Made it all the way to investor approval to be denied, My realtor and seller are related

I am a buyer that found a house on realitor.com  I did not have a realitor so  i contacted the listing agent directly.  we put in a offer at fair market value and got all the way to investor approval, yesterday the realitor informed me that the bank has denied the offer due to the seller of the house is her sister.  the realitors broker said that he would put another realitor on the case, now the bank doesn't want to deal with the broker or the realitor at all.  Does anyone have any suggestions how to fix this.

Appreciate any Help

Paul

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If you read my post, I said most, which is not referring to all.

Also, you cannot base your assumption on what you think. You need to base your assumptions on what you think the lender thinks. Wells Fargo still classifies agents as "parties" to the contract. Are they right? Who knows... Does your name go on the contract as listing or selling/cooperation broker? IS that a party? Maybe, maybe not ... you need to think what the lender thinks..

Looking at the wording you quoted. If the lender was minimizing "arm's length" to just he buyer and seller, why wouldn't their wording be "The buyer and seller on this contract may not be related, etc.. etc.."

Food for thought ... not our though of course .. theirs!

I actually think you and I agree :)  I think that it just depends on the lender and the investor as to whether or not a listing agent can be related to the seller.  Not all lenders require an arms length transaction form, in the case of the original post, the listing agent may be a moron :) hard to tell

The Negotiator said:

Jeff, I would have to disagree with you. Seller and listing agent being related can cause problems (obviously.) Some lenders do NOT want that and need 100% arm's length. The transaction is NOT arm's length because the seller and agent are related. Each lender does seems to have their own version of an arm's length doc, but, they all seem to have "no relation" on all of them, which, makes it very clear and not easily distorted.

 

If anyone is looking for blame then blame the listing agent for being a moron.

 

Remember, a short sale is a privileged, not a right. Never go into a short sale with expectations of success.

 

Jeff Payne said:

Paul, your realtor needs to push back and fast!  The fact that your seller and agent are related is irrelevant,  the current market value and your offer are what is most relevant here.  Arms length transaction definition is getting terribly distorted lately and as long as your transaction with the seller is arms length then this sale should occur.  I would guess that the negotiator on the file does not understand arms length and can only read between the guidelines and can not think outside of the box.  Push this thing and escalate to the investor on this one.

 

Scott, we do them all the time...but ours is the listing agent is related to the buyer....we disclose all of this up front..if it is still and issue we just assign a different listing agent....99% of the time we don't have any issues...but as anything else goes...it is different for everyone.

Scott Korbin said:
No commission certainly would help, but the BPO would have to come from a 3rd Party or you'd have to order an independent appraisal. Better yet, avoid the Arms Length in all matters. JMO.

Paul Silva said:


Christina Conrad said:
Jeff is right...it probaby is someone that is new and doesn't understand arms length transactions...I had a similar deal with BOA recently where the Listing Agent and Buyer were related and we had the Arms Length and BOA denied the ss in Equator...we had to start over because the BOA rep.  kept saying you can't do it...well you can, we have done it plenty of times b/4..they just don't pay the commission...so we assigned another listing agent and reinitiated the ss and it went through...
Ben, straighten out your cap.

The Negotiator said:

You Realtors with your 2 week "degrees" are so sensitive. Give me a break, this is not a high school chat room. Be kind and courteous to others.

To all those who replied laughing should be ashamed of yourself.


Nedy Blanchard said:

What is a Realitor?

I can tell you that if I were the Seller in this deal, I wouldn't take the under the terms the OP did. And  I still don't understand why buyers believe that going through the listing agent is a good idea, but that's another topic.

I just had an offer on a short sale listing that I have that 'smelled funny'.  Everyone was related to each other (lender, agent, buyer).  The agent claimed that she thought it was okay to do this, yet went to an awful lot of effort to conceal all of this from me.

We countered back that the buyer had to dual-process with one of our lenders, and that the agent needed to hand the file to someone else in her office as the buyer's agent.   Not surprisingly, they politely declined.  I'm pretty picky about doing things upfront and I told her that I want to CLOSE the short sale, not just slap someone in there. 

