Can agents list their own short sale properties?
Hello. This is my first post here, and I wonder if the superstars can help me. There's a question in my Activerain SFR group that I think needs some authoritative answer. The question is, can an agent be the listing agent for a short sale property owned by the same agent? ( I think I mangled that - lol.)
I believe the agent can, as long as the same agent doesn't benefit (get paid commission) from the sale. I know I read this somewhere, but can't cite chapter and verse. Can you help? Thank you so much!
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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Just to be clear and state some facts. I sold 2 of my investment homes last year as short sales. I was the listing broker on both of them. They were both with BofA and were both Fannie Mae loans. I did not receive a commission but the selling broker did. The fact that I was the owner and the listing broker was not an issue at all.
So yes you can list your own property. You just can't get paid to do so. The lender does not own the property. They cannnot dictate who you use to list it. They can however dictate who will be paid out of the proceeds of the sale since they are the one taking the lost.
You guys are stating a lot of rumor and hearsay. I don't believe it for one minute because I've done it....twice.
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Permalink Reply by Ashly Alexander on
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The laws have recently changed. So what was done 6 months ago, agents selling their own short sales, you just not may be able to do today. It would really be a shame to waist so much time and energy and to loose a buyer . . . I do a lot of short sales, more than most agents, and I would rather err on the side of caution and get another agent at the very least to sell my own property. At least somebody could get paid and my time would not get sucked up in my already emotionally charged and stressful situation and I could actually spend my time on a listing that I would get paid from!
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Permalink Reply by Barbara J. Rice on
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The rules do keep changing! I think we're all in agreement that you as the homeowner will not receive a commission.
Who is the lien holder? If it's BofA or Wells Fargo I will contact someone I know there and get a real answer for you on the issue of whether you CAN be the listing agent. Personally, I don't know of any laws against it, just a question of how the bank handles the commission.
Barbara Rice
702-523-7907
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Permalink Reply by The Negotiator on
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I would strongly disagree with this because most banks would love the agent owner working the short sale so they don't have to pay out 3% commission.
Melissa Polce said:
Most banks don't want you associated with your own short...you are an agent and also the banks borrower, my suggestion is hand this to a trusted friend or BIC to see you through.
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Permalink Reply by Kieran Jackson on
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I'm still very new, and I learn something from almost every post I read here. I love short sales. This is the only market I know, and I am determined to do very well.
My first question is this... how would the bank know, if an agent is getting a referral fee from a short sale? The referral fee is NOT on the HUD Settlement...
If the banks had their way, there would be a law that states "every agent must accept a short sale listing and NOT charge any commission out of the bank's proceeds, period". But, there is no law. The short sale is based on a hardship. If an agent has a hardship, that agent's property should be approved for the short. It's in the bank's interest also. It shouldn't matter if the listing agent is the owner (but I know, it does matter to the bank). The bank may not like the owner/agent listing. The bank may not like the owner/agent's brokerage getting a commission, the bank may not like the owner/agent's brokerage paying that agent their split of that commission. But is there a LAW against it?
Very eager to learn more!
All the best,
~Kieran~
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Permalink Reply by Yolanda Hoversten on
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Hi, ladies & gents!
I'm very pleasantly surprised to find a well rounded discussion of the question I posted earlier.
Just a point of clarification--I'm not the subject of the short sale, but thank you for your concern. I posted here because the question was asked by a blogger in my ActiveRain SFR Group but didn't get traction, and I have not seen this addressed very well over there. There is so much misinformation out there that I truly want to know based on the collective experience here. I wish I could post this discussion over there.
I apologize if I'm not responding to individual comments, but I've learned so much from this thread. I have the theoretical, but not the practical knowledge when it comes to short sales. I do want to go to reliable sources when in doubt. Thank you so much!
- Yolanda
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Ashly. This is not something that is governed by law. If y ihave any doubts just call the lender and ask them. But be sure to ask the right question. "Can the borrower, who is an agent, list their own property and handle the short sale if they are not being compensated to do so?" The answer may very well surprise you.
