Double-siding a short sale - YES or NO?

Will you represent both sides of a short sale?  Why or why not?

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Permalink Reply by Harold Sharpe on March 6, 2011 at 5:48am

Like it or not Double siding a short sale is a big red flag to the lenders.  It should be a big red flag to everyone.

I would never, and have never performed dual agency on any transaction.  I was trained by real estate attorneys.  One can never best represent both parties. It is a conflict of interest. Dual agency is GREED.  While I am sure some will argue the point, with something to the effect the seller gets nothing anyhow, the seller does have a deficiency that they may end up paying taxes on. In addition some may end up having a promissory note due to the numbers not coming in, if a buyer were to come in low.  Or the buyer came in to high may feel slighted.  Dual Agency should be illegal in all states.  Dual agency, in my and many others opinion, is unethical on all levels.  I just find any statements where someone says both buyer and the seller were happy to be a bit ridiculous.  They may have said that to you but felt otherwise.  You will never know and you need to quit fooling yourself and others.  Dual Agency, I am sure one side or maybe both sides feel slighted.  If there is ever an attorney who would like to go after agencies / agents who perform dual agency, by contacting the buyers and sellers, I would readily provide them with the list every month. There are many like me who feel this way who know deep down it is wrong.  The ones who do it feel they are getting away with something.  The question would never be asked if it were felt it was OK to do.  I am not hard nosed on everything, but when it comes to dual agency, or pocket listings, and end up selling homes for less, aid to destroy our economy every day.  The agents that do it, know its wrong, and will argue it every day for the money.  It is my opinion one of the largest problems with our profession we should all work together to iron out. 

Permalink Reply by Maria Evans on March 6, 2011 at 6:05am
In CT it is ok to be a dual agency. In my opinion all deals should be good for buyers and sellers. For this reason,  I feel confortable doing so on "regular transactions" although I don't like the situation. On SHORT SALES I prefer not to do so. I think it helps the transaction with the bank if I just represent the seller. When dealing with buyer's agents on short sales I always try to make sure that I have a serious buyer who is willing to sign a contract, put extra money down and wait for at least 3 months . I don't "play" with many buyers, just one that loves the property, is serious and commited to the deal. Since many things can happen in 3 months (sellers may change their minds for some reason or no reason and buyers as well) this could put me a terrible situation and I prefer to avoid such stress.  BUT..... if I had a buyer who is willing to pay much more than the others, provide they sign a contract that's ok because this would be in the best interest of the seller and I would be willing to handle the risk involved. Needs to be case by case in the best interest of the seller not to ours.
Permalink Reply by Damon Botticelli on March 6, 2011 at 6:09am

I've come to realize the potential for huge problems for me if either party won't perform.  You can do everything right, but it doesn't mean you won't get sued.

 

I have represented both sides without any problems for the clients, however in both cases they cut the commission down to 4% (on $85k properties), so what's the point?  Now I refer out the buyer side.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on March 6, 2011 at 6:19am

It's interesting that agents who are ok with Dual Agency on Standard transactions are not ok with Dual Agency on Short Sales. Hmmmmmm - on Short Sale transactions, the commission is significantly reduced if there's only one agent - i wonder if that's a factor.


Thom Colby

Broker / Negotiator

Newport Beach CA

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on March 6, 2011 at 6:46am

Larry -

 

I absolutely support LICENSED 3rd party negotiators who work for the Seller and Listing Agent.  But help me understandyour statement;

 

Would this lend itself to hire a separate short sale processing / negotiating expert who would be the " buyer's rep" and get part of the total commission--a part of which you would not get anyway if you represent both sides

 

 

WHY would anyone EVER allow a BUYER's Representative be the Negotiator?  If you were the Seller, would you want the BUYER's agent negotiating for you?  What is the Listing Agent doing?  That''s a lawsuit waiting to happen !!!

 

 

When an agent accepts a Short Sale Listing, they automatically assume the responsibility to negotiate that short sale.  If the Listing Agent cannot, won't, doesn't want to, negotiate the short sale, they should hire a Licensed 3rd party negotiator and pay them from the Listing Side Commission.

