Made it all the way to investor approval to be denied, My realtor and seller are related
I am a buyer that found a house on realitor.com I did not have a realitor so i contacted the listing agent directly. we put in a offer at fair market value and got all the way to investor approval, yesterday the realitor informed me that the bank has denied the offer due to the seller of the house is her sister. the realitors broker said that he would put another realitor on the case, now the bank doesn't want to deal with the broker or the realitor at all. Does anyone have any suggestions how to fix this.
Appreciate any Help
Paul
Replies to This Discussion
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Permalink Reply by Scott Korbin on
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That is shocking to me. I would never have even considered processing a case without an Arm Length. And to get one approved that way would be even more shocking. If it was approved, it would seem to have been an oversight by the Lender and Investor staff. Expressly prohibited by most Investors.
Christina Conrad said:
Jeff is right...it probaby is someone that is new and doesn't understand arms length transactions...I had a similar deal with BOA recently where the Listing Agent and Buyer were related and we had the Arms Length and BOA denied the ss in Equator...we had to start over because the BOA rep. kept saying you can't do it...well you can, we have done it plenty of times b/4..they just don't pay the commission...so we assigned another listing agent and reinitiated the ss and it went through...
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Permalink Reply by Michael Schneider on
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Arms Lengths vary by investor and Servicer, and change over time.
Facts:
1. Sibling relationship between realtor and seller is prohibited by some arm's length and allowed by others,
2. The Wells Fargo arms length clearly prohbits this relationship (pretty sure),
3. BofA has in the past interpreted the FHA guidelines to prohibit this relationship.
I would need to read the new Fannie/Freddie really carefully to decided if this is permitted. But, when dealing with OCC regulated banks, they tend to "over comply" simply to avoid being questioned by a regulator. Just not worth the trouble, even if not clearly prohibited.
I have done one deal where the realtor was a sibling of the seller. I told the realtor this could be a problem, depending on the Investor's arm's length. It worked out, no problems, full commissions, but I concluded that I would not do it again. The arms's length in this case did not prohibit this relationship.
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Permalink Reply by William K on
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If I may interject, pardon me as I'm a lay person who was a seller last year on a short sale, but I believe one key
piece of information may have been missed in some responses.
I believe what the OP is describing is a short sale transaction where the selling agent is also acting as the buyer's agent? The OP stated he did not have his own agent and contacted the listing agent himself.
If I'm reading correct, it seems to me that you should have had your own agent as the buyer. Whether that can be remedied at this point is a question of what are your contractual obligations to the agent - and not something I know well enough to comment.
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Permalink Reply by Kathleen Sheridan on
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The issue for the lenders is that the agent is a relative of the seller. A buyer may benefit from having their own agent, but having one dual agent doesn't violate any arms length criteria.
Agents who have experience with short sales should know that listing your relatives property is apt to create problems. The lender is apt to deny the short sale approval, or not allow the seller's agent to get a commission. It's good practice for agents to refer their relatives to someone else.
In addition, the agent who is the relative of the seller needs to disclose this fact in the listing, at least in my state. If this transaction got all the way to the investor before being denied, it suggests that this relationship was not disclosed up front.
William K said:
If I may interject, pardon me as I'm a lay person who was a seller last year on a short sale, but I believe one key
piece of information may have been missed in some responses.
I believe what the OP is describing is a short sale transaction where the selling agent is also acting as the buyer's agent? The OP stated he did not have his own agent and contacted the listing agent himself.
If I'm reading correct, it seems to me that you should have had your own agent as the buyer. Whether that can be remedied at this point is a question of what are your contractual obligations to the agent - and not something I know well enough to comment.
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Well said Kathleen.
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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A couple of thoughts to add:
1) I think there is "more to the story" and it's highly likely Paul is not aware.
2) "Blood is thicker than......" an Arm's Length Affidavit.
3) Was the Listing Agent taking a commission - or - doing at no cost to help her sister?
4) If the "relative" factor is truly the cause for denial, this property will NEVER sell while it is listed with the seller's sister.
Also Paul;
1) You need to make sure no one is related in any future transaction.
2) Use your own agent / broker to represent you in the transaction.
3) Do not use a Listing Agent as your Buyer's agent.
4) Do not use any agent as your lender.
If this house is the only house you want to buy, ask the Listing Agent to refer the Listing to another agent / Broker. (If the agent cares about her sister, she should do this for her own sister's well-being.) The current (soon to be former) agent will get a referral fee from the new Listing Agent as is typical in any Real Estate referral transaction.
I'm not sure where you are located, but I am absolutely sure there are other properties that meet your criteria. If you cannot get this issue resolved ASAP and without much work on your part, I suggest moving onto another property.
