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Dual Agency in a B of A Short Sale

Posted by Jonathan V. Maceli on December 29, 2010 at 5:15pm in Short Sale Discussions

Having been in the process of purchasing a new home for my family for over a year, submitting many offers, having a transaction cancelled a week before closing, my wife and I decided to go into our current transaction un-represented.  We are familiar with the area of the home we offered on and the comparable home values.  When we sat with the listing agent on a short-sale property we are really interested in to sign the RPA, she included another "agent" from her brokerage firm as the "buyer's agent."  This was obviously done to get a full commission from the bank at closing.  Is this standard practice in dual agency transactions such at this?

 

Thanks!  

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Replies

  • Jonathan V. Maceli January 1, 2011 at 3:18pm

    When I stated that I went into the transaction unrepresented, I meant that I contacted the listing agent myself and had her write up the offer to her seller on behalf of me, the buyer.  With this being a short sale, I was not concerned with getting a better price.  The list price was well below what the property is worth.  I was thinking that if we worked with the listing agent, my offer may have more appeal to the seller and agent.  We are putting down about 40% and we are not investors.  I thought that the bank would pay 4% commission to the LA which is better than 3%, and thus, help the attractiveness of our offer.

     

    I am being represented by the listing agent, however, on the RPA it shows another agent's name as the buyer's agent.  The listing agent said that it was to get the 6% from the bank.  I have never had a single conversation with this other agent and have dealt soley with listing agent, who happens to live directly across the street from the property that I have offered on.

     

    We just got a counter from the 2nd lender (it has two loans on it, both with B of A).  We agreed to a $6,500 contribution POC and the sellers have agreed to $10K promissory note.  It is now going to the investor for the next level of approval.

     

    Thanks for all of your comments.  I know absolutely nothing about real estate law and seek the advice from this site to help me get a better understanding of this process.

     

    Cheers!

  • Marsha Umansky January 1, 2011 at 1:17pm

    It is not that the Buyer decided to go "unrepresented". I suppose, the Buyer was hoping that by dealing directly with the listing agent he would secure the deal and/or would get a better price by eliminating the 2nd commission (erroneous assumption).

    The "Dual agency" laws differ by State, but regardless of  what is "standard" in Buyer's State there should have been some kind of disclosure. I just don't see how another agent could be "included" into transaction without any explanation.

     

     

  • Jeff Payne December 30, 2010 at 6:32am

    Harry,

    Good points!  I am still trying to figure out how this buyer is not represented, it looks like he is represented by the listing broker or an agent in his office.

    Still also trying to figure out why a buyer would want to be unrepresented.

    Harry Clay said:

    You have it all wrong.

     

    The listing agent was just being extra careful & respectful of YOUR best interests as the Buyer, as opposed to your erroneous implication that this was "obviously done to get a full commission".

     

    I'm a listing agent that almost always requests 6% on the listing contract (to be split 50/50 between cooperating Brokers), well knowing that BofA almost always knocks the commission down to 5% on their Short Sale counter offers...

     

    ...& if the Buyer's side is then represented by a Buyer's Agent who is also employed by the same Broker (the definition of Dual Agency)...

     

    ...many Banks have absolutely no problem reducing the commission further, down to 4%, due to Dual Agency.

     

    The fact that the Listing Agent included another agent (understandably from their own firm), by definition means that Listing Agent wasn't being greedy, but rather, very judicious. 

     

    The Listing Agent isn't going to earn more; the agent is actually going to earn less than if you had been represented by a Buyer's Agent from another brokerage.

     

    This example, in itself, shows you how little you actually understand Real Estate law, & this might be good reason to reconsider the idea of entering into your next transaction unrepresented. 

  • Jeff Payne December 30, 2010 at 6:05am

    Jonathan,

    You decided to go unrepresented?  Sounds like you are represented by the listing agent and you are in a dual agency.  I am sure that the listing agent thinks that they need another agent on the contract to get full commission which can be true some of the time with BofA depending on the investor. 

    Not sure how you are unrepresented though?

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