I am an agent representing both buyer and seller (transac broker) in FL. The title company is in the process of submitting the short sale docs and has been told of a new requirement this morning.
Even though we have a legal, binding contract on the property, NS is requiring the seller to put the home on auction.com for 2 weeks before they will consider a short sale. If the seller does not comply, we are told his only option is foreclosure. We have been told that if there is an offer for less than the current contract amount, the current buyer is still in the winner's position. BUT if a new buyer offers MORE than the current contract amount, that offer will supersede.
How is this legal?!?! There is a binding contract on the property! (with a buyer whose family consists primarily of attorneys and law enforcement, I might add) There are so many things wrong with this I don't know where to start. For starters, the buyer could sue the seller for specific performance if the other buyer's offer was accepted. The original buyer is not even afforded an opportunity to meet or match a bid - unless they sign up to auction.com. Where do agents come into play & how are they compensated? To whom is the offer submitted - the seller or the lender? This whole thing REEKS of wrong and unethical.
Has anyone else heard of this? Who/where could this behavior/policy be reported? RESPA? Any suggestions are welcomed. I am awaiting receipt of the letter they require seller and agents to sign - will upload once I receive.
Wow. Just curious - does the borrower occupy the property?
I think this stinks. BofA started talking about doing this with short sales awhile back and didn't get much blow back from the agent community. I was surprised.
Personally, if this is the way short sales are going to be handled, I'm out, which I think is their point anyway. If they want to pull shenanigans there is no reason for me to be involved AT ALL.
I think this is a lazy method to try to prove that they have done due diligence in getting the highest offer. I think this is also in response to all the pocket short sale listing sales out there.
Still, why am I here? I play by the rules. If that's how they want to do business they can sell their own short sales as far as I am concerned. I am not helping them force/cajole/encourage buyers and sellers into real estate transactions orchestrated by auction.com.
Have you read the contracts on auction.com? Ridiculous.
Try calling the Florida Realtors attorneys. I'd be curious about what they think. Please post.
NS does a lot of shady things seemingly due to poor management, laziness or greed. However, they are the servicer and MUST do what the investor tells them to do. Who is the investor? I don't know of any investor (yet) that insists on that dubious auction.com garbage. My assumption is that it is another pinhead attempt of NS (and there seem to be plenty enough) to screw you over. Look around on these forums for threads about this auction.com stuff.
Of course the investor has the right to say no to any short sale - so it is legal. However NS makes up lots of stuff (from time to time, they imply that the buyer MUST get the loan from them, for instance).
In Colorado, a seller can not legally sign more then one contract to buy and sell. Nation Start may be able to require it but the seller would still be breaking the law. I'm wondering what would happen if the buyer took the seller to court.
I feel strongly that each one of us needs to start taking a stand for these requirements that put the seller in danger and our licenses in danger. How? Well if ALL of us started supporting each other and NS got 200 phone calls in one day in support of one single transaction plus faxes, emails and letters, they may pay attention. Case by case we can support each other. This is really getting in the way of each of us making a living and taking care of our sellers. Personally, I don't see how it is possible to be a transaction broker in a short sale (too much guidance is needed) so let's take our fiduciary responsibility serious and help each other out. There's my thought!!
Tni, why be out? there is still a listing agent. there is still a buyers agent. Auction.com is not the agent's enemy - well, my experience with Auction.com has been good.
I don't see how a servicer can require the use of Auction.com but then again, a servicer is not necessarily required to consider a short sale either - just a reinstatement.
Besides, the seller still owns the house and has 100% total control of the access thereto.
Quite frankly, I'll take Auction.com over FannieMae's inflated values any day.
As the principal broker for my company (and also as an attorney), I don't appreciate more and more risk being pushed on to the licensee. Real estate law is not moving as fast as these changes are. As licensees, we are held accountable to real estate law in our individual states, period. Further, many E&O carriers do not cover transactions done on non-standard contracts and some specifically exclude auctions. That means you literally have no net. None.
In my view, some agents seem too anxious to go "all in" with the next thing a lender throws our way. Sorry, if they want to dictate terms they need to go ahead and take it back as REO inventory where they have a better shot at bullying their agents into doing whatever they want.
