Sellers Instruction to listing agent
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.]
Replies to This Discussion
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Permalink Reply by Gary Johansen on
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You are exactly right! I didn't post the all of the BofA licensee certification which runs 2 pages that both agents must sign, while most if it is applicable only to the listing agent. This is also covered
"Property has been listed on the appropriate local Multiple Listing Service at a listing price intended to generate open market competitive offers to purchase Property and not at an artificially low or high listing price. Licensee representing Seller further acknowledges and agrees that his or her 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."
Given the language above any condition, restriction or disparaging language in the listing, in my opinion would put the listing agent at risk from a zealous bank's attorney and yes over pricing the property is included. It isn’t my insistence, just my opinion, and each agent is free to act as they feel.
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Permalink Reply by Scott Taylor on
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Tiffany, In my area, (Orlando), we have a great deal of investors that "broadcast" offers. This type of buyer doesn't want to lock into a contract because they usually don't even bother to look at the house until after they get the short sale approval. Then often times dissappear. So if this form deters them from signing, Good!! If agents and buyers are deterred by signing a piece of paper which contractually binds them then please, please do go onto the next property! The form's intent is designed to deter those certain buyers. If you don't have multiple - broadcasted offers out there then you won't mind signing this.Of course anyone can cancel as you say. If a contract is written well, they will likely lose thier good faith deposit. It's likely that a distressed home seller doesn't have means to sue the buyer for specific performance, but that could happen. I'm going to guess that you've never been on the listing end of a short sale contract, am I right? If you list a short sale and process it for weeks and weeks, make countless calls, chase seller's and agents for extentions and financial papers, you really don't want to have to start over again if the buyer walks, right? More importantly you don't want to waste time since the property could foreclose.
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Scott,
You are incorrect. I mostly list short sales and have been for over three years. I list and sell short sales in both AZ and CA and also negotiate short sales for other agents so i completely understand how to list and sell them. I have lots of experience with short sales and like I said before I don't think it is in the best interest for the seller to send out instructions like this because the buyer can cancel for any reason during the inspection period. That is how both AZ and CA contracts are written so you can have them sign this form but they can cancel and what I find is funny about non refundable earnest money deposits is they can only make it non refundable until the agreement notice is delivered then once again they can cancel during the inspection period. So you only delay the inevitable. You can play all the games you want but the buyer can always cancel. Specific performance is usually against the seller. I have never seen anyone sue for specific performance agains the buyer.
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Permalink Reply by Kevin Vitali on
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I think sellers can put any restrictions they want on their property. Let's face it we want committed buyers for a period of time on a short sale. They can't have their cake and eat it to. SHORT SALES TAKE TIME.... if your buyer can't wait, then don't look at short sales.
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Permalink Reply by Isabelle Javier on
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In California, CAR Form SSIA (Short Sale Information and Advisory) says it all.
Page 3 of 3 Paragraph 7. BUYERS CONSIDERATION. (last sentence) Buyers are also strongly cautioned that writing offers on more than one short sale property with the intent to purchase only one such property could be a misrepresentation giving rise to legal claims by the Seller including claims for the Buyer’s deposit.
So Gary, can your Buyer afford more than one property? If not, then it sounds like you're a player, and want to have your client's offer accepted with the ability to write offers on other properties at the cost of the Seller's loss. I wouldn't want to ever be in a transaction with you, based on your 1) disgruntled attitude, 2) argumentative spirit, 3) dishonest perception.
Get over it, and stop whining.
Do your client service and learn more about short sale requirements and stop pursuing a law degree.
Isabelle
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Permalink Reply by Joan Psarros, CDPE, CRS, SFR on
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I have never seen this type of request. However, thinking about it there could be a good reason for doing this. I have had several agents tell me that they have their buyers put in multiple offers on short sales without telling the listing agents (one stood up at a short sale class at our board and was proud of having their buyers put in up to 15 different offers. Meanwhile the listing agents are working diligently to get the seller's bank to approve the short sale. Then you call the buyer's agent only to find that the buyer has bought.
When I am the listing agent I don't have this problem as I have the buyer put the deposit into escrow once the seller signs the contract. At least they will remember that they have money in the game and will let me know if the buyer walks.
Regarding the Code of Ethics it is long and there are some other paragraphs that might be of interest to you: Standard of Practice 16-10
REALTORS®, acting as buyer or tenant representatives or brokers, shall disclose that relationship to the seller/landlord’s representative or broker at first contact and shall provide written confirmation of that disclosure to the seller/landlord’s representative or broker not later than execution of a purchase agreement or lease. (Amended 1/04)
As I am not a lawyer I am concerned with buyers putting in multiple offers. When a contract is terminated I always have all parties sign the termination of contract addendum. Many agents do not do this and feel it is unnecessary . However, each state is different and here in Florida my short sale addendum that I use states that dates start from the day the buyer is given a copy the short sale approval letter. However, the escrow is due once the sellers sign the contract.
I list and I sell real estate. I work hard and do not use a third party to handle my short sales. I give weekly updates to all parties so they are all aware of what is going on with the short sale process. I have been afraid to calculate the amount of hours I put into my short sales. But, I also do them in order to help people and move our economy into recovery.
I would rather have a listing agent know what they are doing. I personally tried to buy a short sale for my family last year that was listed with someone else. It never closed and is still out there on another of multiple buyer contracts. I wasted a lot of time and money and finally terminated the contract when the seller filed bankruptcy.
