For real estate agents, real estate brokers, and brokerage companies dealing with REO property, you may already be familiar with a provision in Fannie Mae “master listing agreements” which stated (in at least one version of this agreement) that real estate broker (who holds the Fannie Mae REO listing):
“shall not represent both Fannie Mae, as seller, and a potential buyer in connection with the same real estate transaction; dual agency is prohibited under this Agreement.” (Fannie Mae Master Listing Agreement effective May 1, 2011, section 10E(iii))
For those real estate brokers or agents who noticed, read, and understood this prohibition, it meant that they could not list the Fannie Mae property and represent a buyer in the same transaction, even though in many states (such as Minnesota) such “dual agency” is specifically allowed by state law where both parties agree to such representation.
Where’s the problem? Envision that a brokerage company represented a buyer for the last 9 months in that buyer’s search for the perfect home. Then, buyer finds just such a home, only to find out the brokerage with whom it is listed is listing the property for Fannie Mae. Given the terms of the Fannie Mae master listing agreement, that brokerage would have to tell the buyer they can no longer represent them, both upsetting the buyer who has invested 9 months in developing a relationship with that brokerage and the brokerage, who would then not be able to conclude the buyer representation with a successful closed transaction, and who would consequently not get paid.
What’s the good news? Fortunately the good news that can be relayed in time for you to enjoy your Memorial Day weekend, is that Fannie Mae appears to have determined that they will not enforce that term, and will cease incorporating it into their listing agreements. To view the Fannie Mae information release, check this link: http://bit.ly/iFBDkF
Please spread the word among other real estate agents or brokers, particularly those who deal with REO property and Fannie Mae, as this may be an important new development for them to be aware of.
This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck. Brad is the chair of the firm’s Transactional Group, and his practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law, and Wind Energy Law. Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters. He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals.