WatchI have been following this site for several years, but my wife and I need a bigger home for our growing family and saw a beautiful house that was a shortsale and put in a slightly higher offer via our realtor. It is priced comparable to others in the area. However, the other realtor said the 2 offers from the first day it was on the market were the only ones she send to her client for review and she wouldn't consider ours.
Does anyone know if there are any alternatives e.g., to contact a bank directly and tell them you are willing to pay more? Probably a long shot and not playing by their "rules".
thanks
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Boise, ID
Norbecker's website
She is only sending those 2 offers as they are (most likely) her clients and she will get both sides of the commission. You could leave something in the mail box to make sure the seller knows of your offer and that the listing agent is refusing to submit some offers.
Good luck.
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Los Angeles, CA
Why did you use a buyers agent? Huge mistake. You wont have much chance to get the house. Its SOP in CA to flush offers where they are using buyers agent - unless its way overpriced or at least retail priced- you wont get the deal.
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What's wrong with using a buyers agent?
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Danville, CA
gregpfielding's website
No, you can't contact the bank. And, it's probably not that the listing agent is "double-ending" the deal. It's much more likely that they have a great offer from buyers who seem like they will stay with the transaction until the bank approves it.
The sellers don't care much beyond that, so there really isn't any incentive to go through the headache of a bidding war.
If you want to learn more about the mechanics of a short sale, here is everything you would ever need to know:
http://bayarearealestatetrends.com/how-short-sales-work/
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gregpfielding says
Right, the selling agent is not that motivated to get the bank more money -- this actually goes for anyone represented by a selling agent. The quicker and easier the deal is done the quicker that the agent gets paid.
Even if the offer would make the bank -- or any seller -- $10,000 more, that would make the selling agent only $300 or $600 if there were double-dipping. Not worth it if it adds complication and drags the sale out another few weeks.
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Once the short sale process has started they don't take other offers in my experience.
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nw888 says
There are several other threads that discuss this. The short answer is that a buyers agent is not incentivised to actually work in the buyers best interests, but the buyers agent has a financial incentive to work against the buyers interests.
While the sellers agent is no friend of the buyer, they sort-of have a financial incentive to work in the buyers best interest.
The long story is in this thread, pay particular attention to Iwog's comments:
http://patrick.net/forum/?p=1208653&page=2#comments
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Wow thanks so much!
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Danville, CA
gregpfielding's website
leoj707 says
This can be spun lots of ways. All agents in every deal have a financial incentive to get the deal done, whether they are double-ending it or not.
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gregpfielding says
Right, they have an incentive to get the deal done, not an incentive to do what is best for their clients.
When double-ending the deal an agent has a lot of incentive to get the deal done for you, at the expense of the seller or other buyers.
Iwog details it pretty good in the thread that I linked to.
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Danville, CA
gregpfielding's website
leoj707 says
By that logic they have the exact same incentive then to get the deal done for the other party at your expense.
There are people here who advocate using the listing agents as dual agents when they buy a house, assuming that this "incentive to get the deal done" will work in their favor. In fact, just the opposite could be true.
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gregpfielding says
I don't follow, what other party? another buyer? the seller?
And what is the incentive for this agent to work more on behalf of this "other party"?
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Daytona Beach, FL
Contrary to what real estate agent gregpfielding stated, of course you can contact the bank. Any servicer that is handling a short sale approval had better be considering all offers in order to get the best possible net for the investor that owns the mortgage.
I would also contact the sellers to determine if they gave specific instructions to the listing agent not to consider other offers.......if they did they are not acting in good faith in the short sale process and if they didn't the real estate agent is violating the law and the Realtors Standard of Practice.
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Danville, CA
gregpfielding's website
Jonny Angel says
Wrong wrong wrong.
The bank will not talk with you in a short sale situation without the written consent of the Sellers. There is a specific letter required, signed by the sellers, that authorizes their bank to share their personal formation with you.
Additionally, you aren't buying the home from the bank or even negotiating with the bank. The seller owns it. You are buying from them, subject to them successfully negotiating removal of the lien from the house. The bank has no authority to even engage you in any conversation about you buying the house because it's not theirs.
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GP Fielding Esq, is exactly right. The bank will not discuss anything with you unless you have been authorized by the sellers in writing.
On another note, you say that this realtor only submitted two offers to the seller, the first day on the market. S/he better hope that they did not price too low, as very early offers without being on the market for a bit tells the bank that the property was probably listed too low, increasing the likelihood of denial/counteroffers. Sounds like they are a little clueless.
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Jonny Angel says
This sounds reasonable, however, it is simply not the case in practice.
