Hi Everyone,
I have had my sister-in-laws home listed for4 months. We originally thought the sale would be a regular sale and sell for some profit. However, the values have dropped and we are now in a short sale position, granted its only about 20k short.
My problem is having just read the FHA arms lenght guidelines, it looks like I can't be her agent.
One thing to note as well, that I have drastically reduced my commission to make this deal as close to what is owed and precurred the buyer as well so the lender will only have to pay a super low commission.
Does anyone have anything to help me with determing what is the best course to take? Can I be her agent on a FHA PFS? Since I have had the property listed for the last 4 months, can I transfer this to someone in my office?
Thank you for your help!
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Hi Everyone,
Quick update. My sister in law decided to not pursue a short sale because the would not allow her to do a short without going at least 32 days late on her mortgage. Such silly laws - Thank you all for your advice and guidance - it was a huge help and I truly appreciate you.
First - I am almost certain that you can be her agent. I have never read an Arm's Length that has forbidden a family member or even an agent themselves from representing themselves as a fiduciary in a transaction. At its core the issue is whether or not they the bank or investor will allow you to earn a commission.
Why not just call the negotiator and ask? I have found that too many agents have thoughts and opinions on matters but you have to remember that there are no hard and fast rules in shorts sales. It is up to the bank and the investor what they will allow.
For example, I just closed a sale where the buyer and the seller's kids were dating. Every agent that they/I talked to said it couldn't be done, but we wrote the relationship into the purchase agreement and sought the permission of the bank (both verbally and in writing) and the sale closed three weeks ago. I have found that the primary thrust behind an arm's length affidavit is that the seller doesn't profit while debt is being forgiven.
I would however caution you against finding a "creative" solution to your problem. Shifting the listing to someone else so that the bank will think that they are paying the other agent if they knowling wouldn't have paid you is fraud. Disclose the issue and get permission. If you don't, and the bank or the state real estate board haul you into an investigation, you will be wishing that you did everything on the up and up.
Cameron Piper
Coldwell Banker Burnet
Licensed MN Broker
great input
A few points:
1. Any licensed individual or the seller themselves can represent themselves in a short sale. I don't think anyone is questioning that. The question is if they can be compensated for doing so.
2. Shifting the listing to another agent within the same brokerage is not fraud. The listing belongs to the broker, not the agent. I even suggest that if the listing and or buyer's agent shares the same last name as the seller or buyer, that they have the broker re-assign the agent.
3. Your point about calling the negotiator is great, but you must do so in a manner in which it doesn't tip off the bank of your intentions. In this instance, I would have the sister-in-law call in and ask if her sister-in-law can list their property and get paid for doing so.
You can't do it. However, if your last name is different than the borrowers then the foreclosing lender will not know. Another method is for your broker to assign the listing side and the buying side to two different agents within the office and pay your entire commissions minus his fees and maybe a small fee to the agents involved. If this will be a short sale, I suggest you up the listing agreement and include it on the HUD.
Keep in mind, this is not your listing. This listing is with your broker. So the proper solution is to talk to your broker and make it profitable for you.
In my knowledge, you can't represent your relative in a short sale and get paid. It's a tough one since you already done work. Let us know how it will work out for you, I've never had this situation before.