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Do Short Sale associates hurt your REO business?

I’m curious how other agents see short sales and REOs mixing.

If you are an REO agent and are assigned a listing, you are happy. If you then find out that one of your associates in your brokerage has had it listed as a short sale within the past 6 months, your happiness might turn into a sense of loss. You need to tell your seller that the property has been listed with your brokerage and let them decide if there is a conflict of interest. In fact, the seller probably is already aware that the property was previously listed with your brokerage, in which case they may not have assigned it to you at all depending on their policies.

Do you, REO agents, consider this scenario potentially damaging to your business? One reason I was motivated to build my own brokerage was I could control what listings we handled and avoid sellers in distress since potentially we have a better chance of selling their home as an REO listing than selling their over-priced, underwater short sale home. When I worked at a franchise brokerage I had to turn down pre-listing bpos because another agent in my office currently had the properties listed. This happened a few times and I decided that it was up to me to solve the problem by leaving.

Now, the whole game is changing and short sales are becoming part of the mix with management companies that previously only managed REOs. I have heard some short sale agents claim that they get REO listings by being the short sale agent for the owner in default but I have yet to see any proof to back up this claim. Usually the short sale agent gets a call from the REO agent instructing them to remove their short sale listing from the MLS because the property has a new owner. These are uncharted waters so my question is:
Will a short sale assigned by a management company be more likely to be kept by a listing agent if it fails to sell and becomes an REO?

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