Buyer submits offers on multiple short sales with no intention of buying them all!

Just curious how you are all dealing with your buyers who want to make offers on multiple short sales. What do you think the legal implications are? How ethical do you think it is? How do you balance wasting everyone's time with your fiduciary duty to your buyer client?

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Permalink Reply by peter on January 30, 2012 at 12:36am

As a buyer, when I wanted to submit multiple offers my agent would have me withdraw the other offer unless I could execute on both. I don't know if that is the norm, but I was ok with it.

Peter

Permalink Reply by Smitty on January 30, 2012 at 2:55am

How do you know they have no intentions of buying them?  Are you talking about investors?  Investors are usually the only group that I know make multiple offers and it's in hopes that ONE will stick. 


We usually weed out a less than desirable buyer by requiring them to do inspections up front and giving them a 45 day timeline to get a mortgage commitment if they are financed.  That way, they are paying an appraisal AND inspection and usually when someone is out $600 - $700 they are a bit more committed to the deal. 

 

 

Permalink Reply by Jeff Payne on January 30, 2012 at 5:32am

Sean, are these your buyers or are they buyers that are offering on your listings from other agents?  If they are your buyers, it is simply a matter of educating them on how short sales work.  I think that there are legal issues if they are making offers without the intention of purchasing but doubt that much could be done about it in a court of law.  I think that it could also be an ethics issue possibly if you are doing this and not disclosing that your buyer is making multiple offers and will only be purchasing one property.....

If they are your buyers, you control the situation.  If you are on the listing side and know they are doing this, you control this situation too and consult with the seller to ask for non refundable EMD and/or inspections to be done upon acceptance.  Make them put some skin in the game

Permalink Reply by Sean Crosier on January 30, 2012 at 5:57am

Thanks Harry! I have only skimmed through that addendum... Great to know.

Permalink Reply by Jeff Payne on January 30, 2012 at 6:03am

Good stuff Harry.  I sure wish Florida would get with the program like California!

I can get on board with this statement for sure:

Many times these buyers were lead around by buyer agents who I know were desperate to close anything fast, because they were under financial duress themselves.

 

 

Permalink Reply by Mark on January 30, 2012 at 1:20pm
A buyer's agent has a duty to his client, not the short seller.
As an investor, I definitely see the other side.  I was the first offer on a short sale that took a full year to close. 
On another deal, I was buyer number 4 on a deal that took 14 months.
As a buyer's agent, I would counsel a buyer to write an offer, but keep looking.
It's only fair- the banks can process shorts faster if they don't like it
Permalink Reply by Eric Simkin on January 30, 2012 at 6:00am

I am not a Realtor. However, from a legal standpoint, I would not want to be the Realtor whose name is on multiple agreements of sale. Lenders will look to recoup losses anywhere they can. So, always air on the side of caution. Do not bring unnecessary attention to yourself or your firm.

Permalink Reply by Joseph Alfe on January 30, 2012 at 9:29am

This is why I thoroughly vet buyers and make them lock into the offer for 90 days.  It drastically cuts down on the walk-aways.  Read about how I set this up here:

http://josephalfe.com/2011/11/hello-world/

Permalink Reply by Mark on January 30, 2012 at 1:24pm
A ninety-day lock is fair, that is more than enough time for a bank to evaluate an offer,
Any more than that is abusive- remember, a short-sale is always contingent on the lender.  
Locking in a buyer is only fair if the lender is actually trying to close the deal.
Not every lender negotiates in good faith. 
Permalink Reply by P Nicolas Velecico on January 30, 2012 at 4:42pm

 

 I have run into these buyers and they way I handle it is that they will loose their deposit if they dont go through with the sale

Permalink Reply by Mark on January 31, 2012 at 5:46pm

So the buyers are locked in forever, even though the seller isn't?  

You don't have a sale unless the lender plays along, and lenders are either great, or terrible at processing short-sales. 

Permalink Reply by Sean Crosier on February 1, 2012 at 6:23am

Not locked in forever. Only for whatever time period they agreed to be locked in to allow the seller to get bank approval. In California the default on our contract is 45 days but I frequently write in 30 days. Seems reasonable to me.

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