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  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


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Anyone can discriminate. You just can't discriminate for one of those 7 reasons - or is it 8 now? :)

Here is the BOA SS addendum (most recent -- LMO 503-3).  The fact this this had been changed because of a dual agency clause indicates that it isn't in stone.  As you see at item 3 you have an issue:

This Addendum to Purchase Contract is entered into and is effective as of ___/___/___ by and between, Seller(s), Buyer(s) Seller(’s’) Broker/Agent and Buyer(‘s’) Broker/Agent(hereinafter referred to as “the Parties”) and shall be deemed to amend, modify and supplement that certain Contract Dated ___/___/___ by and between Seller(s) and Buyer(s) (the “Purchase Contract”).


NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Short Sale Purchase Contract Addendum and of the representations, warranties, conditions and promises hereinafter acknowledged, Sellers, Buyers and Broker hereby agree as follows:


1.       The Parties acknowledge and agree that the Subject Property is being sold in “as is” condition.

2.       The parties acknowledge and agree that the Seller may cancel this agreement prior to the ending date of the contract period without advanced notice to the broker, and without payment of a commission of any other consideration, if the property is conveyed via foreclosure to the mortgage insurer or the mortgage holder.

3.       The Parties acknowledge and agree that the Subject Property must be sold through an “Arm’s Length” Transaction. Arm’s Length means two unrelated parties characterized by a selling price and other terms and conditions that would prevail in a typical real estate sales transaction. No party to this contract is a family member, related by blood or marriage, business associate, or shares a business interest with the mortgagor (Sellers).

4.       The Parties acknowledge and agree that neither the Buyers, or Sellers, nor their respective Brokers/Agents have any agreements written or oral that will permit the Seller or the Seller’s family member to remain in the property as renters or regain ownership of said property at any time after the execution of the Short Sale transaction. This includes if the seller is retaining a direct or indirect ownership or possessory interest in the property, and/or have a formal or informal option to obtain such as interest in the future.

5.       Seller agrees to vacate the subject property within _____ days PRIOR TO closing of the transaction OR Seller agrees to vacate the subject property within ____ days after closing subject to terms as shown on the purchase contract.

6.       The Parties acknowledge and agree that none of the parties shall receive any proceeds from this transaction except approved sales commissions.

7.       The Parties acknowledge and agree the purchase contract cannot have any provisions for Assignment / Assignee and / or Option to purchase. Bank of America will NOT approve any transactions with these sales contract provisions and any such provisions are expressly deemed unapproved.

8.       Buyer agrees that property cannot be sold or otherwise transferred within 30 days of closing; Or 90 days if transaction is approved under the Home Affordable Foreclosure Alternatives program (HAFA).

9.       The Parties acknowledge and agree that upon Bank of America’s request the Parties shall provide all material documents involved in the short payoff transaction, including but not limited to, the Buyer(s)’ and Seller(s’) HUD-1 Settlement Statements.

10.   The Parties acknowledge and agree that this Short Sale transaction will not constitute appraisal fraud, flipping, identity theft and/or straw buying.

11.   The Parties acknowledge and agree that any misrepresentation or deliberate omission of fact that would induce the Bank of America, Investor or a Mortgage Insurer to agree to the terms of a short payoff which would not have been approved had all facts been known, constitutes Short Sale Fraud and may subject the responsible Party to civil and/or criminal liability.

12.   The Parties acknowledge and agree that this Addendum together with the Sales Contract shall constitute the entire and sole agreement between the Parties with respect to the Sale of the Subject property and supersede any prior agreements, negotiations, understandings, optional contracts, or other matters whether oral or written, with respect to the subject matter hereof. To the extent that any term or condition contained within the Short Sale Contract is contradictory or inconsistent with this Addendum, the Parties agree that this Addendum shall supersede. No alternations, modifications, or waiver of any provision hereof shall be valid unless in writing and signed by Parties, FHA, VA, government agencies, any Investor, and/or mortgage holder, hereto.


