Comment

Comment by Kathleen Lordbock on December 22, 2011 at 11:10am

Sending in more than one offer- really? The lenders are having trouble processing one offer at a time for a SS and in most systems at this time- you do not even have the capacity to put in several offers. If the key words are highest and best- best in whose opinion? To me the best offer is one with the least strings attached and the best ability to hang in there. If there is a cash offer and one $1000 higher that needs to pass inspections etc- which is the BEST offer? Your fiduciary duty is to the SS seller- what will get the deal done? An unsigned PA is nothing, means nothing- why would you send that in?

A Short Sale is in the best interest of a lender- where the seller is not or will not be making payments and the opinion is a foreclosure. Lenders will lose less money- do not have to hire an agency to list it and maintain it and pay for elec/heat etc.

I am doing what is best for them as well BUT they are not my clients.

Comment by Mike Horton on December 22, 2011 at 10:21am

Guys let's take this one step further. Lets say that you submitt an offer that has been signed by the seller and meets minimum requirements of the lien holder. Then you send an offer and the lien holder comes back and says we want the higher offer. Under what contractual grounds could you cancel the current contract, lets assume there is no breach of contract. The original buyer could then sue for specific performance of the contract. Yes I know we could fabricate a story about the lien holder has the right to reject a contract (are they a party to the contract?) but this to me seems to be dual agency (since is in implied you are doing what the lien holder wants and not the seller). Guys I really think sometimes we get carried away with what the lien holder wants and we then get to stretching our responsbilities to include that grey area. It is a tough business working with all the players we have to on a short sale, but I believe we have to hold the line on letting negotiators run our business.

Comment by Marcy Moyer on December 22, 2011 at 9:05am

Mike,

I agree with you on that issue. They get to see the offer that is signed by the seller. period. My point is that the lender wants the best offer, and since there have been some instances of that not happening they may be trying to get that with the addendum and the agency issue may be an unintended consequence. I can not believe that this issue can not be worked out by asking for clarification and then explaining what the agent's bottom line is.

Comment by Mike Horton on December 22, 2011 at 5:38am

Uh guys, I think you have to go back to Agency. You work for the client not the bank. They are not a party to the signed listing contract. Sending an offer that is unsigned by your seller to the lien holder is an implied agency. If through this process the lien holder decides to not approve a contract (that has the  contingency based on the lien holder approving the contract net on it) through your efforts, have you not just violated your fiducary responibility to your client? I think I am a lot more worried about that then I am the addenda. You may want to check with your legal counsel on that one.

Comment by Marcy Moyer on December 22, 2011 at 5:24am

Have you asked the person who sent the letter to define what they mean by highest and best and what they consider the time line to be? Maybe they just want to make sure there is no bias in the seller's acceptance that may happen if the listing agent double ends, or the seller has some distant relationship to the buyer. 

Comment by Thom Colby CA Brkr 888-391-5245 on December 22, 2011 at 5:08am

@Jim McCormack, 

 

I think this falls under the saying; "he who has the gold makes the rules".  I'm doing one right now with Wells and I have no issue in signing their Addenda.  They want me to present higher / better offers, no problem, I'll send offers along to them unsigned by the seller - because the seller can only - legally - sign one offer at a time.  The lender cannot direct the seller to sign any offer other than the one the seller selects to sign.  So therefore the lender only has two choices; 1) rescind their approval (assuming they've already approved) and hope the seller signs a new / better / higher offer or 2) allow the current offer to move forward.  I certainly want the highest / best offer for my client so if something comes in higher it will get consideration.

 

I don't think the seller and the lender truly have an adversarial relationship.  The seller is asking their lender to settle for less than what is owed and, the lender is working with the seller in approving a (most times substantial) loss they are willing to take.

 

I'm not disagreeing with you, in that it is creating odd relationships between Realtors, Brokers, Lenders, Sellers, and Escrow / Settlement Companies, and it will be interesting the first time a litigation comes from it.

 

As another example of how crazy it's getting, I have another transaction with IndyMac/OWB as the lender and the Settlement (Escrow) Company is refusing to sign the IndyMac PEC form which will cause the transaction to be declined today.  This is already approved and ready to close within a couple of weeks.  Do I sue the Settlement (Escrow) Company for not signing / attesting to the Arm's Length Affidavit?  I see their point, but there's nothing in this transaction to suggest collusion or anything else inappropriate.

 

I truly believe Short Sales are going to get tougher and more knarly as 2012 proceeds and, those Realtors who will not / cannot adapt need to stay away from Short Sales.  The lenders / investors make the rules because they are taking the loss and they make the ultimate decision.  I guess the alternative is for the seller to bring their mortgage current.

 

Have a great Holiday and Successful 2012 !

 

Thom Colby

Broker

Palm Desert & Newport Beach CA

 

 

Comment by Jim McCormack on December 21, 2011 at 8:33pm

Problem with Wells Fargo Required HAFA Listing Addendum

I have a serious problem with Bullet Point #2 (Reads: "Listing Broker/Agent Agreement: It is the listing broker/agent’s fiduciary responsibility to present the highest and best offer to the servicer.") in the wells Fargo required HAFA Addendum (see this discussion) as it requires the Listing Broker (i.e. us) to have a fiduciary relationship with Wells Fargo when this can only be given to the seller, especially since there is an adversarial relationship present between the bank and the seller.  Also, from a practical standpoint, I cannot present the "highest and best offer" since only executed contracts are submitted to the bank and highest (i.e. lots of contingencies, weak buyer, etc.) is frequently not the best (i.e. cash, AS IS, etc.).  Also, this clause does not have an ending time.  Therefore, it could be construed to mean that I have to continue to submit higher offers even after a previous fully executed contract is approved and ready to close.

This Addendum cannot be acceptable to REALTORS.  It is yet another way that the banks are trying to more and more burdens on the back of short sale professionals by requiring them to do things that are in direct violation of their contractural duties to their actual clients (i.e. the sellers).

Any suggestions, comments or advice?

Comment by Kevin - Greenville, SC on December 21, 2011 at 7:13pm

Denise, No a net of 88.13% is a requirement for only VA Compromise Sales.

Comment by Denise Sipple on December 21, 2011 at 5:46pm

Hi Kevin, is the net of 88.13% apply if you use Equator or on all short sales?  

Comment by Kevin - Greenville, SC on December 21, 2011 at 11:20am

Kim,

Wells Fargo won't order a Liquidation Appraisal until the property is under contract.  Also, I recommend you don't use equator.  A net of 88.13% of the Appraisal will be required in order for them to approve.

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