 

Best,

Thom Colby

Broker / Negotiator

Newport Beach CA

 

Larry Davis said:


Would this lend itself to hire a separate short sale processing / negotiating expert who would be the " buyer's rep" and get part of the total commission--a part of which you would not get anyway if you represent both sides
Thom Colby said:

It's interesting that agents who are ok with Dual Agency on Standard transactions are not ok with Dual Agency on Short Sales. Hmmmmmm - on Short Sale transactions, the commission is significantly reduced if there's only one agent - i wonder if that's a factor.


Thom Colby

Broker / Negotiator

Newport Beach CA

 

Permalink Reply by Bill Travis on March 6, 2011 at 7:01am

What I'm seeing here in the Phoenix area is some agents are hiring attorneys to do the negotiating. I don't know what the attorney's are charging in total, but in the listing sheet, the agents are asking the buyer to pay a fee. The ones I've seen are a fee of $1,295. That will turn a lot of buyers off.

In my opinion, the agent hired them, and the agent can pay them. The negotiator is representing the seller, not the buyer, so the buyer should not be asked to pay any part of their fee.

I'm also hearing that the attorney's being hired is not doing the negotiating; it's done by a clerk in the office.

I'll probably suggest to my buyers that they bypass those listings.

Permalink Reply by Michael D. Schade on March 6, 2011 at 7:32am
So long as you have dual agency,you find it easier to accomplish the the goal.
Permalink Reply by Bill Travis on March 6, 2011 at 7:56am

Anyone contemplating dual agency in AZ (where it is legal) should thoroughly understand the agents Duties, and the Conflicts of Duties that are inherent in dual agency:

From the book Arizona Real Estate, A Professionals Guide to Law and Practice, by Michelle Lind,m ESq., General Counsel Arizona Association of Realtors:

"...Dual Agency involved inherent conflicts..."

"...In general a dual agent must not:

  • advocate or negotiate on behalf of either the buyer or seller
  • disclose any confidential information that would place one party at an advantage over the other party, such as:
    • the buyer is willing to pay more than the price offered
    • the seller is willing to accept less than the listing price
    • a party will agree to financing terms other than those offered
    • the repairs or improvements that a seller is willing to make or that the buyer is willing to forego
    • the confidential motivating factors of either party..."

The first factor ----- "must not negotiate on behalf of either the buyer or seller" ---- actually wipes out what the agent is being paid by the sellers to do, and that is to negotiate the best deal for them.

If an agent accepts dual agency and does not explain to both clients that s/he can no longer negotiate for them, that s/he cannot provide price guidance, but can only pass pass information back and forth; or if s/he actually does negotiate on behalf of one or both, then that agent is setting him or her self up for a legal action at some point down the road.

 

Permalink Reply by Michael D. Schade on March 6, 2011 at 8:28am
I'm use to dual agency transactions,so I have no problems and feel it is much easier to control the outcome.
Permalink Reply by Bryant Tutas on March 6, 2011 at 8:58am
Don't confuse working both sides or a transaction with dual agency. You can always just not represent one of the parties or handle it as a transaction broker if this is an option in your area. However you choose to do it you can work both sides without being a dual agency.
Permalink Reply by Nate Gerard on March 6, 2011 at 9:11am

Firstly, I'm not sure this is the appropriate place to debate dual agency or not in general. The question was regarding short sales and there are liability perils and potential commission loss due to dual agency but there also seems to be some success stories so it looks like this is again a personal choice like so much in our business.

Secondly, negotiators should be hired by the seller's agent and paid for either by the sellers, the sellers agent, or the lender (if they'll agree). Personally, I don't agree with the practice of asking the buyers to pay for an outside negotiator. Also the big three frown upon negotiators since there is abuse of this position going on.

Permalink Reply by Trina Gonzales on March 6, 2011 at 10:31am
Shortsales are a lot of work as it is.  I did it once last year and it was a mess.  It's so much easier when you represent one side of the transaction.  It'll keep your head a little clearer and allow you to work on another listing.

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