To the OP, as someone upthread said - Get another agent asap.  One that will represent you on any home that you wish to purchase. A month or so ago, I casually asked a negotiator at Chase if there is indeed a "black list" and he confirmed that there definitely is. 

 

 

 

 

I am doing a shortsale now and I informed the negotiator that the seller was my brother's daughter.  I had to have an arm's length transaction form signed by all parties and under my name I stated and signed that the seller is not receiving any money from the sale of the property or from my commission.   This is the concern of many banks as in a shortsale the seller cannot receive any money from the proceeds.  I am working very hard on this transaction and it wouldn't be fair for these sellers not to be able to have me work on this file due to a relationship.  Unfortunately, when working with some negotiators who really do not understand real estate they have a problem with this.  Possibly the agent didn't inform the bank when the offer was presented.  If there is a relationship it should be disclosed to all parties of the contract.

WOW, this is one heck of a hot topic! Perhaps our hosts (thank you for such a great site). Can somehow create a referrence site for this!

We still dont have all the details, on this, too bad the agent that Paul used, doesnt join in! I tend, and only tend.... to believe that this short sale was not denied, the commission was! Which is when the Broker shoud have gotten involved! Double Dips (as I call them, can always be tricky!)

Situation about 18mos ago, I had an agent list his parents home, Co-broked sale,(and all properly disclosed on the MLS and sales contract!)  actually the second piped up and said no commission to the listing agent as it was the son! I as the Sales Manager confronted the second and said no way, you are interferring with the transaction, attributing to a foreclosure, and interfering with a contract. The Broker owns the listing, not the "listing agent" and the Company will not settle for -0- compensation. (real nasty tough guy by the way!) . Well yes we got "less" apples, but the deal closed (actually with some help from the first!) Selling agent took no hit! (ya gotta watch that one, we could have had the buyers  agent split the reduction per mls! yes I know gray area!)  Buyer got a home, Seller got short sale and Listing agent at least made some money as well as the Brokerage!

I personally, would not "assign another agent" In the event of a "transaction gone bad", and the Broker's records, With all the sleezy crap going on with short sales, this could be!???! possible mortgage fraud. Just not worth it!

I believe the "arms length form"(can we post some various lender's forms?)  means, the Buyer and Seller!!! have no "side agreements" or are relatives! Yeh because I have seen instances where the sellers, friend, relative, girlfriend, second cousin twice removed.... wants to "help out" Buy the home, let the former owner stay there, and perhaps purchase it back down the road!

YES, the lender's, mortgage brokers , and, perhaps,  we the real estate agents, created this mess! It is not fair!!! However! I do not suggest anyone, put thier reputation, License, Brokerage firm on the line for anything not within the law!

I wish Paul the best, and hope he get his home from some of the input he got on this site!

 

Great post!  Beverly I like your style :)

Beverly Cibulsky said:

WOW, this is one heck of a hot topic! Perhaps our hosts (thank you for such a great site). Can somehow create a referrence site for this!

We still dont have all the details, on this, too bad the agent that Paul used, doesnt join in! I tend, and only tend.... to believe that this short sale was not denied, the commission was! Which is when the Broker shoud have gotten involved! Double Dips (as I call them, can always be tricky!)

Situation about 18mos ago, I had an agent list his parents home, Co-broked sale,(and all properly disclosed on the MLS and sales contract!)  actually the second piped up and said no commission to the listing agent as it was the son! I as the Sales Manager confronted the second and said no way, you are interferring with the transaction, attributing to a foreclosure, and interfering with a contract. The Broker owns the listing, not the "listing agent" and the Company will not settle for -0- compensation. (real nasty tough guy by the way!) . Well yes we got "less" apples, but the deal closed (actually with some help from the first!) Selling agent took no hit! (ya gotta watch that one, we could have had the buyers  agent split the reduction per mls! yes I know gray area!)  Buyer got a home, Seller got short sale and Listing agent at least made some money as well as the Brokerage!

I personally, would not "assign another agent" In the event of a "transaction gone bad", and the Broker's records, With all the sleezy crap going on with short sales, this could be!???! possible mortgage fraud. Just not worth it!

