Short Sale
I listed a property. This is a certified HAFA file . Our brokerage has over 600 agents in our office. I had a shortsale denied because one of the realtor in my office gave me an offer under his LLC. Since we have the same Broker. Bank Of America claims this is not a non arm's length transaction. My broker is furious. I have read the addendum . There is no place that says you can't have the same broker. If this law is in place this will cripple the large real estate brokerage. I have never experience this before. Plz advise.
Replies to This Discussion
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Permalink Reply by Donald Johnson on
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LOL ... write BoA ... and simply inform them of one simple fact ... ANY TRANSACTION PROCURED UNDER DURESS IS NOT AT ARMS LENGTH. So, by definition, a short sale can NOT be, nor will it ever be, and under no circumstances could it possibly be an At arms length transaction since any homeowner selling short is doing so under personal, economic, emotional, political or other Duress.
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Permalink Reply by Smitty on
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I disagree with Harry. I've closed several short sales with LLC's, trusts, etc., and it's an excellent way to own property and keep you safe from liability. I closed one last month and one this month that were LLC purchasers and BOA serviced. The issue is BOA is looking at the fact you are both Realtors in the same office and feel it's not arms length. You can try to make your case to BOA but I doubt you'll get to someone that can change that ruling. I would ask them to clarify and ask if they allow dual agency?? I still think you'll have a hard time getting them to change their stance.
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I'm sorry but lenders are absolutely trying to just cover their own &%$. They are SOOO paranoid about fraud that these ridiculous bulletins are published.
LLC's, TRUSTS, etc., are all legitimate ways to buy and sell property and the BEST way to protect yourself. Now, the whole part about the seller not being on title... I agree with that. It causes a title nightmare, not to mention if the true seller is not on title, how is the sales contract valid? However I have worked with homeowners who had their property in trust and sold to a short sale investor and it's completely valid. THE HOMEOWNERS stayed on title throughout the entire transaction and only at closing did the title change to the investor.
Anyways, the above is a bit off track. I just closed two short sales and both were purchased in the name of an LLC. I swear the lenders don't really take time to LOOK at the files and make knee jerk decisions.
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Permalink Reply by Bryant Tutas on
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Shirl. Why not just place the property on the market and look for buyer that is not affiliated with your office? No matter how you try to explain it the fact is that an agent in your office wanting to purchase the property under their LLC is NOT an arms length transaction. Do you truly believe that this is the highest and best offer than you can get? Isn't the agent buying it because it's a "good deal"?
Your post is confusing 2 issues. There is nothing stopping an agent in your office from selling the property to one of their buyers. The issue is the agent purchasing it. You guys need to not spend any more time trying to make this work and instead concentrate on finding a different buyer so your seller can avoid foreclosure. That should be first and foremost.
As a broker myself I would not allow any of my agents to purchase one of our short sale listings. Too much conflict of interest. And this is exactly why BofA is not allowing it.
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Permalink Reply by Jeff Payne on
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I have not had any issue with the buyer purchasing thruough an LLC, we did supply the negotiators with the articles of incorporation. I can only assume that once they see that the seller is NOT purchasing the property back through and LLC or trust, Bank of America is OK with it.
I read Harry's post and I believe that is referring to changing the name of the purchaser before closing to an LLC, I did that once but again had to provide LLC docs to prove that the same buyer was purchasing, just in the LLC.
I can understand the issues with the LLC but as long as you can document everything, don't see why there would be an issue.
I really don't see an issue with an agent purchasing a short sale either, it should be up to Bank of America to decide if the offer is good based on their appraisal and providing that no one is related, they should let the sale happen. I don't think that just because an agent works in the same office that they should be excluded as a purchaser.
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Permalink Reply by Anna Chroscicki on
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I will say it again - I have not seen it before but I see it more and more often- I think this is just another loophole so investor does not have to approve HAFA short sale. And I do not know why- I thought they are getting incentives for doing short sales, but I have a feeling that there is more to it that we know. But......if they do not approve it because buyer comes from Real Estate office- I guess there is nothing to do but forget the deal. If however they have problem with two agents with the same office there could be a way. Try to explain to them that all agents are independent contractors and everybody has separate business. In Re/Max we are just renting space from broker- so I am not sure if that is situation for you, but I had something similar once and it helped. Believe it or not, but sometimes negotiators do not understand how we work- they think that buyer and seller is represented by one entity.
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Permalink Reply by Beverly Cibulsky on -
Just some thoughts, did you read HAFA approval lettter? This must be what you mean by Certified HAFA approval. Was the correct verbiage included in the offer? "arms length/must hold for 90 days? Did you incude the LLC paperwork with your package? Do you have Dual agency in your state? Most important, is Buyer/agent looking for a commission as well? (as usually buyer or seller cannot recieve any proceeds from transaction, Is commission a proceed, I dont know) "does the buyer have a business realtionship with the agent or seller" Just try and prove you case with the lender. Once again my favorite quote, "you cant always get what you want, you get what you need"
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The problem today is lenders, (that are usually not the investors - just the servicing agent - wouldn't that be a third party negotiator btw), are usurping powers not granted them. What do I mean? An example of abuse of power, both legislative and third party is that in Florida, the new legislation passed not so many moons ago, ultimately gives Condo Associations the right to demand rents paid directly to them and to evict a tenant. Now figure that one out if you can. A tenant and homeowner have an agreement via a lease and a third party having nothing to do with that agreement can come along and supersede the property owner's rights and displace an otherwise paying tenant. It would seem then that a thing called due process has been misplaced along this pathway. Their recourse is to sue the homeowner and gain control over rents, not a simple one paragraph letter to the tenant.
This is not indifferent to this situation in that the investor that is selling short - because they can't get market out it any other way anyhow - is trying to tell a buyer what they can or can not do before and after they purchase. They can absolutely reject the short sale offer based on it's financial merits, without a doubt, but to direct who may or may not buy Real Property in the United States, especially when foreign entities come here and buy our property every day without question other than do they have the funds in US dollars, this is a direct intrusion on the rights of property owners that have no other recourse besides either foreclosure or short sale. When the same people making these idiotic rules borrow trillions of dollars without our vote or consent, then throw us in jail for not paying taxes on the debt THEY incurred, it is this type of scenario as to why we're int his mess in the first place.
Hey lender allow this dude to buy a 1/1 condo for $160k that was just converted from a $500 a month apartment??? Oh yeah, and don't restrict the developer from tacking on a monthly fee of $300 times 450 units on top of the $125,000 profit he just made. Then at the time it collapses they want to restrict the only people even capable of buying this junk, and it is junk for the most part, for all cash because they idiots won't lend out the FREE money WE THE PEOPLE allow the dumb*** FEDS to print willy nilly. ZERO interest costs, means ALL - 100% PROFIT - on every single dollar lent out to end users, but they won't, so then let's restrict the American investor buyer ... but let's have the Chinese and Middle Eastern nations that hate us come in and spend like crazy.
It is up to us to step us as a collective group and stop this craziness. At the end of this year I won't take another short unless I can make at least $4500, it's not worth it otherwise, and because of the new "You're Guilty Of Fraud Because We Said So" laws, I may never touch another one and just let them foreclose and partner with some Chinese guys in HK and buy up the scraps. Sad, but that's what we're looking at right now.
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