I am being asked theses questions by an agent that I negotiate short sales for. She is a California agent who is going to short sale her residence. Her 1st and equity line are with Wells Fargo. She is wondering if Wells Fargo will decline to pay another agent in her office the listing agent commission? Any problems you can foresee with Wells Fargo paying full commissions if both the listing agent and selling agents happen to be both working for the same real estate office that she does? Are there any arms length issues that have come up on Wells Fargo short sales in these situations that have been experienced.Do you recommend that she act as the listing agent on her own short sale? We are trying to structure this short sale to avoid any known problems of this type with Wells Fargo.
As always, thank you all for sharing your experiences and wealth of knowledge.
Eileen Johnson
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Kevin Donaldson said:
Why would you want to even take a chance? I would always suggest using someone outside their own firm. Guaranteed there will be no issue. They can and will sometimes check and do you really want to blow up your own deal. Find someone outside that knows what they are doing.
Another tip when negotiating with the same bank in California with two loans from the same bank and there is recourse on the 2nd (the 1st is protected by SB931 effective Jan 1st this year) is using case law Simon vs. Simon 1992. Google the case. Commonly referred to as the "One Action Rule" if the same bank forecloses on the first,they have taken there one action (only in Non-Judicial foreclosure). I use this quite a bit in escalations. Keep in mind the negotiator will know diddly squat about this and frankly does not care. However, the Chief Loss Mitiagator or SVP is well aware of this law if they foreclose. You have to be willing to take them to the mat per say. Don't roll over.
Hi. I am an Agent and my own residence was shorted last September. The Listing Agent was from my Brokerage. My Lender was Wachovia which is now Wells Fargo. There were no issues. My Lender also at the time offerred funds for moving. The Buyers were represented by another agent and brokerage.
So I would check with the Lender you are dealing with and ask what their policy is.
Ellen,
I have listed and sold 10+ properties for agents / escrow officers / and Mortgage Lenders within, and affiliated with, the KW brokerage I used to be affiliated with. I never had an issue with the lender on any of them. All of them closed and all attained FMV at the time. The MOST important thing to do is treat your fellow agent-seller just like any other seller - no special treatment - NO $ to them - NO Referral Fee - NO Commission Split, NOTHING to the agent-seller. My personal practice is no double-ending on any transaction BUT I strongly recommend others not to double-end any short sale transaction where another agent is the seller. Also, make sure the seller-agent does NOT represent the Buyer and does not receive a referral from any agent who does represent the buyer. Basically, keep it above board, professional, a true Arm's Length, keep the agent-seller out of the transaction except as the seller, and you will have no lender issues, no reduced commission, and no E&O Issues.
Agent-Short Sellers can be a great source of listings and sales - just don't share any $ with them and make sure everything is well-documented like you would for any other client. The only difference in these transactions is you will have to be more sensitive to your co-worker's personal plight when discussing the transaction with anyone.
Best of luck helping your agent co-worker,
Thom Colby
Broker
Newport Beach CA
When my husband and I relocated to Southern California, we were in the position of having to short sale our own home (EMC Mortgage - Chase). We struggled with this same issue. I contacted another Broker I knew who successfully short sold her home, to find out what she did. She had an agent in her own office list her property, but she avoided any conversation with the negotiator about who the listing agent was, etc. She didn't DENY that her own office was in fact the "listing" side.....but she didn't come clean about it either. (I understand that the contract shows who the listing Broker is, but in her hardship letter, she neglected to mention the fact that she herself was a Real Estate Broker ~ the listing Broker).
I'm not saying she did anything at all "wrong" - who am I to judge? but truthfully, we were not completely comfortable with the way that other Broker chose to handle it. We didn't want to do this without full disclosure. We decided to have our daughter (also a licensed real estate agent who works under our own Brokerage) list our house. Our daughter is a new agent who lived out of the area where our home was located, and we wanted her to get some short sale experience. Our short sale package included our Hardship letter, where we CLEARLY said that we had our own real estate Brokerage, that we were the Listing Broker and were relocating for business. We also included a copy of a signed agreement between our daughter and our Brokerage, exempting her from any commission split with us. Once the lender received the short sale package and assigned the file to a negotiator, the negotiator outright asked our daughter if she was related to us and she promptly told him YES. She took this listing with the full understanding that the lender may or may NOT pay her. As you can imagine, we were all on pins and needles, waiting for the approval letter and what information it contained with regard to the commission. She received FULL commission, as did the selling agent ~ 3% each side. At the close of escrow, we also instructed the escrow officer to send 100% of the commission to our daughter directly, to ensure there was not one ounce of even the PERCEPTION of inpropriety on our part. We didn't want one penny of that commission coming into, or going out of, our bank account.
We've also heard about agents short selling their own homes and NOT getting paid at all - whether or not the listing agent is from their own office.
We wanted to err on the side of full disclosure and it worked out for all of us. Our daughter got paid and has enough money to keep her rolling as she learns the trade and we successfully short sold our own property.
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