IN WITNESS WHEREOF, the parties hereby have acknowleged the terms and conditions contained in this Addendum as evidenced by the signatures appearing below;
























Realtor / Broker Listing Agent Certification


Subject to and including the terms and condition contained in the attached Short Sale Purchase Contract Addendum Seller(s’) Broker/Real Estate Agent________________________ and Buyer (‘s’) Broker/Real Estate Agent ______________ (hereinafter referred to as “Brokers’”) further acknowledge and agree as follows:


1.        Brokers’ hereby acknowledged and agree that Bank of America is not the property seller, but only the mortgage lien holder (s) or alternatively Servicer acting on behalf of the lien holder, accepting less that the balance owed to facilitate the Short Sale purchase transaction of above said property as an alternative to foreclosure. Bank of America is in no way responsible for Listing or Buyer Realtor / Broker sales commissions, since that is the sole responsibility of the property seller under the terms of the listing agreement.

2.        Brokers hereby acknowledge and agree that Brokers are actively licensed and in good standing by the appropriate authority within the State that the property is listed for sale, or a licensed Attorney in good standing in the State where the property is listed for sale.

3.        Seller’s Broker acknowledge and agree that the  subject property has been listed on the local Multiple Listing Service at fair market value to provide open market competitive bids to present to seller as per the terms of seller / agent listing agreement and that the marketing is in fact and “in spirit” seeking to maximize the selling price of the property.

4.        Seller’s Broker  acknowledge that Seller  has been presented with all offers to purchase home from this open market listing, and seller has selected the buyer of said transaction at the sales price terms disclosed and agreed to within the purchase contract.

5.        Brokers’ acknowledge and agree that there are no agreements, understandings of contracts relating to the current sale or subsequent sale that have not been disclosed to property seller and Bank of America as the mortgage lien holder or Servicer on behalf of the Lien holder

6.        Brokers’ acknowledge and agree that Seller, Buyer or Brokers  have not received, nor will receive directly or indirectly any form of compensation outside the  official terms of closing as presented in the purchase contract and what will be presented in the preliminary and certified HUD-1 closing settlement statement

7.        Brokers’ acknowledge and agree that they have disclosed to Bank of America any relationship to the buyer or ownership interest in the buyer’s company, or represents that Listing Realtor/Broker has no existing business relationship with buyer.

8.        Brokers acknowledge and agree that that any misrepresentation or omission may subject the responsible Party to civil and/or criminal liability.


Listing Broker/Realtor Agent: ____________________


State License Number:__________________________



Buyer(‘s’)Broker/Realtor Agent: ____________________


State License Number:___________________________



have the seller put you as listing broker  and  resubmitt file

Did we ever hear back from Paul? Did he get the home?


The problem not that the seller and listing agent are related.  The issue lies in the fact that buyer is using an agent who is related to the seller.  That makes it a non-arms length transaction.  A relationship cannot cross the lines. 

The Seller and the Listing Agent can be related.  A Buyer and the Buyer's Agent can be related.  If the Seller and the are related, that would be non-arms length.  The same if the Buyer's Agent is related to the Seller or if the Listing Agent is related to the Buyer.  In those cases, lines are crossed with a relationship.

Non-arms length transactions are very susceptible to fraud. 


When a lender is taking a loss on a transaction, they most certainly can call all of the shots.

I am sorry to say that if you really like the house, get another agent with another brokage firm  Shame on the listing agent for not knowing this simple rule... It is spelled out on the Arms-Length Transaction Affidavit. It will be another long long wait but that the price buyers must pay to buy a great property via Short Sale.  Best of luck

Actually, the current agent is the "procuring cause" so any new agent will not be entitled to the commission.  The Buyer needs to find a new property to buy where no one is related to anyone else!


Also, somehow all of today's topics are recycled from last year (2011) so these issues are long-gone.....

#1 - Disclosure Law  requires disclosure to the buyer if the Agent is Related to the seller.

#2 - Bank of America (and probably all lenders) do not allow the listing agent to be related to the seller.

"Seller further acknowledges that he or she has no existing business relationship with [..] Seller other than the purchase of Property according to the terms and conditions of the purchase contract."

This should have never gone this far, and the broker was ill informed and greedy to list with someone in his own office. I agree it ought to get relisted with another firm, and you need to start over. Too bad.



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