I believe the "arms length form"(can we post some various lender's forms?)  means, the Buyer and Seller!!! have no "side agreements" or are relatives! Yeh because I have seen instances where the sellers, friend, relative, girlfriend, second cousin twice removed.... wants to "help out" Buy the home, let the former owner stay there, and perhaps purchase it back down the road!

YES, the lender's, mortgage brokers , and, perhaps,  we the real estate agents, created this mess! It is not fair!!! However! I do not suggest anyone, put thier reputation, License, Brokerage firm on the line for anything not within the law!

I wish Paul the best, and hope he get his home from some of the input he got on this site!

 

Joan, be careful to say the seller can not recieve any proceeds from the short sale.  I am closing one this week and the seller is getting 1000.

Joan Psarros, CDPE, CRS, SFR said:
I am doing a shortsale now and I informed the negotiator that the seller was my brother's daughter.  I had to have an arm's length transaction form signed by all parties and under my name I stated and signed that the seller is not receiving any money from the sale of the property or from my commission.   This is the concern of many banks as in a shortsale the seller cannot receive any money from the proceeds.  I am working very hard on this transaction and it wouldn't be fair for these sellers not to be able to have me work on this file due to a relationship.  Unfortunately, when working with some negotiators who really do not understand real estate they have a problem with this.  Possibly the agent didn't inform the bank when the offer was presented.  If there is a relationship it should be disclosed to all parties of the contract.
Jeff, I know that on HUD transactions where there was an Approval to Participate that Sellers are permitted to receive up to $1,000 Cash at Closing. What type of transaction was yours?

Scott

Jeff Payne said:
Joan, be careful to say the seller can not recieve any proceeds from the short sale.  I am closing one this week and the seller is getting 1000.

Joan Psarros, CDPE, CRS, SFR said:
I am doing a shortsale now and I informed the negotiator that the seller was my brother's daughter.  I had to have an arm's length transaction form signed by all parties and under my name I stated and signed that the seller is not receiving any money from the sale of the property or from my commission.   This is the concern of many banks as in a shortsale the seller cannot receive any money from the proceeds.  I am working very hard on this transaction and it wouldn't be fair for these sellers not to be able to have me work on this file due to a relationship.  Unfortunately, when working with some negotiators who really do not understand real estate they have a problem with this.  Possibly the agent didn't inform the bank when the offer was presented.  If there is a relationship it should be disclosed to all parties of the contract.
FHA short sale.  We tend to see alot of people saying that the seller can not take any money from a short sale but I always caution to never say never.  I was on a conference call with Citi execs a few weeks ago and they are offering cash to a short seller, as much as 11,000 so far, Chase has a program that they pay 20,000, HAFA has relo money.  It is more common today that the seller will recieve money at closing.

Scott Korbin said:
Jeff, I know that on HUD transactions where there was an Approval to Participate that Sellers are permitted to receive up to $1,000 Cash at Closing. What type of transaction was yours?

Scott

Jeff Payne said:
Joan, be careful to say the seller can not recieve any proceeds from the short sale.  I am closing one this week and the seller is getting 1000.

Joan Psarros, CDPE, CRS, SFR said:
I am doing a shortsale now and I informed the negotiator that the seller was my brother's daughter.  I had to have an arm's length transaction form signed by all parties and under my name I stated and signed that the seller is not receiving any money from the sale of the property or from my commission.   This is the concern of many banks as in a shortsale the seller cannot receive any money from the proceeds.  I am working very hard on this transaction and it wouldn't be fair for these sellers not to be able to have me work on this file due to a relationship.  Unfortunately, when working with some negotiators who really do not understand real estate they have a problem with this.  Possibly the agent didn't inform the bank when the offer was presented.  If there is a relationship it should be disclosed to all parties of the contract.
Just don't do it and you won't have to worry.  If I were related to the Seller, I would not list it, but would work with another agent in the office.  Too much SHort Sale Fraud going on and the Arms Lengths are getting more numerous as we go along..why make trouble???  This process is too complex and timely to push the envelope..follow the rules and don't go into the gray areas. 

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