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

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Gregory Holmes said:


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:

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.

Hopefully they Don't have some kind of a list that they put your Name and Brokerage on  Something for all to think about


Gregory Holmes said:


Gregory Holmes said:


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:

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.

Hopefully they Don't have some kind of a list that they put your Name and Brokerage on  Something for all to think about
Here is a update,
The realtor gave the listing to a new broker and I singed a new contract. We have to start all over again.  There is no conflict of interest now, I hope it will go through.
I will let you all know the out come.
Thanks for all the help!!!

Paul
This a common occurance. I have seen Realtors be denied commission to get the deal closed. Beware all Realtors if you have a personal relasonship with the seller you may end up working for free or suffer a denial in the end.
Smart Move!

Your broker and the agent need to get this file to the executive branch of BofA. I don't believe that she went all the way to the investor before the package was denied. That is not a reason to deny the short sale. Even an agent doing her own short sale as an agent can be a party to the transaction as long as she does not take a commission. It is an interpretation of the note owner's guidelines. This is a misunderstanding of the arms length. 

And just to clarify- BofA does not always use arms length agreements. Not all lenders use arms lengths agreements. But wit the new stupid Dodd -Frank Bill , they may be running scared and interpreting the statement the wrong way now. 

They will deny because BofA will not pay commission.  BTW: This stuff always gets found out in the eleventh hour when the demands are checked and BofA sees it is the same Brokerage on both sides, their radar goes off.  Sometimes you simply open the file again and Seller has to get another agent. 1st try using another agent from the same Brokerage and work out a deal between the two agents to get your agent some compensation for the work. If that doesnot fly it is because the Investor is afraid of the liability,  just go get another agent outside of Listing Brokerage and work out a referral deal.

 

This is an issue on another level. Lack of Disclosure. In the State of CA = When you are the Listing Agent you have to put on the listing in the MLS you have to post “Agent is related to Seller”.  On the other hand: If I am representing a Buyer that I am related to, I have to put on the purchase offer that . . . Buyers Sister is a Licensed Real Estate Agent for the State of California… if I buy anything or represent my immediate family. i.e. Buyers wife is a Licensed Agent, Buyers Mother is a Licensed agent. Yahda yahda….

• Article 4
REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)

• Standard of Practice 4-1
For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)

No problem Scott.  I have a different opinion and have seen it happen many times, even have seen agents sell their own short sales.

Scott Korbin said:
Jeff,

I disagree with your assessment. Most regulators, if not all, deny contracts where a relative of the Seller will receive any benefit from the Short Sale. The possibilities of the Seller benefiting from the Short Sale financially are obvious.  I could be wrong. I often am. But I would find a Broker who is not related to EITHER party. Please take no offense, but I have never known an investor to approve a Short Sale transaction knowing that there was a relative involved as the Broker for the Buyer or the Seller.

Jeff Payne said:

Paul, your realtor needs to push back and fast!  The fact that your seller and agent are related is irrelevant,  the current market value and your offer are what is most relevant here.  Arms length transaction definition is getting terribly distorted lately and as long as your transaction with the seller is arms length then this sale should occur.  I would guess that the negotiator on the file does not understand arms length and can only read between the guidelines and can not think outside of the box.  Push this thing and escalate to the investor on this one.

 

Paul- This is Short Sale 101 stuff, relatives shouldn't be anywhere near a short sale let alone being on both sides of the deal. Find yourself another agent and another house. You'll save yourself another 3 months of incompetence.

Agreed, Jeff.  This is such a gray area, both regarding explicit agreement and intent to verify.  Probably left a bit vague by design.

My sibling-sale was disclosed, did not violate the arms length, was not dual, and was on portfolio of one of the four majors OCC regulated Banks.

@Paul Seems it should work out.  The "start over" is often accelerated, btw, as many docs/values should remain valid.  Thanks for generating this Sunday's Discussion.  Back to the Times...

 

Jeff -- Just because you can do something does not mean you can illegally do it. The statutes of limitation are long and in that time period this stuff will catch up with you and others who have done these things. Why sleep with a time bomb?

 

CBS News had an exposé about “Short Sale Transactions Under Investigation” - I will cut to the chase = The State of Nevada Regulatory boards, including DRE are scrutinizing short sales transaction and they have many agents that share your opinion wishing they had known better.  Ignorance is not a defense that stands up well in court.

Jeff Payne said:

No problem Scott.  I have a different opinion and have seen it happen many times, even have seen agents sell their own short sales.

Scott Korbin said:
Jeff,

I disagree with your assessment. Most regulators, if not all, deny contracts where a relative of the Seller will receive any benefit from the Short Sale. The possibilities of the Seller benefiting from the Short Sale financially are obvious.  I could be wrong. I often am. But I would find a Broker who is not related to EITHER party. Please take no offense, but I have never known an investor to approve a Short Sale transaction knowing that there was a relative involved as the Broker for the Buyer or the Seller.

Jeff Payne said:

Paul, your realtor needs to push back and fast!  The fact that your seller and agent are related is irrelevant,  the current market value and your offer are what is most relevant here.  Arms length transaction definition is getting terribly distorted lately and as long as your transaction with the seller is arms length then this sale should occur.  I would guess that the negotiator on the file does not understand arms length and can only read between the guidelines and can not think outside of the box.  Push this thing and escalate to the investor on this one.

 

The bank is not going to approve any sale where there is not arms length transaction.  That includes the seller and agent being related.  Some agents are trying to do short sales on their own homes and those also will not be approved.  It is best that you get your own agent to represent you.  Was it disclosed to you that she was related to the seller?  That should have been disclosed.  These are things your own agent would check out before you waste your time.  Good Luck!

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