The FBI is focusing its attention on real estate brokers to see whether or not the broker submitted all offers to the lender in a short sale transaction.  A real estate broker who does not submit ALL offers to the lender could be charged with being involved in a conspiracy to commit fraud against the lender.  

 

 

Please take a look at this link FBI focusing on Real Estate Brokers on submitting all offers

I would love to get your feedback on this one.

 

 

 

 

 

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This will require some study. Our fiduciary duty is to the SELLER not to the bank. 

I'm going to investigate this in our state. 

Let me just explain my earlier comment slightly:

 

If you have multiple offers and accept the best...for the seller....and you then submit just that one offer to the lender, I think you are in great shape.

I  think you are in even better shape if the contract language clearly says only one offer is permitted to go forward - for the purpose I tried to explain earlier.

 

In my MLS, once an offer has been submitted to the lender, you must mark the listing as "offer submitted to lender" - a searchable parameter in the system.  The listing is still technically active, but in practice it's off-the-market in the eyes of selling agents. Other offers simply are not going to happen.  Hence:  I keep a list of possibly interested parties/agents.

 

Most lenders only want to see one offer.  They are having a hard time just processing those.  They probably don't even want to TALK to the FBI.

 

Anybody dumb enough to get involved with one of the folks who want to buy and simultaneously sell at a higher price that has not be disclosed to the lender probably does need to have/expect a visit from the FBI.

WOW!! Thanks for the great discussion. There ain't no way I'm submitting multiple offers to the lender. They do not own the property and do not dictate how I handle my business. My sellers are paying me to look out for them. It is my obligation to make sure they do not end up under contract to more than one party and to make sure their lender is not requiring them to breach an existing contract in order to accept a subsequent offer.

 

The way to protect our sellers and ourselves is to place the property on the market at FMV then negotiate a strong contract as close to FMV as possible. Then place the property pending and work the deal through to closing. Everyone is happy and we move on.

 

IF the FBI did state this...and I have my doubts about that. Then they are wrong. And they too will be ignored just as I ignore lenders trying to dictate how I work. As brokers and agents we need to take control of our businesses. Quit letting outside parties tell how us how to do what we do. As long as we remain within the law and our CoE we are good to go.

What concerns me is that the writer did not cite her sources for this information. I just have a hard time believing the FBI would concern itself with real estate transacations.

Jim,

 

I do agree with you a lot of your points.

 

I believe the likelihood of the FBI investigating our Short Sales are unlikely and it is probably more geared toward those third party companies buying and flipping before close as others had stated. I know a lot of those companies are associated with Real Estate brokers / attorneys. I get approached by them all the time. 

 

I do believe there is a point to be made here that we don't really consider mainly because it hasn't happened and the likelihood is minimal. There is a distinction between what we could potentially be liable for and what our duties to our sellers are. I could give a couple potential scenarios. 

 

In a situation where you get a 2nd offer three weeks later that is higher. You are now in a situation where you and your seller have to decide what to do with that offer. The way I handle is that is we give the first buyer the opportunity to firm up to the better terms. If they don't than they are bumped and contract is null and void and the 2nd buyer takes priority. If the first buyer firms up than I don't have to change contracts, I am just able to give the bank more money. If the 2nd buyer takes priority than I have to switch buyers but normally this is not an issue. Sometimes the timeline is extended which is the only negative scenario in this situation. The benefit of doing this is the bank gets the highest and best so if I ever get investigated my sellers actions as well as mine will show I was attempting to get the best offer to the bank. In addition, the liability is reduced but hopefully I can get it completely removed as well.  There are other factors not being discussed here in an effort to keep my already rather long posts shorter.

 

Now if you didn't consider the stronger offer, there is a chance that the bank will counter higher or not even take the lower offer and you are stuck with nothing because the stronger offer would have already walked. 

 

If the buyer agent / buyers attorney has executive contacts at the bank and they find out their offer was never submitted. The backlash could be very harmful to your current negotiations of the existing contract not to mention any liability to you and your seller for not disclosing a higher offer. 

 

Your seller in three years is being pursued for DJ or collection activities and they tell their litigation attorney you advised them not to consider subsequent offers. Guess who is getting sued, the person with insurance, you!

 

The bank finds out that you didn't submit a higher offer to them after the sale. Even though you have no fiduciary responsibility to them your actions or in this case lack of actions as a professional who is expected to be honest and forthcoming to the public has cost them money. Basically, there is a loss that can be easily calculated and it gives them a basis for making the case against you since it was your decision not to submit a higher offer. 

 

Regardless of our beliefs or what has been trained to us. If a third party is affected due to our actions, even if the intentions are good, they can still build a strong enough case to sue us. By not submitting or considering a better offer you are opening up the potential for this happening. You as a professional business person have to assess your risks considering and decide what is best for your seller based off your state laws, MLS rules and regulation etc.


Again, the chances of this happening are minimal but I know I don't want to be the one they make an example of. I am not saying anyones approach is wrong, this is just something we should all really consider when reviewing multiple offers. Truth is Realtors do things everyday they shouldn't and never get caught. Just use your best judgement but don't make the mistake of thinking your actions don't have consequences.

This makes no sense. Lenders only want to see one offer at a time.

We represent the seller, not the lender. Most lenders will only allow us to submit one offer anyway. BOA is the best example of this proctice.