Best of luck,
Thom Colby
Broker / Negotiator
Newport Beach CA
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Paul,
Was there was an "Arms Length Transaction Affidavit" signed by all parties? This is usually required by the bank. The relationship between the seller and the seller's agent was probably ok, but the fact that the seller's agent was also representing you is probably where the bank takes issue. This is clearly stated in the Affadavit. There is a possibility that you may find your own agent and submit a new contract. However, you probably want a to find another agent under a different brokerage.
Hope this helps.
Dorothy
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William,
A good thought, but it is NOT necessary for a Buyer to have their own agent in a Short Sale; however, one should ensure that the Listing Agent is experienced in Short Sales and that one is comfortable working with a Dual Agent. A Buyer may secure the services of an attorney if they question what the Agent is doing or they simply need legal advice. But a good agent can well represent both Buyer and Seller in a Short Sale, but NOT if the agent is related to either party.
William K said:
If I may interject, pardon me as I'm a lay person who was a seller last year on a short sale, but I believe one key
piece of information may have been missed in some responses.
I believe what the OP is describing is a short sale transaction where the selling agent is also acting as the buyer's agent? The OP stated he did not have his own agent and contacted the listing agent himself.
If I'm reading correct, it seems to me that you should have had your own agent as the buyer. Whether that can be remedied at this point is a question of what are your contractual obligations to the agent - and not something I know well enough to comment.
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On the deal that the investor approved the deal where the Agent was a sibling, do you know who the investor was?
It might have been a Private investor not subject to the same regulatory guidelines.
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Permalink Reply by Josh M. Boggs on
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From where we sit it sounds like there have certainly been a few red flags on this one. Was that relationship disclosed to you the buyer up front and who was representing you in the deal? Was this listing agent negotiating the offer as a "3rd party" not representing either the seller or you as the buyer? Well if he's supposed to be acting as an "intermediary without appointments" then I would suspect it sounds very sketchy from the start if he's also related to the seller. Wouldn't you?
Furthermore, if he's the dual agent on the deal; in our experience we have NEVER seen the full 6% commission being paid. They only want to pay 3%. I'm wondering if perhaps that's the REAL reason this Realtor is saying it's getting denied from the investor. Banks certainly do not know our real estate business and are not in the business of real estate, but they have been forced to learn it at a high level these last 4 years. Anything to give them suspicion of possible foul play, would make it open season for them to start shooting the offer down.
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Very Touchy Situation sorry to say that was a Novice Move now the Bank probally thinks that you are some kind of shaky person associated with some type of shaky brokerage unfourtunately stuff like that happens all the time,now time to count your loses move on to the next you can't keep the Injury in mind but next time have some one else do the work for Sis while you stay in the Background hard lesson Learned Eh ?
Josh M. Boggs said:
Hopefully they Don't have some kind of a list that they put your Name and Brokerage on Something for all to think aboutFrom where we sit it sounds like there have certainly been a few red flags on this one. Was that relationship disclosed to you the buyer up front and who was representing you in the deal? Was this listing agent negotiating the offer as a "3rd party" not representing either the seller or you as the buyer? Well if he's supposed to be acting as an "intermediary without appointments" then I would suspect it sounds very sketchy from the start if he's also related to the seller. Wouldn't you?
Furthermore, if he's the dual agent on the deal; in our experience we have NEVER seen the full 6% commission being paid. They only want to pay 3%. I'm wondering if perhaps that's the REAL reason this Realtor is saying it's getting denied from the investor. Banks certainly do not know our real estate business and are not in the business of real estate, but they have been forced to learn it at a high level these last 4 years. Anything to give them suspicion of possible foul play, would make it open season for them to start shooting the offer down.
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Gregory Holmes said:Very Touchy Situation sorry to say that was a Novice Move now the Bank probally thinks that you are some kind of shaky person associated with some type of shaky brokerage unfourtunately stuff like that happens all the time,now time to count your loses move on to the next you can't keep the Injury in mind but next time have some one else do the work for Sis while you stay in the Background hard lesson Learned Eh ?
Josh M. Boggs said:
Hopefully they Don't have some kind of a list that they put your Name and Brokerage on Something for all to think aboutFrom where we sit it sounds like there have certainly been a few red flags on this one. Was that relationship disclosed to you the buyer up front and who was representing you in the deal? Was this listing agent negotiating the offer as a "3rd party" not representing either the seller or you as the buyer? Well if he's supposed to be acting as an "intermediary without appointments" then I would suspect it sounds very sketchy from the start if he's also related to the seller. Wouldn't you?
Furthermore, if he's the dual agent on the deal; in our experience we have NEVER seen the full 6% commission being paid. They only want to pay 3%. I'm wondering if perhaps that's the REAL reason this Realtor is saying it's getting denied from the investor. Banks certainly do not know our real estate business and are not in the business of real estate, but they have been forced to learn it at a high level these last 4 years. Anything to give them suspicion of possible foul play, would make it open season for them to start shooting the offer down.
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