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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First let me start by thinking the forum owners, moderator and participants in this discussion. You all gave me a place to bounce ideas off of listing agents and to mature my stance on the topic.
I started this discussion because I didn’t like a form attached to short sale listings. As we worked our through this topic for a day and I had a night to ruminate about it I’ve come to a conclusion and I’d like to share it with you.
Some of you agreed with the form, some of you thought the form could have been written better but agreed with the underlying premise.
So put yourself in court under oath being questioned by a lenders attorney and the question put to you is what is the purpose of the form (or any restrictions or conditions placed on the buyer or buyer agent through the short sale listing)?
To weed out flakey buyers. To discourage buyers that doesn’t fully understand the short sale process and won’t last until close. To get buyers committed to the sale. To protect the seller from foreclosure (from buyers that won’t perform - there could be that an argument the unintended consequence was that the foreclosure caused by discouraging some buyers and that you were contributory to the foreclosure).
So how are you going to realistically promote that this form is and was designed to generate more offers from more buyers? What is the incentive in this form or any condition or restriction or limitation attached to a short sale listing to get more buyers interested in making more offers on the property?
It boils down to this, the purpose of this form or any restriction or condition added to the listing that isn’t a property disclosure, or lender disclosure and relates to buyers obligations or behavior – is designed for restricting offers.
It’s like when you are stuck for ad copy, start off with your benefit of working with me is.
What’s the benefit for the lender? I understand that the listing is with the seller – but in the end you will be signing the lenders paperwork, so it is in the sellers best interest to cast a transaction that you can sign off without perjuring yourself.
The bottom line is any condition, limitation or restriction but on a buyer through the use of the short sale listing will discourage some buyers from making an offer. That nasty attorney stand in front of you will be making that case much more eloquently. Then he will ask you if you signed the Licensee Certification and point out the verbiage in certification and have you read “Licensee has not engaged in any conduct that restricts or limits offers from buyers”. And to a jury of your peers he will state that the only practical purpose for this and the only reasonable result from using this form is to discourage some buyers from making offers.
I would venture a guess that the next thing he would ask for Is the complete restitution of all commissions paid on all the transactions that had conditions or restrictions, plus a little something because you misrepresented yourself on the certifications and whatever wild a$$ amount he thinks you may have cost the bank and of course attorney fees. In today’s electronic environment he might even ask to see the log on the lockbox during discovery so he could look for additional evidence.
I think the entire idea of putting restrictions, limitations or conditions on short sale listings is a mistake that will eventually cost licensees money and reputation.
This is just one buyer brokers take on this.
I had hoped that the agent(s) using this form would have contacted me by now, I did send them an email voicing my concerns with no response and I know that at least one of them is a member of this forum. Like I said earlier I hope to work this out amicably, but if they persist with this practice I will escalate the issue. I do not want to put any of my buyers at a disadvantage if I write an offer on one of their listings and refuse to sign the form.
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Permalink Reply by Jeff Payne on
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Gary, well thought out for sure.
I guess we could do the same and come up with what if scenarios...
What would you tell the court if you had to testify when your buyer placed 10 offers and all were accepted, sellers pulled their properties off the market and in the end the buyer only purchased 1 as they intended and the 9 others ended up being foreclosed on by the bank. How do you explain that you advised your buyer to contract to buy 10 homes when they really only intended to purchase the first one that got approved.
I can only conclude that short sales are unfamiliar to you and that you have never worked on the seller side of the short sale and most of all have concluded that you condone buyers contracting with multiple sellers to purchase with the intention of only purchasing one.
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OK I just reread your last sentence. How are you putting your buyer at a disadvantage? You are putting your buyer at a disadvantage by not getting their offer submitted and accepted. Again, I can only assume that you are planning on having your buyer make multiple offers on multiple properties or we would not even be discussing this?
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“How are you putting your buyer at a disadvantage?” You are putting your buyer at a disadvantage by not getting their offer submitted and accepted.”
By refusing to sign the form that I will let the seller interfere with my previous buyer broker contract.
“The form reads I want to know whether the buyer’s agent makes this promise to you before I sign any offer.’
The implication is that the seller won’t sign if the buyers agent hasn’t compromised themselves.
Again, I can only assume that you are planning on having your buyer make multiple offers on multiple properties or we would not even be discussing this?
Different market, our listings only last a week or less in most cases I couldn’t find multiple properties at one time if I tried. That doesn’t mean that if something came up in a month that buyers wanted to look at that I wouldn’t show it to them. They could decide what they wanted to do. I work for them. But that can happen with non short sale properties too.
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Again different market, using nothing but short sales in a 4 mile circle around my house priced 250k or less, there are 10 short sales active, 11 short sales that are contingent , 276 pending sales and 593 total closed sales in the last year (they don’t track if it was a short sale after it closed). Of the 10 active short sales 6 have been on the market 10 days or less.
