Auction.com requirement - is this even legal?!

I am an agent representing both buyer and seller (transac broker) in FL. The title company is in the process of submitting the short sale docs and has been told of a new requirement this morning.

Even though we have a legal, binding contract on the property, NS is requiring the seller to put the home on auction.com for 2 weeks before they will consider a short sale. If the seller does not comply, we are told his only option is foreclosure. We have been told that if there is an offer for less than the current contract amount, the current buyer is still in the winner's position. BUT if a new buyer offers MORE than the current contract amount, that offer will supersede.

How is this legal?!?! There is a binding contract on the property! (with a buyer whose family consists primarily of attorneys and law enforcement, I might add) There are so many things wrong with this I don't know where to start. For starters, the buyer could sue the seller for specific performance if the other buyer's offer was accepted. The original buyer is not even afforded an opportunity to meet or match a bid - unless they sign up to auction.com. Where do agents come into play & how are they compensated? To whom is the offer submitted - the seller or the lender? This whole thing REEKS of wrong and unethical.

Has anyone else heard of this? Who/where could this behavior/policy be reported? RESPA? Any suggestions are welcomed. I am awaiting receipt of the letter they require seller and agents to sign - will upload once I receive.

Much thanks!!

Kim

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Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on March 13, 2013 at 5:20am

I don't agree with Nationstar's tactics and I've seen the "inside" of Auction.com aka REDC - but - every accepted offer of a short sale is subject to a contingency the lender will approve it.  That said, the offer you have is still subject to the lender's approval of the short sale.  They simply will not approve your offer.  Also, think about it, if it goes to foreclosure, guess who gets it to sell?  Auction.com / REDC / Red Crown Realty.  Sounds like a conflict of interest to me.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on March 17, 2013 at 5:25am

Two things:

1) Isn't it interference with an existing Listing Agreement by Nationstar attempting to insert Auction.com into the mix?

2) I started a group here in SSS called Auction.com  I'd be interested to see the comments we attract there.

Cheers to all,

Permalink Reply by Elizabeth Morris on March 22, 2013 at 4:30am

I was in the same position.  We have an offer on the property and at the approval stage then were told that we now have to go through auction.com.  After spending hours on the phone I was provided with a telephone number at Nationstar of 1-855-761-4143 to dispute the referral to auction.com.  I spoke with this department who told me that the auction.com requirement was not required if there is an offer and you can opt out.  The woman who I spoke with was helpful and said that she would email the negotiator that the file should be submitted for approval and that we had opted out of auction.com.  I guess I'll see what happens.  Hope this helps

 

Elizabeth Morris, Esq.

Permalink Reply by Kim Wennerberg on March 22, 2013 at 6:30am

Elizabeth, thank you for posting this and the phone number. Glad to see this!

Permalink Reply by Kevin - Greenville, SC on March 22, 2013 at 6:00am
Permalink Reply by Rikki on March 22, 2013 at 6:18am

Kevin-

I found this video yesterday, more info on Nationstar/Auction.com conflict.

http://www.youtube.com/watch?v=OBavZdExPyUhttp://

As well as this article:

http://platinumelite.wordpress.com/tag/auction-com/

Any thoughts Kevin?

Permalink Reply by Kevin - Greenville, SC on March 22, 2013 at 6:23am

I saw the video as well.  I think ultimately some AG's will step in if this continues.

I found this as well from a Title Company -

http://gsstitle.com/wp-content/uploads/2013/03/Nationstar-Email.pdf

Permalink Reply by Kim Wennerberg on March 22, 2013 at 6:29am

Quite a bit has happened since my last post. 1. Was contacted by broker, Brian Rust, in Orlando FL who was running into the same new requirement on his deals and while googling this, ran across this post. He contacted the legal hotline for Realtors in FL and had a much different experience than I did. He spoke with a Meredith, who agreed this should be taken further - to NAR. Brian also contacted several negotiators (he had 2 nationstar deals going at the time of the calls) and several managers, all of whom said the opt-out for auction.com was not an option. He finally spoke with a manager who after talking with Brian for 45 minutes, said he would offer the opt out to his customers. Brian stated that wasn't good enough - if it is offered to his customers it should be offered to everyone's customers (Go Brian!!). Here is his info: Evan Switzer - 469-549-3193 - [email protected]. Brian spoke with him on March 13 at 10:20 eastern time.

The next day I was contacted by a reporter from Bloomberg News - so people are paying attention here! He also spoke with Brian Rust - though I see no story published as of yet in a search on their website this morning. 

I have refused to sign the auction.com paperwork at this point but have no confirmation from anyone as of yet that our opt out has been accepted. We are still working on this today but wanted to at least update what has happened so far. Will update further once we have someone saying this has been approved! 

Thanks to everyone for your input & updates!

Permalink Reply by Becky Alfaro on April 10, 2013 at 4:07am

So thank you everyone for the info. I am working a short sale w/ Nationstar and called the number I found here. I was told they will escalate it to try to allow my seller to opt-out. Unfortunately he has already signed the letter they sent but once I made clear his attorney is willing to write a letter taking that back the rep let me know she would try. I'll keep you updated with what they say. 

Thanks again!

Permalink Reply by TOP END Properties on April 15, 2013 at 5:51pm

Can't the lender can just decline the short sale (which would probably void the offer) .. and then require it be listed at auction..

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on April 16, 2013 at 6:16am

Lenders can decline short sale offers at anytime and for any reason.  It does not "Void" the offer from the Buyer.  Every short sale is contingent on lender approval.

The lender is NOT THE OWNER so they CANNOT REQUIRE a property they do not own to be listed on Auction.com - only the owner can.

Permalink Reply by Keji Ogunleye on April 22, 2013 at 5:33am

I'm so glad some agents are standing up to the bullies..Nationstar and Bank of America. How can we best service our clients when is not in their best interest to list a house in auction.com ?I refused to sign the auction.com agreement with Bank of America and advised my clients is not in their best interest.

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