Down in South Florida, I keep a close eye on new properties coming onto the market as possible investment options.
Increasingly I see a new entry go into the MLS, I would go and take a look and be amazed at some of the great deals out there, but when I alert my buyer agent to call and arrange a showing, many of them responded with "There is a contract on this already, you can always submit a backup contract if you like". Now if I ask to see the property first, they would refused because there is already a contract, they want you to submit a backup contract site unseen.
After I ran into this about half a dozen times a pattern developed. Talking to a few others it seems these properties already have a potential buyer lined up already, but in order for the bank to approve they are obligated to put the property on the MLS to look like it was "Active and Available for two seconds"
Anyone has any idea or comments with this pattern? Is it a good thing or a bad thing? Seems like it would be in the best interest of the seller and the bank to get the best deal possible, and to pre-determined a buyer and closed it off for everyone else they are not doing that. I have a hard time believing the bank is aware that there wasn't an open process to solicit the best deal. Is it done because the listing agent had a buyer lined up and he/she can take both ends of the commission and if they end up selling in the open market they most likely would have to split 50/50 with someone else?
As a potential buyer in these situation are there any suggestions on how to get the foot in the door?
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We see it too, on REO, short sales and equity sales. The best properties go very fast. Our REO properties have multiple offers sometimes BEFORE they hit the market because people are watching them and buyers are lining up. Our short sales have buyers waiting for them regularly. The best interest of my seller is for them to get an offer that is acceptable to the bank and for them to be relieved of the burden of the mortgage without a deficiency.
Possibly. However in the cases I ran into they had contracts before they put into MLS, I don't think it was a matter of entering into MLS then 2 minutes later they got a call. It was more like it came on MLS on Wednesday you call them and they said they already had a signed contract "yesterday" and when you asked them why they put it into the system as "Active Available" they just go "uhhhh well hmmm...the owner said to do it that way" and some will say it was done to satisfy the bank.
I even had cases where I wanted to submit a backup contract and they dance around the issue. Just smells like they are playing a game. One time spoke to a guy on a Monday and he said yeah you can submit a backup contract on Wednesday, and I sent it to him and no response. After two emails he replied "sorry already had a backup contract signed on Tuesday should have offered full asking price" but then why he told me to submit one on Wed and I did offer full asking price".
Is there a way I can ask for a formal rejection note from the seller to make sure no one is playing games?
Jeff you beat me to it. I was trying to find that HUGE thread that we debated with those two agents, but I couldn't find it :(
Smitty, I was thinking about the same thread when I saw this post. It is a very interesting discussion, with so many opinions. It is worth reading.
HUGE Thread
Ahhh, you found it. Great. I think it says it all.
Jack,
We are starting to see much of the same thing you are experiencing in your area here in Phoenix. Our inventory is very low right now and there are a frenzy of buyers. We are really starting to see some crazy things going on which include these listings that in my opinion are not being properly marketed for the benefit of the Seller and lender for the best offer. We have made it a policy to list our short sales for at least 5-7 days. We collect offers during that time and typically have 10+ offers to share with the Seller to select the best offer to submit to their lender. I think what we are seeing is agents that represent Buyers door knocking distraught Sellers encouraging them to list with them because they have a Buyer. This in my opinion is not in the best interest of Seller.
Hi Paula and Others,
I am also from Phoenix and recently listed a short sale in Surprise (a city that boarders Phoenix). I put the listing in the MLS, at 9pm, and within an hour had an offer in my email, and by the end of the next day, had 32 offers, total. Surprisingly I got several calls from investors that wanted me to represent them instead of using a buyer's agent. I told them I would not represent both parties and that they would need to have a Realtor represent them. Many investors are having trouble getting their offers accepted, so they use this ploy, hoping that the listing agent will want a larger commission and will choose this person's offer over the rest that are represented by other agents. It saddens me that Realtors would do this type of thing. As a listing agent, it is vital to actually have your clients reject offers in writing, as you could be inviting big trouble, in a multiple offer situation.