I'm not saying that I wouldn't write multiple offers for a buyer, around here it isn't uncommon for listing agents to hold offers for a week to 10 days and then present them all at once to the seller. But if we had one in the queue and got another one accepted I'd expect the buyer to withdraw the first.
All for this is a red herring. The point I wish to make is that you sign that Licensee Certification at your own risk. You obviously have a higher tolerance for risk than I do.
With nothing more that the listing information, which you are responsible for and the Licensee Certification which you must sign. If it was me I would keep the listing simple and place the restrictions and conditions in the counteroffer.
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Why would you not have a problem with the seller instructing their agent to hold all offers for 5 days? 10 days? 30 days? That is a restriction in the listing not much different than the original post. I am talking about not only writing multiple offers but getting more than one offer under contract with your buyer only intending to buy one. An offer is much different than an accepted contract so offers in this case are irrelevant. Signed contracts are relevant to this discussion.
Sounds like you do not do that so your original post's concern is really irrelevant. Send your buyers offer in, the listing agent has to present it and get the negotiations started. Might be a good chance that the seller agent never told the seller that they require this form to be signed and the listing agent now has to explain themselves.
I agree that the counteroffer is where the terms of the contract need to be placed, not in a document that has nothing to do with the contract in my opinion.
I have no issue signing the licensee certification because when I list a short sale we work to get the highest and best offer for the seller to accept and send to the lender, otherwise it is a waste of time and keep in mind that highest is not always best. We get the highest and best offer that we can and the seller ultimately signs off on that offer and we submit to the bank. The bank then does their due diligence to decide if indeed that offers meets the requirements to issue an approval. At no time do I have a duty to the bank, my duty is to the seller. If my offer does not meet the banks requirements, they wont approve it.
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Permalink Reply by Smitty on
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I couldn't agree with Jeff more.
Gary, I'm going to tell you why seller's put restrictions on sales...it's so their time isn't wasted with a buyer who is not going to be able to buy the house or not committed to the sale.
If you think about it, isn't putting SOLD AS IS a restriction on a sale? Does that restrict certain buyers? Well if the house is uninsurable, or uninhabitable, it sure does. So should I as a listing agent at that time encourage my seller to take any offer presented? Let's say I get a nice young couple FHA buyers, first time buyers make an offer on my gut job!!! Do you think that their lender is going to qualify them to buy that house? NO. Absolutely not, but your argument is we should not RESTRICT ANY BUYER. So, let's take the FHA offer, start negotiation, get about 60 days into the process have the buyer's lender send their appraiser to the house take one look at it and deny the loan. Now I've just wasted a HECK of a lot of time because I didn't fully disclose the RESTRICTIONS on the sale!! SOLD AS IS is a restriction for some buyers.
The seller and the seller's agent know the most about the property, and if they have information that they know will impact the sales process, they of course are going to put restrictions on the sale not to waste time. If the sellers restrictions interfere with your buyer or your buyer's agent duty then my opinion is you need to move on from the sale. It's not the right house for you. There is a reason your buyers shouldn't be looking at that property.My duty is to my seller, NOT to the lender, and if my seller is telling me they don't want to work with buyers that can't stick around for 90-120 days, and their property is unfinanceable, likely won't pass this or that inspection, then guess what? I'm going to disclose right on MLS the EXACT type of restrictions that produce a strong buyer for my seller. I'm not going to allow unqualified buyers to even go to the property to waste everyone's time, by disclosing on MLS what the seller does and does not want from a buyer.
I can tell you BofA even though they may have an opposite motivation than my seller, will likely appreciate me not wasting their time too!!
I had a deal fall apart a couple weeks ago. We had all kinds of restrictions because we knew we needed a cash buyer. SOLD as IS. SELLER WILL NOT AND CANNOT MAKE REPAIRS, BUYER IS RESPOSIBLE for X Y Z. The property was serviced by Ocwen. It had an auction on it and we knew we needed a cash buyer and that's exactly what we got after we threw the restrictions up on MLS. We had an iron clad PNS. 5 days before we went to close the buyer did a septic inspection. It failed. My response to the buyer's agent was...too bad. You signed a PNS that stated septic was to be inspected in 5 days of signing of PNS which was over 30 days ago and you're telling us NOW? It also was to be in writing if they found an issue within 3 days of the inspection and that never occurred. Buyer wanted $20,000 off price of house and I would normally say POUND SAND you breached the contract but there was an auction less than two weeks away and it was easier to ask if Ocwen would take the hit.You know what her (Ocwen) response was? - Didn't you (me) tell buyers it was sold as is? Why are they coming back NOW right before closing? Didn't you put that it was the buyers responsibility to deal with septic if it failed - To which of course I answered YES but the BUYER claimed he didn't "understand" - He didn't get his deposit back and we did get a new buyer in and closed but the rep at Ocwen was kinda ticked off thinking I wasted their time with an unqualified buyer!!!!!!!!!
So YES GOOD short sale list agents in conjunction with their sellers DO WEED OUT.
