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Short sale contract revisions drawing criticisms from Realtors

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A recent article in the Herald-Tribune relayed that the new contracts being handed out by Wells Fargo and Bank of America for short sales have become an issue for Realtors.

One of the new terms of use in the contracts request Realtors to certify that the short sales they are conducting are "arms length" and that these properties will not be resold within 30 to 90 days of their closing. By requesting this from Realtors, the banks are hoping to protect themselves a type of real estate fraud known as flopping.

Flopping occurs when real estate agents persuade banks to accept lower prices for available distressed properties in order to then quickly resell them for a higher price. While Realtors are aware of this trend, many see the new contracts as a continued shift of burden and professional liability away toward them, and away from the banks.

"The contracts put extra pressure on Realtors to do due diligence and could have a chilling effect on legitimate flip transactions," Sarasota attorney Evan Berlin told the news source.

Now, because of these new contracts, many Realtors are thinking twice before agreeing to help investors find new properties. If a Realtor violates the contract, they could be found guilty of perjury, the article relays. 

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