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 Sheila Vardakis on
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Mark I could not agree more............we owe it to the seller to get the best offer out there and when we take one without putting it up on MLS, we are not doing that. Love the "club fed" comment.
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Permalink Reply by Mark on
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Thanks, Sheila!
I sincerely appreciate this forum, and it's users as a source for information on what is a bit of a "black art" to actually closing deals, but it is genuinely painful for me to watch the tortured explanations that are sometimes used here to justify unethical behavior.
I pay hundreds of dollars per year in MLS fees for access to homes that are "for sale", not, "neener-neener-I-sold-it-to-my-cousin-'cause-cousin's-aren't-in-the-arm's-length-transaction-form's-list-of-excluded-parties" info.
excuse my french.
I also pay hundreds of dollars per year in fees to organizations like NAR, who are supposed to be lobbying & convincing the public that Realtors are "ethical" people.
News flash - to the "public at large", we aren't ethical in their eyes, and this behavior & rationalization doesn't help.
Accidentally taking a buyer to look at a listing, then finding out that it's another "insider" deal makes me look bad.
It's MY mls, just as much as it's yours, so don't use it as a tool to mislead lenders - I'm a taxpayer and a Realtor, and I know it isn't "the bank" taking the brunt of the "hit" in these deals.
Put your homes on the market and take offers for a few days, perhaps even (gasp!) a whole week. It won't cost you any money, and it'll cost me less as a taxpayer as well.
Those situations where an offer has to be "in" the bank in 15 minutes are much less common than these tortured arguments make them seem.
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Permalink Reply by Jeff Payne on
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Mark, that is simply your opinion based on nothing but your opinion. You base nothing on the code of ethics or on laws, just your opinion.
When did you join MLS, you were just a buyer who purchased 2 short sales?
Tell me how it costs you less as a tax payer? I would LOVE to hear that one.
Bottom line is that our job is to represent the seller, we have an agreement with the seller, not with the buyers agent, not with the bank. We represent the seller. If I get my seller a full release with no further consequences, which happens 99% of the time, I have done what I was contracted to do. If I happen to have a buyer whose criteria matches the listing, I submit the offer to the seller for their approval. if that offer is an offer that in my professional opinion has a good chance of being approved and the buyer is in it for the long haul, again, I did the job I was hired to do.
I was not hired so that Mark is treated fairly. My duty to the buyers agent is to disclose offers and update in MLS with an offer is accepted.
What next? A week is not enough because if a week is going to make such a huge difference, a month would surely make a bigger difference. I meam (gasp!) a whole month, it wont cost you any money and it'll cost me less as a tax payer as well. Nevermind what the seller needs, never mind what the person who hired us to sell thier home needs.
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Very interesting conversation.
Most of what I've read is based on the misguided belief that we know best for everyone in the transaction.
If a seller sells his property, a buyer buys the property, the offer is acceptable to the bank, the agent (s) makes a buck, Who is hurt???? NOBODY!!
The banks do not and never will have time to monitor each and every transaction, how it was marketed, how long it was marketed etc. For the sake of the economy we need to push these distressed properties through so that we can eventually have a normal market. With more and more defaults each day we can't afford to have any more backlog. Who are we to question, if an appraiser determines market value as such and that price is acceptable to the bank?
We owe it to the seller to simply sell the property and get it closed. It doesn't matter to them how high the offer is. What matters to them is that it's closed.
When there is discussion of bidding a listing up $40,000+ I would immediately wonder how in the world will it appraise? If it doesn't, how did that help the seller? The entire transaction could be put in jeoporady.
Remember . . . . these are not sellers who are out there demanding the highest dollar so they can move up. These are sellers who are beaten down, embarrassed, humiliated, and just want the pain to stop. They just want their life back. Our best service to them is making the pain stop.
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Marcy,
I think you are dead wrong on how we owe it to the sellers to get it closed and fast. It does matter to them how high the offer is........why? because if there is a deficiency pursued, the higher offer will help the seller.
We are not to think of it as "the banks do not and will never have time to monitor each and every transaction. That say to me that you are hoping to get away with something. I hope your company has some good E&O insurance.
Listing the property is in the best interest of the seller. Plain and simple. Anyone working with a pocket buyer is cheating their seller.
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Sheila,
I didn not mean to say, don't list it. I do list all my short sales. I don't agree with forcing the listing to stay on the market X number of days. Of course, we want the highest offer, but we also have to look at all factors involved, not just the dollars. It is our job to negotiate the deficiency away. I have never had a deficiency on either a 1st or a 2nd.
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I agree it is our job to negotiate the deficiency away. However, I have a hard time believing that you were able to get all of yours waived? What motivation is there for the bank to waive it? Now if they send out a 1099 then they can't collect and that is done in the majority of cases.
The junior liens are the loans that need to be on the alert. If the money wasn't used to improve on the house then they should expect them to collect on the deficiency.
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The motivation is to get something now and get it off their books or, more than likely, getting nothing later. I know they can wait years to collect, but if the seller declares BK they get nothing. Most sellers are insolvent by this time.
Look, I don't run off half cocked. I require that my sellers meet with an attorney prior to entering in to a short sale. I always have their best interest 1st and foremost in my practices.
I will not make a moral decision on whether or not a loan "should" be paid. That's not my job. My job is to make the deficiency go away.
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Shelia, the motivation for the bank is the cost involved with trying to pursue a deficiency. Like I said in the previous post, I have had one out of a few hundred that had a possibility of a deficiency and the seller simply did not care. I believe he used the phrase "You can not get blood from a rock no matter how many times you hit it with a hammer." The banks know this too. The get their write off and get the toxic loan off of their books.
We are also getting deficiency releases on 2nds for the same reason.
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Sheila, in the last 4 years I have only had one short sale that there was a possibility of a deficiency and that was out of a few hundred.
My job is to get the seller out of this jam with no future recourse from the lender, if I happen to have a buyer who is interested in this property and present their offer to the seller and the bank approves the short sale, that is what I was hired to do.
The reason we have to get it closed and fast is that many of the sellers who are in default are already on the clock and the quicker we can get a good offer the better.
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Banks should make sure there is at least a short marketing period so that the best offer is on the table. If a seller is facing a foreclosure date within that marketing period the banks should extend that date. Not all agents are unethical who pre-sell their own listing but there are agents who are taking advantage of the situation in order to fill their own pockets. For the sake of the economy we should make sure the bank gets the best offer not one that is under market value. When agents sell their own listings under market value it not only hurts the banks, the neighborhood comps but the economy as a whole. The banks should also prohibit listing agents from double ending their own listings in short sales. There is too much room for price fixing, back door cash deals etc.... I am surprised the arms length addendum wouldn't apply to dual agency since the agency relationship between the agent, buyer and seller creates a relationship that directly conflicts with the interests of the banks.
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Stephen, I have a very hard time following you here. You are saying that if I have a buyer and sell them one of my listings that it was to fill my own pockets? How is that any different than selling my buyer one of your listings and having another agent sell my listing. I still got paid from my buyer and my seller, just in different transactions. I make the same money so how would doublesiding line my pockets any more?
You seem to care more about the bank than the seller who hired you to sell their home. Agents selling listings under market value? How is the short sale getting approved if it is under the value of what it should sell for? The banks hire appraisers and BPOs to check the value of the property. If the offer was under their values, they dont accept the short sale.
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