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I actually thought this discussion would have ended with the post at the end of page 2 (in my browser) that starts with “First let me start by thanking the forum owners, moderator and participants in this discussion. You all gave me a place to bounce ideas off of listing agents and to mature my stance on the topic.”
Had you read it you would have found - “It boils down to this, the purpose of this form or any restriction or condition added to the listing that isn’t a property disclosure, or lender disclosure and relates to buyers obligations or behavior – is designed for restricting offers”
In my opinion this nullifies your long and impassioned post.
But I agree that you and your seller have a vested interest in making sure the buyer sticks around to closing BUT the place to put the restrictions is in the counteroffer (if it’s a short sale) not in the listing. Actually forget it’s a short sale and that you have a Licensee Certification to deal with, it just is not good marketing to lead with restrictions and conditions that a buyer has to meet, before they are interested in making an offer. Isn’t your goal to sell the property, don’t you increase your chances if you have more offers? Absolutely full disclosure of material property issues is required, if your state has a statutory disclosures, and you can attach those documents to your listings, I’d do it.
And while your duty is to your seller, you still have to deal with the lender to complete the sale. If you know that certain behavior is going to cause problems with the lender down the road, it would seem it to be in everyone’s best interest to avoid those actions.
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What if I write an offer on your short sale listing and "the buyers" require that first you promise in writing not to present any other offers to your sellers and not allow backup offers and you have to promise this to me before the offer can considered by your sellers.
Your problem is that you now have an offer pending, probably have an obligation to at least tell your seller that there is an offer, have to compromise your agency to get to get to see it.
What do you do?
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Gary, you still have not explained how the seller limited your buyer in any way. Your buyer had every chance to make an offer on this property ( again I assume that the property was available). You gave your opinion but not much of anything else. You came here and asked a question that you already had the answer to and then did not the answer you wanted to hear. Fact of the matter is that there are restrictions on nearly every listing in MLS, especially short sales. Smitty gave you a great example.
What if........................................
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I've alread answered your question once, I'll just cut and paste it for you.
Permalink Reply by Gary Johansen Delete
“How are you putting your buyer at a disadvantage?” You are putting your buyer at a disadvantage by not getting their offer submitted and accepted.”
By refusing to sign the form that I will let the seller interfere with my previous buyer broker contract.
“The form reads I want to know whether the buyer’s agent makes this promise to you before I sign any offer.’
The implication is that the seller won’t sign if the buyers agent hasn’t compromised themselves.
I've now answered your same question twice, how about you answer mine.
What if I write an offer on your short sale listing and "the buyers" require that first you promise in writing not to present any other offers to your sellers and not allow backup offers to be presented and you have to promise this to me before the offer can considered (seen) by your sellers.
Your problem is that you now have an offer pending, probably have an obligation to at least tell your seller that there is an offer, have to compromise your agency to get to get to see it.
What do you do?
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Gary, maybe I'm not understanding your question, but I see no problem with what you proposed. Let's say you write an offer on my short sale and the buyer requires that no other offers can be considered until the offer you are presenting is considered. I just don't see this as an issue. Not sure how contracts are written in your state, but in my state buyers agents give us a deadline for when a seller can consider an offer. It could be anywhere from 24 hours to a week and I would have NO problem having my seller or me consider your offer and if the terms are acceptable to us accept the offer, REJECT it or COUNTER it and not present any other offers until yours is considered. I don't see the issue.
Chances are your offer comes in, my seller will look at it and we would decide how to respond. Once we respond, your "contingency" essentially goes away right? So you write the offer asking for not other offers to be presented to my seller until my seller reviews and considers your offer. Honestly, what's the issue? Yep, you present it, I present it, it gets accepted I submit it to the lender, it's marked pending. It gets rejected, I send it back to you and it's NOT marked pending, or we counter and meet somewhere in the middle.
The thing is, I essentially am letting my seller review your offer and if they can't live with the terms the buyer sets, they will either counter or reject it. That's our option, JUST LIKE IT'S YOUR OPTION to PRESENT your offer to the seller.
I read your post and your “It boils down to this, the purpose of this form or any restriction or condition added to the listing that isn’t a property disclosure, or lender disclosure and relates to buyers obligations or behavior – is designed for restricting offers” - is dead on. It's absolutely meant to RESTRICT unfit buyers, or buyers not willing to meet the seller's restrictions. I'm not here to waste the lender's time, my time or the seller's time. However you want to put it. I'm going to bring to the bank the strongest offer with the highest chance of closing. I'm not going to present an offer to the lender from a buyer that doesn't have the stamina to stick to the deal.
But I agree that you and your seller have a vested interest in making sure the buyer sticks around to closing BUT the place to put the restrictions is in the counteroffer (if it’s a short sale) not in the listing.
Why? Why is this not the place? If we know right up front the type of buyer and offer we need to close, why wouldn't we disclose it on MLS? Don't you think it's a waste of time to even have your buyer right an offer if they can't live with the terms you KNOW the seller wants to see?
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