With each passing day, more and more control is being seized or claimed on these transactions. I don't want to wake up one day lying next to the BofA, Nationstar or Auction.com logo. Preferred partners and networks -- it's getting a little nuts right now. Do agents need to push back on these arrangements? YES, I think so!
How many agents have adequate disclosures for their clients on an auction.com transaction? I would venture to say ZERO. How many understand how it impacts their duties as a licensee? Very few. Clients need legal advice on these contracts and most agents do not even have a basic understanding of them. So, my financially strapped seller who can't afford to sue BofA now needs to do another legal consult on the auction.com docs? I personally think that sucks and makes things more difficult for people in a difficult situation. Then according to this post, they want them to risk a lawsuit because of a higher auction bid? Nice.
And importantly, what next from the lenders?
Yes, the banks are granting the short sales. Big deal. Often, they are being paid and required to do short sales. Why shouldn't I push back on this? Are they saying that I'm not bringing the highest offer? I disagree. Are they saying that my marketing is not as effective without auction.com? I disagree. Are they saying that an auction is going to bring the best buyer for the short sale process? I disagree.
If they don't like the offer or my process, they can turn the short sale down. They can always employ a magical network of people to do their bidding (but be careful it might require a real estate license!), but once I get involved my actions are held to the standard of a real estate licensee.
Legal requirements and legal developments for real estate brokers and real estate salespersons tend to move very slowly. Why would I jump into unchartered shark infested waters so I can have the privilege of doing short sales for BofA or Nationstar? If you want to do it, fine. But not me. It may be different in FL as there are transaction brokers. We do not have that in CA.
It is my license on the line, not Nationstar's. We all get to decide how to run our business as real estate agents and the second I am required to use auction.com on a file -- I am out. Short sales are not the only game in town anymore.
PLEASE be sure to follow up with everyone on this....if it is true and they are attempting to cut you from the deal, i would go straight to the attorney general as well as various other media outlets (including NAR).
Make a big enough "fuss" and I am certain they will amend their "rule"
In Illinois the Attorney General directed me to go to IDFPR (illinois department of financial and professional regulation. Somehow that is not making any sense to me
Watching this one closely.... I have several NS short sales and I agree, this reeks.
Kim - That has got to be hands down one of the slimiest scenarios I have heard to date. The sales contracts on Auction.com are ridiculous and hardly bullet proof for either side - buyer or seller. Not to mention that it is a clear and obvious play to get broker advocacy out of the way so that lienholders can control one (or several) large entities like auction.com and do what they like to homeowners in distress who will then have no one else to go to.
Think about it. If markets like Las Vegas (just one example) could have straw buyers come in and purchase properties for higher values making it "appear" that the property was worth more in order to get new investors to buy in those communities; what could our banking system put together with their money, government funding (the people's tax dollars) and contacts?
I think it is a pretty clear, and somewhat genius attempt, at creating a new housing bubble within a burst bubble. They only have to throw a few bucks more at a certain percentage of shortsales through auction.com that would sell for a higher price through that venue (whether it is a fair or legitimate deal or not) and they would use that data to "prove" that Brokers are not able to get highest price for the property.
On LinkedIn there is a man named Ronald Bates 'recruiting' brokers for a similar business model to auction.com. Here is his profile: http://www.linkedin.com/profile/view?id=94303711&authType=name&...
If you contact him he will tell you that he has a business partner that has an "in" with banks to have default properties run through an online platform he is putting together that is similar to auction.com. He believes that they have enough banking partner commitments to rival, if not overshadow, auction.com. I had that conversation with Ronald Bates about 4 months ago and passed on the offer to become their Washington State Broker. I do not believe we can have a fair and competetive market place when only a select few are running the game and the borrower's outcome has no relevance in the business plan.
If there is even one start up out there that has gone far enough to procure commitments to process their default properties through an online auction, you can bet there are many more that we have not even heard of yet. The dots are not that difficult to connect.
The question is - will professional forums, groups and advocates allow them to get their tethers set on something like this or will we join our voices and send a clear statement that we will complain and organize.
I would think the DFI - Department of Financial Institutions in your state would be a good place to start. It always helps to have the homeowner write a letter as well as the Broker, in my experience.
As British Historian Lord Acton once said, "Power tends to corrupt. But absolute power corrupts absolutely." If the broker advocacy is removed for the borrower/consumer, I believe that is the exact scenario we will see in our market place.