Sellers Instruction to listing agent
I've showed a couple of short sale properties that have sellers instructions attached to the listings. I view this practice as intrusive and think it may open the seller to demands for lost commissions (at least in California). In addition as a buyers broker I felt required to disclose the restrictions placed on me and by agency on my buyers. I feel these seller requirements were at least in part of the reason why they moved on to other properties.
This isn’t something that an unknowing seller that doesn’t understand the separation of agency dreamed up, but seems to be a form included in the agents listing presentation (as I've seen it on 2 different listings with different sellers, but same agent).
Sellers instruction,
To listing agent
From seller
Date
RE property address
Dear (Listing agent)
I authorize and direct you to ask buyers agents who send you an offer on my property identified above to promise in writing that they will not write any more offers for their buyer(s) upon my acceptance and to withdraw any outstanding offers upon my acceptance.
I want to know whether the buyer’s agent makes this promise to you before I sign any offer.
Please ask agents to return the following verbiage to you:
I, (name of agent) as a member of the board of realtors, promise that upon seller’s acceptance of my buyers’ offer (buyers name) for (property address), I will not write any more offers for those buyers. If the buyers have any outstanding offers, I will immediately withdraw those offers upon seller’s acceptance, because my buyer will wait for short sale approval per the terms in the SSA.
Signed and dated by the seller
Also attached
Bank of America disclosure to be signed by both licensees - [marketing efforts were in fact and “in spirit” aimed toward maximizing the selling price of Property from a ready, willing and able buyer. Licensee has not engaged in any conduct that restricts or limits offers from buyers, including but not limited to requiring cash offers, using disparaging language regarding the property or tenants, or unreasonably restricting access.]
Replies to This Discussion
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Permalink Reply by Gary Johansen on
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You don’t see a potential problem letting the seller try to interfere in the buyer’s broker’s contract with their client? Re-read the interference tort.
But since I started this discussion it has occurred to me that a short sale listing agent is putting themselves and their broker at risk by putting any restriction or condition that isn’t from the lender into the MLS listing. Go back to the initial post, at the very bottom is an excerpt from the Bank of America form Licensee Certification “Licensee has not engaged in any conduct that restricts or limits offers from buyers”. A pretty straight forward statement from a federally insured institution. If you were using the form in question or your buyer instructed you to use the form – would you sign BofA’s certification to get the sale to close? The seller may instruct you to use the form, but you would have to enter it in the MLS, and that would clearly violate the certification.
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Permalink Reply by Smitty on
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I think you are way over interpreting it. The whole post was originally about a seller, I'm assuming that was burned and wanted to ensure the buyer would stick it out. I don't see this as an issue. Maybe the listing agent could have written it differently such as, passing of title out 120 days and anything beyond that must be agreed to by both parties in writing, but the gist of what you wrote IMO is a seller trying to protect themselves from a buyer just getting tired of waiting and having that buyer end the contract to go on to another property.
The LICENSEE is not engaging in conduct that restricts limits if the SELLER is putting conditions on the sale. Keep in mind BOA is NOT party to the contract.
If my seller tells me they want to make sure that the buyers do their inspections up front and not at approval, and I disclose the seller's condition on MLS - that is not ME engaging in conduct that restricts buyers who don't want to do that.
Tort is when one party interferes with another causing harm to the contract. In this case you don't HAVE a contract. You haven't even written an offer. There was no harm to a party. I can see tort happen all day long in a multiple offer situation with inexperienced listing agents, where they take a back up offer when the first offer is already executed. In that case you have an executed contract already. You cannot execute another one without some heavy disclosures. That's tort, but what you have described above ...you haven't even got a contract yet.
I think the bottom line is if you don't like the conditions a seller has placed on the sale of the property MOVE ON. There is a GLUT of homes on the market. I'm sure the buyer can find something they can live with.
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“I think the bottom line is if you don't like the conditions a seller has placed on the sale of the property MOVE ON.”
