in these fields for old listings? Will it be lost, or automatically transferred to the new data fields? Appraisers rely on the accuracy of information entered by listing agents and sorting old data by sale type is essential.

  16. David says:

    Sale categories for appraisals under the new uniform data set requirements are: REO, Short sale, Court ordered sale, Estate sale, Relocation sale, Non-arms length, and Arms length. The latter two categories are, of course, post-facto, so could not be used for listing. It would be nice if appraisal standards, like what constitutes "above-grade" living area would eventually become standard in listings. Appraisers always have to second-guess or disregard information in listings, delaying appraisals and often making listings unusable as comps.

  17. Tyra says:

    Can you allow for this field to be visible in the Gallery Agent View? This would be really helpful so we can glance at multiple properties and know the type of property we're reviewing.

    Thanks so much for your work to improve!

  18. The short sale listing should be catalogue as a "PRE-FORECLOSURE" not a Foreclosure.

  19. Better. Not perfect but better. The ultimate would be if all parties involved in real estate transactions used the same nomenclature. The law has one, Agents and the public have another, appraisers a different one and we are all forced into whatever MRIS decides for our data sets. I don't think it is all that hard. A short sale is an attempt to sell a house for less than is owed with the permission of the note holder to accept the sale. They are either pre-approved or not. A foreclosure is a lender selling for what is owed on a property at the time of taking possession. An REO is a proerty that has been foreclosed, taken possession of and is offered by the note holder. I think to avoid confusion these two should be combined into a REO/Foreclosure category as effectively it doesn't make much difference to the buyer. Then there are estate sales, Relocation sales, court ordered sales (usually divorce or bankruptcy), auction sales and the rest are arms length. Those should be the choices. Anything else is too subtle to matter and makes it too confusing to the end users of this product.

  20. To follow up on using the same terms across the industry, Fannie Mae has standardized the terms used for valuation of properties. If these were used by the agents and integrated into MRIS listings, we would all be on the same page. Here is a link FYI.

    Here is the form appraisers fill out that deals with REO/Foreclosure data.

    If the data entered into MRIS listings are not easily converted to this format or the data is inaccurate, our reports are not accurate.

  21. brendan says:

    i agree with many of the comments… short sales can be pre foreclosure. the concept to have one field is great. but the way you are categorizing foreclosure I think will just confuse the public not to mention the agents. i believe that will be a cluster. also if we are going to add these types in, estate sale would be nice. i realize this is "regular" but there are some differences and can be useful to know.

  22. ross says:

    I believe most of the comments on terminology have some validity, some more than others. But I also believe too many of the agents provide misleading information on short sales, foreclosues or REOs, eiher due to incompetence or due to deliberate manipulation of the selling process. There has to be a better way for short sales and the other types of "distressed sales" to be identified as having multiple offers already submitted and the agent is still sitting on them for whatever reason.

  23. […] we mentioned last week’s post, we are making adjustments to improve the way you enter and search for distressed properties.  We […]

  24. Valerie Blake says:

    Wow! I'm getting prepared to be totally confused. Too many choices. I believe there will be too much liability in agents choosing among terms thats may not mean the same in all jurisdictional areas or portions of our industry, While I understand the current concept of Potential Short Sale, for example, it is shouldn't be up to me to check a box that says Short Sale and risk being held liable when the bank says no. And I certainly don't understand the subtle differences between Foreclosure and REO as expressed here. How about an Unknown field for E&O insurance purposes?

  25. Jeanne says:

    There is going to be massive confusion on the FORECLOSURE status, both for the public an the agents that may not deal with them all the time. In my opinion, a "foreclosure" is a done deal, the bank owns in it. Pre-foreclosure means it is on its way. You cannot assume that everyone is going to read your explanations and undertand this. Sellers do not always tell us everything, this puts an additional liability on the agents as I see it.

  26. Allowing sellers the choice of not disclosing distressed property and agents checking a box "Other/Undisclosed" is deliberate manipulation of the selling process. Luring buyers or renters in this way seems somehow unethical to me; especially when a buyer falls in love with a home (only to eventually find out) that the home is in default because the seller is not disclosing it from the beginning …. or that after a renter moves in with all of their family and belongings…… that they have to move out because the undisclosed process/default takes place well before the expiration of their lease term. We need transparency here, and diligent agents…… after all,…… buyers want to buy, renters want to rent, and sellers want to sell. If this is allowed to continue, undisclosed listings could eventually become stigmatized listings that sit on the market.

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