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 Stephen Pringle on
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Tammy, if properties in your local market are receiving multiple offers don't you think it's best to expose them to the market instead of trying to just sell them quickly to your own buyers? I think that first week of exposure will help to procure the best buyer which in the end does help the deal close faster and does help the sellers get on with their lives more quickly.
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Permalink Reply by Tammy Davis on
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Getting a higher price over list is not necessarily the best offer. I am looking for a price at or close to what I have determined market value is. I am also looking for a well qualified buyer...represented by a communicative agent.
To accept the higher offer...get the short sale approved, only to not have the house appraise would be devestating. Even worse would be a buyer that has lost interest and moved on (but his agent failed to comunicate it to us) after we have obtained the short sale approval.
I have a 100% closing rate on short sale...knock on wood! And part of that is because of the standards I set on each transaction.
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Permalink Reply by Joseph Alfe on
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When I see short sales listed for more than 30 days with no offer, I see an agent who is working against the seller. I price properties at the "Sell it today price." By letting the property sit on the market, you inch the seller that much closer to default or foreclosure. There is a myth that lenders require certain market times. I price aggressively, and expect multiple offers, often in as little as 5-10 days. If the agent has a buyer on thye first day, as long as its a legit offer, I can get it approved.
This is what's best for the seller, not wasting market time to see what you can get.
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Permalink Reply by Bryant Tutas on
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The goal should be to get the best offer for your seller. One that you know the lender will accept and one where you can defend the price if needed. The buyer also has to be qualified and willing to commit to the transaction. If financing is involved then the price needs to also be inline with what the property will appraise for and the financing needs to be a loan type that fits the property. If these things line up then when the offer is received has no baring on anything.
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Permalink Reply by Jeff Payne on
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I agree with Bryant, Smitty, Joseph and Tammy. I want to get an offer that reflects the current market value or something very close to it and one that has a buyer who is in it for the long haul and understands what it might take to get the short sale completed. How do I know that my offer is market value? Simple, experience on pricing properties by being in and studying the market. How do you know your list price is NOT even close? Simple, you get NOTHING because you are overpriced or you get 11 offers and one $42K over list price like the original post here because you underpriced it. My goal is to list the property at what I believe is market value based on historical data, condition, location, etc. it is not to price it so that it sits on the market for months or to underprice it so that it looks like a price war only to have the best offer most likely reflect market value. Time is of the essence and the quicker I can help my seller out of this situation, the better.
My duty is to the seller, I have NO duty to the lender.
If I know that I am going to 123 Johnson St to take a listing today and the there are 5 recent sales in the $200,000 to $225,000 range and all very comparable, I have a very solid idea of what the offer needs to look like. What is the problem if I have a buyer who I know is looking for a home in that neighborhood and I alert them that this house is coming on the market and then I let the seller know at the same time that I have an interested buyer?
The double side issue is a non issue even though there are those that make it an issue because they think it is all about the money. Want to know why it is a non issue? Simple again. If I have a ready willing and able buyer to purchase a home, I get paid when they purchase whether or not they buy my listing, right? If I have a listing that is priced right, it is going to sell and I get paid right? No matter how you slice it, I get paid on a buyers side and sellers side, right? Double side just means that my buyer and my seller came to an agreement and I got paid on both sides.
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Actually Jeff the listing was at market value not under priced. It was a 2 bedroom 1 bath and we had similar houses that were 3 bed 2 baths and 4 bed 2baths on the same street selling for $289k. So $279k for a 2 bedroom was at market value based on the comps. Our market here is a lot different probably than yours. We have very low inventory and tons of buyers. I still believe even in a slower market there is no harm in exposing the property for a short period of time just in case you do end up with a better offer over all for your seller. I say leave it up to the seller ultimately if they want to take an offer prior to putting it on MLS but explain to them the benefits of potentially waiting. You think your buyer in your pocket isn't going to be interested in the property 5 days after you put it on MLS? We are now seeing properties come on that are pre-sold that would have sold for more $. How do you know unless you try?
We just had a property put on by a GOOD agent who understands the benefits of trying to get the best offer for their seller even in a short sale and it got 15 offers and sold for $55k over asking. This property was also listed at market value. It's funny how reading these posts some of you think you know you have the best offer for your seller without even trying to get the best offer. I think it has more to do with you guys getting double the commission or it's easier for you. There is a true conflict there. Banks really should impose a minimum 5 day marketing period, in some markets, to protect against agents who try to pre-sale their own listings. They should also not allow you to double end it. There is a good reason why some banks demand a waiting period for their REO properties before offers are taken and I think short sales should follow suit.
Double ending should be illegal but that's a whole other topic for debate.
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As we say many times....I don't need 10 offers on a listing, I just need one good offer.
Do you think that the sellers that have lived in their house for over 20 years, experiencing a financial hardship that they are embarassed for their neighhbors and family to know...shouldn't take the first full price offer? This stops the herds of people walking thru their house and allows them to get on with their lives.
Again I have to think about my sellers and what is in their best interest...it's not about a paycheck, or what is easier for me...by no means. My workload is the same in getting the short sale approved, how long the house is on the market makes no difference.
Stephen...question, how did you list a house at market value..and yet it sold for 55k over asking? Something there doesn't add up....
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I agree there are some situations where sellers don't want to even put it on MLS and have buyers going through their home and they are embarrassed. I get that.
The home sold for $43k over asking because we are in a market of low inventory and ton's of buyers. Not all markets are in this situation but I still feel exposing the property is better than not depending on the sellers situation.
How do you know that your one good offer is the best without look at all 10 offers Tammy?
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This topic has become very interesting...and I love the responses everyone has given.
It's interesting that you, as an agent feels that double ending a transaction should be illegal. I can't think of another agent that is better to work with than myself. I don't double end that many transactions...but when I do, it is the easiest most uncomplicated transaction.
First if you received 43k over asking (which was listed at market value) it is safe to assume that you had an all cash buyer who loved the property so much that he paid 43k over market value..that is as likely as a needle in a haystack. But good for you...absolutely take that offer and run! We also have very little inventory in our market...but I rarely see a buyer pay over what the appraised/market value is.
Again, I know my local market very well and know pretty close to what a property will or will not appraise for when the time comes. I do not want to set my sellers up for disappointment in the end if the property does not appraise, then we have to start the process all over again. That is what a GOOD agent does.
What do I deem to be a good offer? As close to list price as possible, a good pre-qualified buyer with excellent FICO's, with verified proof of funds to close. A complete contract that is completed correctly. And good communication from the selling agent right off the bat is a big plus.
I only present the facts to my sellers...the ultimate decision as to whether to accept the offer, counter or decline is totally up to them.
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I don't think dual agency is illegal, but it raises conflict of interest in a short sale transaction. There is simply too much liability.
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Permalink Reply by Smitty on
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OMG. I think this is the first time I disagree with Joseph!!! LOL ;)
I love dual agency AND according to a recent Inman News survey 3 out of 4 agents agree
"Among more than 500 agents and brokers surveyed, three out of four said it's acceptable (67.1 percent) or even desirable (7.6 percent) for two agents from the same office to represent the buyer and seller in the same transaction."
"A slim majority objected to a single agent representing both the buyer and the seller, with 25.9 percent viewing the practice as "unacceptable" and 32.4 percent calling it "not desirable."
http://www.inman.com/news/2011/11/1/dual-agency-and-double-dipping-...
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Dual agency is illegal in Florida. However you can work both sides of the transaction. Just can't do it as an agent for both parties. In fact by default we are transaction brokers. We have NO fiduciary unless we choose to work as agents. Most of us don't.
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