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Kieran. Because the owner normally has to sign a form stating they are not receiving any funds from the transaction. To sign this and then collect a fee anyway could very well be considered fraud.
Kieran Jackson said:
I'm still very new, and I learn something from almost every post I read here. I love short sales. This is the only market I know, and I am determined to do very well.
My first question is this... how would the bank know, if an agent is getting a referral fee from a short sale? The referral fee is NOT on the HUD Settlement...
If the banks had their way, there would be a law that states "every agent must accept a short sale listing and NOT charge any commission out of the bank's proceeds, period". But, there is no law. The short sale is based on a hardship. If an agent has a hardship, that agent's property should be approved for the short. It's in the bank's interest also. It shouldn't matter if the listing agent is the owner (but I know, it does matter to the bank). The bank may not like the owner/agent listing. The bank may not like the owner/agent's brokerage getting a commission, the bank may not like the owner/agent's brokerage paying that agent their split of that commission. But is there a LAW against it?
Very eager to learn more!
All the best,
~Kieran~
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Hey Bryant,
Yes I do understand your point. I have seen on the approval letters, that the bank gives instruction to the title agent. The title agent can't give a dime to the seller. I still do not see how the bank can instruct the broker not to pay its agent. I'd love to hear from an attorney or two on this matter. I do understand and appreciate everyone that has shared experience and opinion on this matter. But it's my belief that if the bank allows an agent to list their own short sale, and that brokerage collects a commission, I don't think the bank has ANY authority to get in that broker's business how they handle their money.
If thats the case, the bank should deny the short sale and insist on a brokerage with no vested interest in the deal what so ever.
Just my opinion. From the few short sales I have closed to date... the banks make it clear their stand is 'them against us'. If your broker is ok with you listing your own short sale, then go for it. I think this type of decision is totally up to the OP at any brokerage. Again, I do know I am a newb.
All the best,
~Kieran~
Bryant Tutas said:Kieran. Because the owner normally has to sign a form stating they are not receiving any funds from the transaction. To sign this and then collect a fee anyway could very well be considered fraud.
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Permalink Reply by Michael Campus ABR,SFR,SRS on
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Is this the principal/agent/sellers primary residence or other? I would think that if it is their primary, they should have someone else list it (because we know if they do it themselves there's no commission) and they would be eligible for
the $1500 relocation expense ($3000 if HAFA) so they could get something after all.
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Kieran. I guess the question becomes ..Would you sign a form saying you are not getting ANY proceeds from the sale and then do it anyway? And is a commission coming from the broker "proceeds of the sale"? I don't believe the lenders are going to waste time and money going after folks for doing this BUT does that make it right? I agree that the lender would have a hard time defending their stance in a court of law.
In Florida it is perfectly legal to give commission rebates after the closing and off the HUD. It just has to be disclosed to the parties of the contract (buyer and seller). Can I lender stop this from happening? Are these proceeds of the sale?
Difficult questions and I think the courts would have to decide.
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Permalink Reply by Jeff Payne on
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Steve, I have seen many agents in my marketplace list and sell their own short sale. While I advise against it because of issues like you ran into, agents are getting them done and it is perfectly legal. I have sold alot of my short sale listings to the children of the agent representing them too. All fully disclosed....
Steve Early said:Jeff:
I've never read this anywhere, but can tell you we had a short sale this year (may have been Wells Fargo but I'm not sure). The buyer was a woman who was a Realtor. The buyer's agent was her husband ... also a Realtor. They disclosed their relationship from the very beginning of the transaction, and had done similar transactions in the past. We got down to the approval stage and they denied the short sale and said we had to replace the BUYER. Replacing the Realtor was not an option.
Jeff Payne said:
Ellen, please direct us to where you found this out? Arms length? Does that mean that a family member could not be the listing agent on a short sale?
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