I was contacted today by a lady referred to me by one of my current short sale clients. This lady explained her father passed away and the estate sold his home. The woman who bought the home is now 6 weeks from a foreclosure sale and she contacted this lady to ask if she would be interested in purchasing the home, since it used to belong to the lady's father. This lady is interested and she has spoken with the lender and they have advised that she needs to get a Realtor involved. This lady has now contacted me and asked if I would act as a dual agent in the short sale of the home between these two women. The two women are not related. Not sure I want to be a dual agent in a short sale, but wondered what others might think.
You need to be a member of Short Sale Superstars to add comments!
**********************************
like buttons
Replies
Realize that Dual Agency refers to the broker having both sides of the transaction in his office. It does not necessarily mean that a single agent handles both sides - that seems to get confused a lot. After complains of BofA putting dual agency into their arms-length last year, it got pulled out after about a month. Banks do use any excuse they can find to cut fees, etc. and usually, unlike your situation, agents advertise and work to get a buyer for their seller, yet the banks/investors often cut the commission if they see the agent as both buyer and seller agent.
About your role as both agent for buyer and seller, unless the buyers agent is paid by the buyer, all agents work for the seller. Here in NJ, the law makes it even clearer, agents cannot be paid by more than 1 entity. Unless the buyers agent is paid wholly by the buyer, all agents work for the seller, their employer. Of course, most buyers agents disregard their legal loyalty and work for the buyer against the betterment of their employer (not unlike what servicers seem to do when they kill and drag out short sales - except servicers are doing it to keep more money, not for the betterment of anyone else). So, you should not have guilt about doing what you are legally chartered to do. But, I do agree, even if you legally are supposed to support your seller, you have brought the conflict to your gut.
Since the point of forcing the seller to use an agent is to get the property properly marketed to bring in the best price, you've just admitted that you feel the offer is low and thus you have not done what the bank wants (I have a tough time crying for the bank after having them screw over my clients for years, however.). But on the other-other hand, the bank will do BPO/appraisal and come up with what they think should be the offer, so you shouldn't feel guilty about not doing your job as the bank intended. And you'll feel less guilty when they come back with something you know is 30% more than the place is worth. Boy, you sure know how to create a conflicted question. ;-)
About being one party a "dual agent"? Forget it. They define everything and there will be no line for such a thing to sign. I do see a lot of ethical, bust-their-butts agents get both sides of the deal with non-lowball offers, but if this is a new rule, it is one that I can actually see merit in. Fewer agents will be tempted to just let this lower offer go through - of course, that is if they think the seller cares about the price, which most don't. As mentioned, most agents just have someone else in the office sign as the other agent. I am not an agent and don't know how that works, but look at it more like not calling the police every time I see someone going 5 mph over the limit on the highway (I have guessed at this being the case, but never knew for sure). This gets past the hassles with the bank about cutting commission - which I believe is wrong - just an excuse to frustrate agents and get rid of short sales.
Since you read the guidelines (I have not), did you see where you are required to market the property for a week before you can have a contract with a buyer - or they will throw out your contract?
Since the woman purchasing is not related to the woman selling, there should not be a problem. The fact that the house once belonged to her father is a non-issue. Dual agency may result in a cut in the commission, so if that is a concern to you have someone else within your office write the offer for the buyer, and you represent the seller. Be prepared for the Short Sale Bank to ask for proof that the house was on the market for one or two weeks to ensure they're getting a full market value offer. If it's one of the big banks that's more likely to happen, not so much with a small bank or credit union. Good luck!
Thanks to everyone who replied - I appreciate all of the thoughtful advice. In general, I don't like dual agency. To me, it feels like a bait-and-switch with my clients. At the listing apt or first showing I explain how I will use my experience and negotiating skills to get them the very best deal, always keeping their best interest first. Switching to a neutral "mediator" at some point and, by the way, earning twice as much as I would have had I remained their agent alone, doesn't feel right to me. I try not to do it. I have done it once, in a short sale situation, where the listing agent simply vanished (he was from my office). My BIC asked if I wanted the list side since I'd been working on it for 6 months and everyone agreed they wanted that, buyers and sellers. I closed it in 8 weeks and everyone was happy. But, in general, I prefer designated dual agency. I still get a little extra commission (referral) for bringing the buyer and seller together, but the buyers get their own agent (from my office) and I remain my sellers' agent. I like it better that way. Just wondered what others might think.
In this particular situation, I don't feel as conflicted since I have no prior relationship with either party and the two parties have apparently talked and worked out most of what they want to do. I think their valuation of the property is off. They are unrealistically low, in my opinion. I'm sure the bank will reject the offer.
Btw, I just read the new guidelines for Fannie Mae and Freddie Mac short sales, to become effective October 2013, and they state that all signatories to the arms-length transaction affidavit, which includes the agent(s) involved, may only have one role in the transaction. Some are interpreting this to mean that dual agency won't be allowed. I can see an argument for a dual agent satisfying the new requirement - a dual agent is performing one role, that of a dual agent. Thoughts?
Thank you for sharing the new guideline coming in October 2013.
With the new guideline of the agent only having one role in the transaction it may be problematic, that would also be brokerage in my thinking, not just agent. They may have that rule because some agents were double ending the transactions without having the property on the MLS or putting it in as Sold prior to Input. Banks here want the property marketed for a length usually 15 days to make sure that they are getting the best and highest offer.
The ruling may not be in effect till that time and hopefully you can get the property sold before if it is priced right and the banks to accept the offer.
Best of luck to you.
Certainly - you can act as both the listing and selling agent for this transaction.
The REAL QUESTION - how do they pay commission on this. You should check. Some banks will discount the commission heavily. Always swing for the fence.
I don't have a concern about the double end, however, the bank's purpose of insisting on an agent being involved is to be sure that the property is properly marketed - to find the best buyer possible. I am guessing that you won't be doing that. The bank will insist that you list it in the MLS as active, but aren't you going to tell anyone who calls that it is already under contract? To be safe, you should market the property, give the buyer first right of refusal. Also, be aware that Freddie and Fannie are now throwing out any contracts made prior to a week of marketing.
As long as it is allowed in your state and you have disclosed it to all parties there shouldn't be a problem.
An advantage would be that you would have total control on your end, disadvantage is you may get the commission cut.
They came to you for your service.
It really isn't any different than being a dual agent in a traditional sale, so if you want it go for it and good luck!
Sharon,
What are your concerns? We process short sale transactions for agents who almost always double end deals. We advise them If they represent both sides they run the risk of having commissions(non HAFA). Many agents have someone else represent the buyer to potentially avoid the risk of having commissions cut.
310-564-6389
www.ishortsalenow.com
brett@ishortsalenow.com
-
1
-
2
of 2 Next