 

The seller should always have the right to instruct us on which offer to submit.

 

When reading my transaction agent sheet to my seller, I remind them that I do not work for the bank, I work for them.

Raymond - Do you handle Standard Sales in the same way ?  Contractually, a Standard Sale and a Short Sale are no different except for the lender approving the amount of the loss.

 

So in a Standard Sale, if you receive an offer 3 weeks after you have a signed contract, do you require the buyer to "firm-up" or get "bumped" (Both of these terms I've never heard before this discussion !).  I suspect an Agent or Broker could have much exposure if they interfere with their own contract!

 

Glad I'm licensed in CA & TX where it's much more straight-forward.

 

Thom Colby

Broker / Negotiator

Newport Beach CA

Hello: Kelly

 

The information was given to us from the Long Island Board of Realtor..

 

Here is the link.

 

http://www.lirealtor.com/viewStory.aspx?sid=e2ae03db-c689-43cd-b0b4...

Kelly Walters said:

What concerns me is that the writer did not cite her sources for this information. I just have a hard time believing the FBI would concern itself with real estate transacations.

Raymond: I agree with you that most of this stop those three party companies who are buying and flipping before closing the deal.

 

Raymond Kennedy said:

Jim,

 

I do agree with you a lot of your points.

 

I believe the likelihood of the FBI investigating our Short Sales are unlikely and it is probably more geared toward those third party companies buying and flipping before close as others had stated. I know a lot of those companies are associated with Real Estate brokers / attorneys. I get approached by them all the time. 

 

I do believe there is a point to be made here that we don't really consider mainly because it hasn't happened and the likelihood is minimal. There is a distinction between what we could potentially be liable for and what our duties to our sellers are. I could give a couple potential scenarios. 

 

In a situation where you get a 2nd offer three weeks later that is higher. You are now in a situation where you and your seller have to decide what to do with that offer. The way I handle is that is we give the first buyer the opportunity to firm up to the better terms. If they don't than they are bumped and contract is null and void and the 2nd buyer takes priority. If the first buyer firms up than I don't have to change contracts, I am just able to give the bank more money. If the 2nd buyer takes priority than I have to switch buyers but normally this is not an issue. Sometimes the timeline is extended which is the only negative scenario in this situation. The benefit of doing this is the bank gets the highest and best so if I ever get investigated my sellers actions as well as mine will show I was attempting to get the best offer to the bank. In addition, the liability is reduced but hopefully I can get it completely removed as well.  There are other factors not being discussed here in an effort to keep my already rather long posts shorter.

 

Now if you didn't consider the stronger offer, there is a chance that the bank will counter higher or not even take the lower offer and you are stuck with nothing because the stronger offer would have already walked. 

 

If the buyer agent / buyers attorney has executive contacts at the bank and they find out their offer was never submitted. The backlash could be very harmful to your current negotiations of the existing contract not to mention any liability to you and your seller for not disclosing a higher offer. 

 

Your seller in three years is being pursued for DJ or collection activities and they tell their litigation attorney you advised them not to consider subsequent offers. Guess who is getting sued, the person with insurance, you!

 

The bank finds out that you didn't submit a higher offer to them after the sale. Even though you have no fiduciary responsibility to them your actions or in this case lack of actions as a professional who is expected to be honest and forthcoming to the public has cost them money. Basically, there is a loss that can be easily calculated and it gives them a basis for making the case against you since it was your decision not to submit a higher offer. 

 

Regardless of our beliefs or what has been trained to us. If a third party is affected due to our actions, even if the intentions are good, they can still build a strong enough case to sue us. By not submitting or considering a better offer you are opening up the potential for this happening. You as a professional business person have to assess your risks considering and decide what is best for your seller based off your state laws, MLS rules and regulation etc.


Again, the chances of this happening are minimal but I know I don't want to be the one they make an example of. I am not saying anyones approach is wrong, this is just something we should all really consider when reviewing multiple offers. Truth is Realtors do things everyday they shouldn't and never get caught. Just use your best judgement but don't make the mistake of thinking your actions don't have consequences.

Hey Thom,

 

I think regarding firming up and getting bumpted it should not happen... however when the lender counters the first offer I have i do give the first offer in first right of refusal else they will get bumped... but I don't do it until that point...  if the first offer counters the bank counter i don't delay in submitting any other offers to the lender and I make sure the buyer knows that.

Thom Colby said:

Raymond - Do you handle Standard Sales in the same way ?  Contractually, a Standard Sale and a Short Sale are no different except for the lender approving the amount of the loss.

 

So in a Standard Sale, if you receive an offer 3 weeks after you have a signed contract, do you require the buyer to "firm-up" or get "bumped" (Both of these terms I've never heard before this discussion !).  I suspect an Agent or Broker could have much exposure if they interfere with their own contract!

 

Glad I'm licensed in CA & TX where it's much more straight-forward.

 

Thom Colby

Broker / Negotiator

Newport Beach CA

The FBI is actually now getting involved in these transactions but the information here is completely inaccurate.  ****The solicitation information was edited out by the site moderators****

You all seem very knowledgeable and you are just the kind of people we want on our team. There is a great opportunity so please contact Ari Afshar to discuss in detail.

 

If such a posting is not allowed on this site, I apologize and mean no harm.

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