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.]

 

 

 

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Here in AZ, the buyer is supposed to disclose to the seller if they are making multiple offers on other properties.  There has been a big problem here in AZ where investors had come into town and were making offers on everything in sight.  It would tie up multiple properties and then they'd choose the ones they wanted most and cancelled the others, usually at the 11th hour.  In a short sale situation, this is devastating to the seller, in that, they will now have to start all over again, most times with foreclosure looming.  Investors don't always postpone foreclosure dates.  In fact, most will give you one postponement and then the property goes to foreclosure sale no matter what the circumstances.  Also, keep in mind, that in a short sale situation at least here in AZ, the buyer can back out at any time for any reason prior to the short sale being approved.  In AZ, the SSA doesn't say the buyer will wait for approval.  Rather, it says that the buyer can cancel the contract prior to lender approval of the short sale.  With all the above being said, I would not sign a document like the one you show above, but you probably won't get the contract.  I would sign it if you added that the SSA supersedes any other agreement where a conflict in terms exist.  Although they want the buyer's agent to sign the B o A form, it looks to me like every action they use as an example is for the listing agent.  You as the buyer's agent have nothing to do with the marketing efforts or limiting access.  I personally wouldn't worry about the B of A disclosure as a buyer's agent because it doesn't apply to you as a buyer's agent unless things are very different where you are.

I think Gary is over-analyzing this form. As Mike Rizzo (and others) said, This instruction is made to lock in your buyer so there is no loop hole. If a buyer and thier agent don't like it, move onto another property that either is not a short sale or find a listing with a naive listing agent and seller who love weak contracts,lol. I'm sure the short sale lender would likely agree that they too do not want a flimsy contract. The bank doesn't want to expend any undue effort or waste their resourses, nor do I as a listing agent. And, as other's pointed out, this seller is risking foreclosure, so they should want a more solid contract. If the buyer doesn't subscribe to this then they should not be looking at short sales. If you don't understand it, I assume you haven't had too many listings.

Hi All,

There are certainly reasons to put restrictions on the buyer and the agent to make the deal stronger for the seller.  However, the restriction described by Gary on 10-31 does not make much sense if the buyer is an investor who buys more than one property at a time.  What happens then?  Should the buyer withdraw all other offers and sit tight for next 3 months?

The listing agent, in my opinion, simply wants the buyer to stick around for the duration of the wild ride (short sale) and the way this particular restriction is written raises more questions than provides answers or assurances.  That particular addendum is not an effective way of driving home the point.

I have instructions with all my short sales.  They are loaded into our documents section of MRIS. I do this to HELP the selling agents further understand the process and to 'weed" out the less the stellar buyers and/or agents.  As a short sale listing broker, I got real tired of buyers walking away from contracts.  I blame this on selling agents not properly explaining the short sale process.  

This is also why..a contract without a deposit is not accepted by my company, this is why Buyers must provide a source of funds to close and this is why the contract has a MINIMUM of 55 days to get short sale approval.  If you don't like the short sale instructions being provided to you, then don't show the property...but explain to the buyer why you aren't.  See if they stick with you.  

Listing Brokers do ALL the work in a short sale.  Their main goal is to protect their sellers and get the property to closing,  those of us who are using instructions are doing so because of the less than stellar buyers and  selling agents.  Selling agents care about one thing..their commission...and they don't have to work very hard to receive it. 

So once again..if you are "put off" by the instructions..remember this.. one of these days you might list a short sale.  And when this happens ...you will finally understand why brokers/agents are adding instructions.  

When I started in this business some 30 years ago, we had one page contracts (front and back).  We now have 30 plus and counting pages...all to protect the parties in the transaction.  INSTRUCTIONS....while they may seem to be a bit much for you are now necessary because even though we now have 30 plus pages for a sales contract...we still have less than stellar brokers/agents and buyers.