And that attitude is exactly what the lender is trying to stop. They are trying to recover the maximum available for their clients and the taxpayers.
If the seller is bitter about having to sell and tells you include disparaging remarks about the property, you would do it? And then still sign the certification? Thinking the seller told you to do it would indemnify you from the consequences. I think you are in for a dissapointment.
Everyone gets to conduct their business in the manner they see fit, that’s part of the beauty of real estate.
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Permalink Reply by Jeff Payne on
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Gary how is it that you know that is the attitude the lender is trying to stop? How many short sales lenders have you personally met with to have this discussion with them? Seems as though you came here with a question that you already knew the answer to.
No on said the seller is bitter, those must be your words. The seller hired the listing agent to look out for the sellers best interests and protecting a seller from a buyer who can harm them from going under contract on multiple offers is certainly something any list agent should be doing.
Why do you keep avoiding my question or assumption that you are a buyer agent who encourages your buyer to make multiple offers on multiple properties?
Your last statement above is spot on!
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Gary how is it that you know that is the attitude the lender is trying to stop?
I can read "Licensee has not engaged in any conduct that restricts or limit offers from buyers"
"No on said the seller is bitter, those must be your words."
What I said was IFTHE SELLER WAS BITTER and wanted to load the listing with neg comments - you will have an issue later on.
"Why do you keep avoiding my question or assumption that you are a buyer agent who encourages your buyer to make multiple offers on multiple properties?"
I have answered this, where I'm at it isn't uncommon when a house is first listed to hold all the offers for a week before presenting them to the seller.
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Gary the lender is not party to the contract, the seller owns the property. "Licensee has not engaged in any conduct that restricts or limit offers from buyers" What am I missing, was your buyer not offered the opportunity to place an offer on the property? The Licensee is required to present all offers to the seller (not the lender) unless the seller directs them otherwise in writing. Did the listing agent not present your offer? Like I said before, the list agent is most likely an inexperienced or frustrated list agent who has issues with buyers making and getting more than one offer accepted with the intention of only buying one property. That list agent really should advise the seller to accept the offer with different terms such as "Buyer agrees to inform seller if buyer has placed offers on other properties outside of this contract" or" Buyer agrees to contract ONLY with seller and will not contract to purchase any other properties without written consent from seller"
Assuming from your original question, you are a buyer agent and have never worked the listing side of a short sale?
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I believe the operative words here "Licensee has not engaged in any conduct that restricts or limit offers from buyers". That’s pretty cut and dried for me. It doesn’t make an exception except if the seller tells him to.
If course my buyers could have made an offer on the property, they can make an offer on any property through me that they want, whether it’s listed or not. The whole point is that they didn’t. There is no way to know if they would have gotten the property, what we do know is that the form at the start of this discussion may have played a part in that decision.
That list agent really should advise the seller to accept the offer with different terms such as "Buyer agrees to inform seller if buyer has placed offers on other properties outside of this contract" or" Buyer agrees to contract ONLY with seller and will not contract to purchase any other properties without written consent from seller"
I couldn’t agree more, once you get past the offer the licensee can in good conscious sign the certification. If you are putting the term and restrictions before the offer, the only practical reason is to weed out buyers.
Assuming from your original question, you are a buyer agent and have never worked the listing side of a short sale?
That is correct. And again that’s why I came here for feedback.
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Gary, why did your buyer not make an offer? How was your buyer limited and how was their offer limited? How did the listing agent limit your buyer?
I can assume (again) that your buyer did not like the form that you were asked to sign because they intended to place multiple offers. Is that the case?
What happens on the other end when your buyer makes an offer and the seller accepts only later to find out the seller accepted offers after they signed a contract with your buyer?
Of course, the listing agents job is to weed out buyers to find a buyer that is ready, willing, able and qualified to purchase a short sale that can take 4 to 6 months. Again, that is what the seller hired them to do.
Last question I will ask..... answer it or not.. Do you advise your buyers to make multiple offers on multiple properties?
