Seller taking an offer before it hits MLS
We are seeing a lot of agents pre selling their own own listings that are short sales before putting them on MLS. I know we have a fiduciary duty to the seller not to the bank but this act of not exposing the property to the market to try to get the best offer drives me crazy. It not only potentially hurts the seller but drives down the comps in the neighborhood. I know some of you will say "I only had 2 days to get an offer to hold of the foreclosure" and in this case it can make some sense but usually it's a listing agent either representing both sides or trying to sell it to a colleague in their office.
I recently put on a short sale and got 11 offers after waiting the week to expose it to try to get the best offer for the seller. It sold for $43k over asking. I could have recommended that the seller take the first all cash offer at asking price or double ended it over and over for a lot less money but I felt an obligation to the seller to try to get the best one. Not exposing it to the market would have not only hurt the seller but also affect the comps in the neighborhood. I also thinks it's our job to try and get the highest price for the bank.
I am curious if anyone can tell me why banks with short sales don't require agents to expose the property for a period of time like REO's do?
I think we should have a standard of care not only to our clients but to the neighborhood and to the bank in some regards.
What do you think?
Replies to This Discussion
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Permalink Reply by Jeff Payne on
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The seller may not lose anything waiting a week but they also could lose the buyer that made the first and possibly the best offer if the buyer keeps shopping and finds something else. Lock down the first offer that comes along if you feel that offer and that buyer can make it to the end.
BTW, it was brought up earlier that REO properties wait on the market, not true in my area, Some do but most go under contract the first day.
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Permalink Reply by Stephen Pringle on
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The seller can also lose everything by accepting your pre-MLS buyers offer who backed out after two months. They would never have known if they could have properly marketed the home that there was an all cash offer which was better than your 20% down offer. Most buyers will wait 5 days if they really want the home. And if they don't want it after 5 days they probably weren't serious in the first place.
A lot of REO properties here are requiring a market/waiting period.
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Permalink Reply by Tammy Davis on
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That's alot of "what if's" and you're right we wouldn't know if there was a better offer down the road....but that is for the seller to decide. If we all only had that crystal ball :)
And losing a buyer (whether represented by me or another agent) 2 months later is heartbreaking...but it is one of the risks of handling sales that typically last longer than 30 days.
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Fair enough, we can what if it to death. I can only think of a few times that I had a buyer waiting for a particular property so the whole issue to me is a non issue.
As far as REO properties, which banks do you list properties for and what is their policy?
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Permalink Reply by Tara Samney on
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Actually my cash buyers are usually the ones who back out first. I have yet to see a lender on a short sale give a cash offer more preference. The only thing great with them is if they have no inspection or appraisal contingency and near market value- then the seller will want to jump on it.....but the lender won't if too low.
A REO and short sale are not the same thing. The short sale is sold by the SELLER- neither the bank or a buyer's agent get to dictate how the seller markets their home or who they want to sell it to. Given REOs sell for less than short sales in my area I would think they don't have a great strategy. Underpricing to try to get a bidding war just turns off a lot of buyers to REOs and short sales.
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I know the highest is not always the best but I think it's usually a good practice depending on the market and seller situation to try to see any and all offers. Agents who think they know they have the best offer in hand without really putting it on MLS I think in the long run could harm their seller.
I am waiting for the lawsuit from the seller who claimed their agent never properly marketed their property by not putting it on MLS and claimed their agent encouraged them to take an off market buyer. They could claim they could have gotten more money and then in turn had less of a tax or legal consequence. That would be a hard case for an agent to defend.
I would never do dual agency in any case and I get asked to do it a lot.
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Permalink Reply by Bryant Tutas on
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Great discussion guys.
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xx
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You shouldn't be getting $43,000 over asking price if you priced it correctly to begin with. If the property is priced correctly - and I usually start at market value, then the best offer usually comes in within the 1st few weeks. I don't see how leaving a stale listing up for months waiting for something higher than market value helps.
It sounds like you are underpricing your listings.
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Nope it wasn't priced under market value. We are just in a hot market with low inventory and tons of buyers and that's what happens when you give it a week of exposure in our market. The buyer's are setting the market price.
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@ Tara
True about underpricing - as a buyer, when I see a property listed @ significantly less than market, I assume it's just another "insider" fraud deal and don't even bother with it.
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Permalink Reply by Sheila Vardakis on
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We are to get the best possible price for our sellers. Not putting it up on the market is cheating your seller out of the very situation you would have missed had you not. The banks are always going to do a BPO or appraisal. Had you taken the first offer that was $43K less, the deal may have fallen apart. as we all know, the house will sell for what the market is bearing, not what the seller wants to what the house appraises for. therefore, we have to seek putting our listings out to the masses to make sure we are getting the best outcome for our seller. there are underlying consequences to a pocket listing and to me, those agents are short lived in the business. you can't operate that way and get away with it. we are held to a strict code of ethics and that couldn't be further from ethical.
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