Johanna Devon, Principal Broker

I don't think anyone was saying that instructions are bad.  All the points that you list in yours are very reasonable.  In fact, I put 90 days to get the short sale approval on mine.  I personally was speaking to the instruction where the listing agent thought they could restrict the buyer from making other offers or backing out before lender approval.  I totally agree with you that the work of a short sale agent is massive, but I think its a little harsh on your part to make such a broad generalization that buyer agents don't work much for their commission.  You obviously haven't worked with a buyer in these times, where a buyer can't get approved for a loan unless they don't need it, or made offers on 30 homes only to always miss out on getting their offers accepted, or driving the buyers around to every house that fits their criteria, etc etc.  All this takes time and then many listing agents (not me) have decided that they should not share 50/50 the commission paid by the seller even when its not a short sale situation.  Without buyers agents, you would not be selling your listings.  Take a long hard look and hopefully decide that we are all in this together and deals work much better when you respect the work of others.  If you personally truly believe what you're saying in this post, I wouldn't show any of your listings because I'd fear you were out to screw anyone you could.  30 years of real estate has evidently made you bitter.

Mike, 

After 30 years, I admit, I question the professionalism of this new breed of real estate agents and there is a lot of doubt in regards to their integrity.  Just read through these responses and it's easy to see..there are a lot of Listing brokers/agents who are fed up with "buyer" agents and the way they handle (or don't in most cases) their end of the short sale.  I am fortunate enough to live in an area where our market has rebounded and inventory is low...so poorly written contracts by less than stellar agents are booted almost immediately.  

Recent examples..Agent writes all cash offer on one of my short sales. No deposit and his client, Mr./ Investor, never visited the property.  Sends over a "source of funds" letter" that my 10 year old grandson could have written better. Agent was seriously offended when his offer was not accepted. HAD he read the instructions he could have had a successful ending by providing all the requested documents when he sent the offer. His loss for his client and himself.

Another example; Agent writes contract on one of my short sales. Offer comes in without any of the requested documents< which were already downloaded in MRIS...so had he actually read the "REMARKS" section.. all his client needed to do was sign them.  In the meantime, another contract comes in with ALL of the requested docs.  Second offer was slightly lower, but agent had taken the time to prepare a firm offer and had his ducks in a row.  I sent 'second" ratified offer to lender; Also sent non-ratified offer to bank with explanation as to why that offer had not been accepted. The bank also accepted the second offer.   

So sir, you do want to show my listing..because I get the job done.  Quickly, quietly and professionally.  

JD

 

Personally I have a problem here.

"Second offer was slightly lower"

My problem is that instead working in your sellers best interest you took less money to make it more convenient and easier for you not act in the sellers best interest. You were smart to cover yourself by sending the second offer over and let the bank decide which they can do in the SSA.

If you were my agent and I found out you did that I might have a problem depending on the amounts.

Whats the hurry and motive to DQ a buyer who had the better offer? Less work? Hmmmm

Amen to that Johanna! *high fives* I would have pressed the "like" button if there was one. :)

Bank of America does require certain paperwork others do not, including the disclosure signed by both licensees.  As far as the seller putting on restrictions, usually it is the agent, although as others have said, they can put any restriction they want to on a sale.  I bypass this by requiring an EMD with the offer that the buyer will loose if they back out before the 90 or 120 days on the contract.  If they have "no skin in the game" there is nothing to loose by saying "oops, changed my mind".  The selling agent has done all the work that a short sale entails for nothing only to start over with a new buyer.  I personally also require the buyer to sign an addendum explaining the short sale process the the time lines, so they understand what they are getting into.

I would also feel uncomfortable having my client sign this as well. I haven't seen this before and feel it isn't in the best interest of the seller to require it.
Scott, there is no guarantee that the buyers won't cancel while it is being processed or once the approval so no matter what you make them sign they can cancel. What these instructions do is deter buyers agents from showing or writing up an offer.

Mostly I just read these threads, as, who knows, I might learn something, and given the level of competence here, most likely anything I might post has been or will have been said.


But it occurs to me that, given Gary's insistence on lack of restrictions to a sale, a Seller asking too much money for their house could be considered a restriction. Snort.

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