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Thanks everyone for the quick replies!
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Josh,
Many things could happen in a short sale transaction. In addition to what Greg said, I'd like to add another angle to the discussion, and I want u to put yourself in the sellers shoes.
Say u bought the house for $600k, now it's worth $300k. It doesn't make sense to keep servicing the mortgage so u let it goes into default. However, u love your house and would love to buy it back at FMV. Therefore, u decide to short sale it, and have one of your close friend buy it back for u at $300k.
If u are the listing agent, what would u do? Help your client (seller) to buy it back through a friend, or would u sell it to a total stranger (buyer)?
Another scenario is that the seller is short selling his house for real, and his friend wants to buy it for real. Why would the seller pick your offer over his friend although the friend's offer is lower than yours?
Many Patnet readers don't fully understand the short sale process and come up with all kinds of conspiracy theories. Learn to give the benefits of the doubt to others and you won't be frustrated.
Good luck with your house hunting.
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Daytona Beach, FL
gregpfielding says
There is nothing "wrong wrong wrong" with my statement that you quoted.....it is the servicers job to get the best possible net for the owner of the mortgage.
Additionally, I am well aware of the short sale process, I know who owns the property and I know what the servicers part in the process is.
Possibly I should have been more clear in my original response so let me clarify to the OP.....
Of course you can contact the bank and let them know that you have a signed purchase contract for the property that the listing agent and possibly the seller refuse to consider....I'm sure that they will be interested.
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Danville, CA
gregpfielding's website
Jonny Angel says
No, they won't. It's none of their business because they don't own the house. They will politely advise you to contact the seller.
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gregpfielding says
While I agree that it is none of their business I think that they still may be interested, even if they can't comment and need to redirect you to the seller. I would guess that it depends on the workload and/or disposition of whom is contacted at the bank.
If it is your job at the bank to get the most out of a short sale wouldn't you want to know if there was a larger offer waiting, before you approved the current offer?
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Los Angeles, CA
No one here realizes what its like to work at a large bank and actually have a huge stack of short sale files and constantly swamped with phone calls from unrealistic loan owners.
I used to do this in the last 'RE Crisis' in 1995/96. In order to manage a massive workload they cant/wont let the house sit for a month and get 10+ offers then choose the highest amount - too much paperwork/manhours.
A loan owner calls and submits a short sale package 'with an offer' and they sit on that file for a long time until they approve or deny. If they deny it they might take another higher offer when its submitted again....or the foreclosure dept might have scheduled the trustee sale and they dont look at the offer until too late in which case they trash all offers its sold at auction.
If the banks were to staff up to 'get highest offer on short sales' they would have to have triple staff. AND that would create a huge loss since they might only net 10k more per deal AND thier losses DONT MATTER since the feds/fha/phony/fraudie/va are the actual investor who LOSE the $. (yes its more screw the taxpayer game)
IF THE BANKS TAKE THE HIGHER OFFER THEY LOSE MONEY. There is a loss anyway and they dont eat that loss but they DO pay for staffing/processing. They only need to do minimal due diligence on these short sales to barely meet the servicing requirements which are set in writing (how many collection calls per month are to be made, what percent of the balance can put at the end in a mod, etc ...all is in writing).
At any rate the loan owners choose thier cousin vinny the agent who is shady as hell so how they possible 'get market price'? they cant!!!
PLUSS the seller doesnt care what they sell the house for, they have zero skin in game! It really is a 'too much big government' issue. If banks held 100% of thier own mortgages with zero taxpayer/fed reserve subsidy you would see mortgages at 10% and banks actually acting financially prudent. (you can get a 3% mortgage with 3% down, only the taxpayer is dumb enough to fund that loan....97% of all mortgages are gov guaranteed now....so buying a house is like 'getting on welfare' or 'getting a grant to fund your space telescope'.. or 'registering out of state car in CA'...get it? CCCP.
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San Francisco, CA
We might be putting in an offer on a short sale today.
Here's my question: do you think it makes any sense to personally contact the seller - ie., if we are able to appeal to the "sellers" emotion, why would they choose the highest bidder over us? The bank wants more money, but the "seller" doesn't care...
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Los Angeles, CA
Contacting the seller will totally PISS OFF the listing agent.
The seller doesnt own the listing, legally the listing agent does. YOU HAVE TO GO THRU THEM for all contact OR u piss them off.... they will likely paint you as a nutjob/flakey buyer/bad credit/bad financing/not enough down payment etc. to the loan owner so they can flush your offer.