I have been selling real estate for 27 years. This is not real estate we are doing but we need to do this to get back to a more normal market. When we list a short sale with different banks (i.e. BOA) they give us requirements that we know up front. They have addendums that are required to be signed. The require part of all buyers' social security numbers, addresses, phone number, etc. This has to be given or the file can not be uploaded. We can complain and cry but in the end we have no choice. The Lenders do not have to follow a Code of Ethics but we as Realtors do. I think we should all just learn how to play well in the sandbox. I added another paragraph for the Realtor Code of Ethics. This is another reason buyer's agents should be careful in putting in multiple contracts on multiple properties. Those are contracts they are having their buyers sign. This is fine if the buyers can afford all the properties if they all get accepted. Otherwise, it is fraud. That is what I think. But, who am I? Just a hard working Realtor wanting things to get back to where the sellers' lenders are not responsible for making a deal happen.
Standard of Practice 1-7
When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/93)
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Excellent point Joan. We always require a good faith deposit apon execution for short sale listings. It tends to marry the buyer to the deal. Of course, they can get out of the contract on financial or inspection contingencies, however, with a binder, they are less apt to jump ship mid stream.
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Im hearing all this talk back and forth.The SS Addendum specifies back up offers and marketing. Its a contingency like any other. You explain it to the buyer. If the buyer accepts it so be it. If the buyer refuses thats that. Write your contract and make it a condition. If Im buying a short sale Im insisting on it. if the seller doesnt want to sell their house its their house to sell. Buyers dont want to get held hostage with a chance to lose a property on a bidding war. They want a house. You either want to sell it or you want to play around. Buyers want a house not games.
You guys made your own mess by allowing the practices to go on. If Im dealing with a realtor and the realtor wants to play games guess what? Ill find another realtor. Its simple put it in the initial contract. Its an accepted contingency or not makes it easy for everyone. No one needs to sweat ethics.
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Ill tell you my experience with a Florida sellers agent on a short sale.
Obtained a signed contract on a BOA short sale a distressed property. Months go buy and out of the clear blue sky I was advised the note was sold. Was a little surprised. Put in another offer on the same property with the new lender with the SS addendum. This contract gives the lender rights and specifies same in the contract. It gives the lender the right to approve the contract.
The sellers agent tried to structure the contract and despite being asked to provide a certification from the lender showing their approval failed to do so. The selling agent refused to disclose the lender or grant authorization to talk to the lender. I talked to the lender who advised they would accept contingencies and agreed with my interpretation of protecting their rights.
The sellers agent executed the section of the contract promising no back up offers would be solicited or would the property be marketed. After executing the contract I had a call placed to the sellers agent about the property and the agent solicited a back up offer.
Prior to finalizing the deal the sellers agent pushed an addendum and hold harmless stating they made no representations as to the property being code compliant and that I was accepting it and that responsibility. But gee why? Because a large extension had been added that was not code compliant or permitted. They knew it and we told them we knew it.
This is as close to dishonesty and fraud as you can get. Th object of that exercise was to conceal the truth by deceiving the buyer. If you want committed buyers dont give them any reasons to question your efforts and honesty.
I walked and inquired later about their interest in obtaining another offer. I was advised if I executed the hold harmless for the realtors and seller they would entertain it. I have other plans for them. Id think the Florida RE Commission and the Tampa Board of Realtors will agree so I can understand Garys frustrations I think thats his point. There should be no reason for the frustrations
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Permalink Reply by Ricardo E. Giacomán on
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I think that as another agent puts it, sellers can say whatever they want, but it can be solved just by requiring an EMD when the offer is accepted by the seller and not by the bank. And the ptential buyer has to be wiiling to wait at least 90 days from that acceptance for that money to be refunded. This way, buyers will not be playing games and submitting multiple offers to see if one of them will stick. It is frustrating to work for months on a short sale to find out that the buyer already is in contract with another offer.
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With all due respect do you think any buyer would be dumb enough to allow you to tie up their money for 90 days while you continue to market the property against their interest? Please.
"It is frustrating to work for months on a short sale to find out that the buyer already is in contract with another offer."
Then get the seller to agree that once they sign that ends the gathering of offers and marketing the property also ends. Sellers agents cant have their cake and eat it to. As a good faith buyer when the seller and the sellers agent want to blatantly disregard my best interests when Im trying to help them then I have no problem whatsoever letting the seller risk losing their incentives and descending into bankruptcy. Its not a perfect world and Im not the one sweating the bankruptcy and needing the short sale. If every buyer and buyers agent put that contingency in the contract we'd have no realtors crying about getting hosed by buyers. You know that as well as I do. You dont take someones money in good faith and then before the ink is dry go out and try to subvert the buyers good faith by drumming up other offers and continue marketing and then cry when things dont go your way. Lets all act like adults when the offer is presented. If the seller executes the contract knowing they really dont want to honor that contract but will use the security it supplies until something better comes along thats as close to bad faith as Id want to get. The ultimate question is will you honor the contract you sign? By having the provision for continued marketing and offers sooner or later someone is going to file a suit and end that practice by going after someones E & O. Or both E & Os for not properly advising the buyer. Its a risky game play it at your leisure and own risk.
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Permalink Reply by Jeff Payne on
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Bill , as soon as the contract is accepted, it is a contract and in my area the status gets changed to pending. Depending on the short sale addendum, the property may or not be marketed after accepted. I recommend that buyer agents have their buyers ask that no other offers be accepted and have that in the contract.
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