Seller taking an offer before it hits MLS
We are seeing a lot of agents pre selling their own own listings that are short sales before putting them on MLS. I know we have a fiduciary duty to the seller not to the bank but this act of not exposing the property to the market to try to get the best offer drives me crazy. It not only potentially hurts the seller but drives down the comps in the neighborhood. I know some of you will say "I only had 2 days to get an offer to hold of the foreclosure" and in this case it can make some sense but usually it's a listing agent either representing both sides or trying to sell it to a colleague in their office.
I recently put on a short sale and got 11 offers after waiting the week to expose it to try to get the best offer for the seller. It sold for $43k over asking. I could have recommended that the seller take the first all cash offer at asking price or double ended it over and over for a lot less money but I felt an obligation to the seller to try to get the best one. Not exposing it to the market would have not only hurt the seller but also affect the comps in the neighborhood. I also thinks it's our job to try and get the highest price for the bank.
I am curious if anyone can tell me why banks with short sales don't require agents to expose the property for a period of time like REO's do?
I think we should have a standard of care not only to our clients but to the neighborhood and to the bank in some regards.
What do you think?
Replies to This Discussion
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Permalink Reply by Mark on
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Actually, I did have proof. It's all in the public records. No way this was disclosed.
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Permalink Reply by Jeff Payne on
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Proof of what? That the agent was the buyer? What is illegal about that? You assume far too much for the little short sale experience that you have. I appreciate your point of view but keep in mind not all short sales are bad experiences like you had.
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We have a fiduciary duty to the seller foremost but we also have an ethical duty to our community and to the bank. Usually highest and best would be what's best for the seller so why not try to do your job properly and expose the home to the market and try to get them their best choice of offers instead of an offer in your pocket which may not be their best choice? I don't need a lesson in Fiduciary duty but many agents need a lesson in standard of care and ethics.
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I was just going to say, Mark for the win. An agent's only obligation is not the fiduciary duty to the client. We first have to act ethically and in good faith. If you're using your fiduciary duty as an excuse to not do those other things then you're probably not even doing the fiduciary duty part right.
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Permalink Reply by Joseph Alfe on
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So, by your line of reasoning, we should take a list price offer with a non flexible buyer over an offer 30K less with a buyer who is willing to pay of liens or buy out a deficiency? In this case, the higher offer benefits the lender, not the seller. You would be violating your Fiduciary Duty and exposing yourself to great liability should you recommend the higher offer. Also, you have NO DUTY to the market. The market is what people are willing to pay, and it is what it is. You have ZERO DUTY to the bank except other than not participating in fraud. Some times a higher offer is better, many times it is not, and if you can't tell the difference you shouldn't be putting your sellers in danger with bad advice.
The "3 minute agent" scenario Mark spoke of is also wrong and could be considered fraud.
The name of the game with short sales is to get an offer as quick as possible. Extending listing time is harmful the seller. If I can get an offer immediately, and its a legitimate offer, then mission accomplished.
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Nobody has said anything about the terms of various offers, as you're talking about regarding paying off liens, etc. The discussion is about accepting an offer pre-MLS vs. marketing the home to get the best offer, whatever that means in terms. Not the same issue at all.
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It got turned into that, because some felt an immediate or pre listing offer was somehow unethical and would harm the market and blah blah. So long as an offer is legitimate, who cares where or when it comes?
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"Legitimate" and "best" are not the same thing. If you can likely get an offer better than the legitimate one via a week's marketing, why not do it? The best offer is better for the seller, the bank, the neighborhood, and your ethical obligation.
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There are many times a seller doesn't take the highest offer but why not try to get the best offer for your client by exposing the home properly? How do you know you have the best offer without trying? You think you have the best offer in your pocket but may be you don't? May be if you exposed the property properly the seller would have less tax or legal consequences? It seems that there are short sale listing agents who think they know what's best for their clients but really they are just trying to do what's easiest and best for themselves.
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Permalink Reply by Tammy Davis on
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Part of that is knowing your market extremely well. We all remember when buyers thought it was smart to offer banks 50 to 100k over list on their REO listings, just to get into contract. Then thinking later that if the property does not appraise..the seller will just adjust the price in accordance with the appraisal.
Same thing on a short sale listing...I do not want to set myself or my sellers up for disappointment if a contract is accepted at a much higher price, and after obtaining the short sale approval..that the property does not appraise. Time is typically very critical.
I make it clear from the beginning with my sellers that my goal is to price the property accordingly, sell it agressively to a well-qualiffied buyer. And to get the seller out of the short sale as quickly as possible, to minimize the damage to their credit and to be able to get on with their lives.
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Permalink Reply by Smitty on
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I could say the opposite if I try to expose it and wait. I have NO IDEA if I'll get an offer when I list it and wait. maybe I'll get multiple offers, but I don't truly know those buyers at all. I have NO IDEA if they REALLY have the ability to close and even then there are outside factors that may hinder the closing.
If I have a buyer and I know their financial stability, have a seller, have an idea of what the lender wants to NET, then why wouldn't I get the home sold in the quickest possible manner? Do you think the LENDER wants the house to sit on the market another 3 months, as a non-performing asset, when I could have had their NET requirement met immediately?
I think you are looking at it from the bank's perspective instead of the seller's perspective. If I get the house sold in under 60 days, and there is no deficiency or tax liability, why wouldn't I? I just don't see the need in "chancing" other offers if I have a solid offer on the table. Why would I pass a solid offer over?
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I typically have a handful of buyers in my pocket at any time looking for property (99% of them owner occupied), I am also in communication with sellers that are considering a short sale. If at the time the seller decides to list the property...if I can put the two together..it's a win-win for everyone.
I can't think of any other agent who is more proactive, quick to respond and has a well qualified buyer...than myself.
In our local market properties that are priced correctly typically receive multiple offers...I have never had to justify to a lender why we received an acceptable offer on the first day of being on the MLS.
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