Remember the listing agent is either a vampire who hynotized the loan owner to get a listing and they beilieve every word they say OR its thier cousin vinny the agent. In both cases they hired the agent to deal with people so they DONT HAVE TO TALK TO YOU.
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Virginia Beach, VA
pedrobenson says
Correct. Also there are some states (Like North Carolina) where the agent is REQUIRED to send in every offer they receive, regardless of how far along the approval process they are with the selling bank on a previous offer.
A BIG reason these agents don't want to send in your offer is you are not offering cash. They have hand-picked a cash buyer who they are trying to get approved, and once the lender does, it goes immediately to sale.
The lenders these days won't even budge on underwriting your loan, until they have the selling lender's approval in-hand. They won't even order the buyer's appraisal. So by the time the lender approves a financed offer, it's already months into the process....and then the buyer's appraisal comes in less, they can't get financed for the full purchase price, can't make up the difference, and boom, the deal's dead.
With a cash buyer the agent knows they can go to closing within days of the selling lender's approval. If you are offering $10k more than their cash buyer, the agent knows the selling lender will stop and give your higher offer priority, because it nets the investor a higher payoff, which again opens up that can of worms (potential fall-through of your offer due to your lender not financing the full purchase price) and they don't want to deal with that (and the extra 2 months it takes to get your mortgage finished, if it does work) so they just make up some BS about how the banks won't accept it because the first offer is "already in process", or how they aren't allowed to for whatever reason. It's simply a ploy to increase their pull-through and get their commission faster.
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Virginia Beach, VA
E-man says
You have just defined mortgage fraud
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Call the bank directly and cut out the middle man.
They always take back up offers, because too many short sale offers fall through since they take a long time.
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Schizlor says
Not clear to me that this is fraud. You can accept whatever bid you want from whoever you want. And the agent has a duty to you the seller, not to the bank.
However, the bank does have the right to kill the deal if it is not to their liking. So if you are giving yourself or your friend a sweetheart deal they may just say no.
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Virginia Beach, VA
The part where the seller uses a straw buyer to buy the home, and then deed it back to him right after the sale...that's the fraudulent part.
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Virginia Beach, VA
The buyers and sellers are required to sign and be notarized on a document called an Arms-Length Affidavit at closing of a short sale. 2 of the provisions in that document state:
4) There are no hidden terms or hidden agreements or special understandings between the Seller(s) and the Buyer(s) or among their respective agents which are not reflected in the Agreement or the escrow instructions associated with this transaction.
--The understanding that after closing, your friend will give or sell you back the house, violates this term.
5) There is no agreement, whether oral, written, or implied, between the Seller(s) and the Buyer(s) and/or their respective agents which allows the Seller(s) to remain in the Property as tenants or to regain ownership of the Property at any time after the consummation of this sale transaction.
--This clause prohibits you from even remaining as a tenant of your friend in the home after the short sale.
So if someone did what he said above, after having signed an affidavit under a notary's affirmation stating clearly that he agrees not to do that....they have committed fraud. If the lender finds out this happened, they will go after them for the full amount of the deliquency that was not recovered at sale (deficiency judgement for the outstanding prinicpal balance at the time of sale, minus the net they recovered at sale)
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Thanks for pointing this out Schizlor, I stand corrected.
It would seem though that just giving your friend or someone you like a good deal (without intent of moving back/payback) is not a violation of these terms? Although you reduce the chance of it being accepted...
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Danville, CA
gregpfielding's website
FortWayne says
Again, the bank will not talk to you. They have no right and also no interest. Sorry.
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Danville, CA
gregpfielding's website
PockyClipsNow says
Totally true. Everyone here will do much better working with the agents than going behind their backs. We can debate all day long the structural/monopolistic problems within the real estate industry, but if you want to actually buy a house, you are better off being friendly and respectful towards the agents.
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leo707's website
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gregpfielding says
I understand that the bank may not talk to you, but why would they have no interest in how much money they may or may not loose on the short sale?
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Los Angeles, CA
LEO the banks dont lose money on short sales. the taypayers do. get it?
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PockyClipsNow says
Ah, haha. right... right...
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Wow, even more replies, thanks!
The listing agent never even accepted our offer. However, a friend in the neighborhood said the sign was still up so she called directly and was told that they were still taking backup offers. Should I talk to counsel? Can I send our offer certified mail or should we just use the listing agent so she can double end it?
thanks for all replies.
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gregpfielding says
That's a good point, I was for some reason thinking of REO's. So my apologies.
Good catch Greg
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https://www.facebook.com/photo.php?v=3599903520344&set=vb.1356212110&type=2&theater
Megan's parents owned the house next to us, growing up in the seventies and eighties.
She looks like her mom.