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"What happens on the other end when your buyer makes an offer and the seller accepts only later to find out the seller accepted offers after they signed a contract with your buyer? "
That's what lis pendens for.
"Of course, the listing agents job is to weed out buyers to find a buyer that is ready, willing, able and qualified to purchase a short sale that can take 4 to 6 months. Again, that is what the seller hired them to do."
OK no argument here, just .I believe that you put yourself and your broker at risk when you do it using the listing agreement and entering it in the MLS.
"Last question I will ask..... answer it or not.. Do you advise your buyers to make multiple offers on multiple properties?"
Most of the time we can't find multiple properties, but lets say the opportunity presented itself and one agent has indicated that they are holding the offers for a week before presenting them to the seller. Then yes if the buyers found another acceptable property and wanted to write a second offer – I would do it for them. I’ll assume that there would be time to withdraw the first offer. What you are proposing is just more unnecessary work for me which I’d try and avoid.
We are kind of beating a dead horse here.
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Permalink Reply by Trong Dang on
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In my opinion, I don't think it is the Seller that needs to do this, filtering out the Buyers. I believe that it is the LA's responsibility to ensure you got the best buyer, who present a reasonable offer and will commit to the transaction as if they were the Seller. I always have a Short Sale Offer Instructions attached to my SS listings to weed out all the flakies like Smitty said. If you need some pointers, follow Bryant's post. If you want more success at closing SS, follow Bryant's post.
If a Buyer's agent resists my recommendations on how to write an offer, I will always tell them straight up, "You need to educate your Buyer more about SS and to bring some skin into the game too, my Seller will commit and take the property off the market to work with your Buyer for the next 3-5 months, while risking getting foreclosed on, what does your Buyer bring to the table?" Realistically we all know in a SS a Buyer can walk anytime no matter if he said on an addendum he will stay for at least 90 days, for all we know the Buyer can walk on day 5 and waited until day 90 to let the LA know.
If the Buyer bring in a low offer, I would reverse it back to the Buyer's agent on why he didn't educate his Buyer about lowballing, that right now is the worst time that he should be doing that. Also question him on whether he educated his Buyer on what the FMV of the property is, and why would the bank accept this offer when the BPO/Appraisal will most likely come in at that price? Do you like to waste time? Because I don't. "Is your Buyer flexible on their pricing? Can they move up if the bank said this is their bottom net? How much will your Buyer go up? Listen, I'm not trying to get the bank the highest offer, I represent my Seller to get them out of foreclosure, but many times that would also translate to bringing the Best & Highest offer to the bank."
Do I enforce every single rules on Bryant's post? No, I don't, but by recommending these steps and see how the Buyer's agent and the Buyer reacts, you will get a feel of if that agent and/or his Buyer is a flake or not. My number one rule that I stick to is the Inspection timeline starts after Mutual Acceptance between Seller and Buyer, not Lender Consent. If the Buyer agree to spend $300-$500 on an inspection up front without knowing if they'll get the house or not, shows that they're committed. But if it is a relatively newer house and the agent is being very resistance and is the only offer for the last 30 days, but I get a feel that he and his Buyer will committ and present a good offer, I will forgo the restriction and move forward with the offer.
Bottomline is, you have to know your value, know when the BPO/Appraiser comes out, what comps is he likely to use to put a value on the property, then get a good offer based on that. Then, weed them out and find a strong/committed Buyer who will give you the best offer. Learn to set expectations ahead, a flaky Buyer could turn into a committed Buyer once they found out you know what your doing. Your success rate will skyrocket. Everybody wins :)
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Permalink Reply by Bryant Tutas on
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I too have restrictions in the MLS. We have to present all offers unless instructed differently by our sellers. My opinion is that when buyers and their agents start treating short sale contract just as any other contract the restrictions will no longer be needed.
Of course buyers and their agents can choose not to make an offer if the deal is too restrictive.
Putting as much info in the MLS as possible should be helpful.
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I do not see this as intrusive at all, I see it as the listing agent doing their best to protect their seller.
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