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 Mark on
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I'm not looking for business.
My email isn't fake, but this profile, like the ones I use at all internet forums is fake.
No one needs to know all of my personal information for the purposes of a chat room, and I have no interest in hearing about posts or opinions I may have had years ago, should a potential employer dredge them up.
I'd suggest you (and everyone, for that matter) do the same thing.
As a manager, I've already had to *try to* look *around* a potential employee's drunken "facebook" postings, and it was a challenge.
I don't know if a future employer might be a Democrat, hates cats or loves something I detest, so on the internet, I'm often "Mickey Mouse", "Zork" or "Bob" - but I do not ever create multiple identities and chat with myself, as you have alluded.
I joined this forum looking for information, not to "troll" or to be ridiculed by you.
I am an agent, I have MLS access, I am an investor, and I've been involved in many businesses for many many years.
I've turned an empty Laundromat into a thriving auto-parts store, Fought city hall and won, more than once !- I've picked stones in a beanfield, coached millionaires on how to *stay* being millionaires, and repossessed televisions in the ghetto. I've been bankrupt, and "wealthy" - I'm a nurse and a mechanic, with half-a-million Hilton "Honors" points in my account from a job traveling the southwest. I hang out with guys who change oil, and guys who drive Ferraris. I'm also a student - back in college for the 4th? time, I forget, might be the 5th...@ 40 years old.
You seem "hell-bent" on "outing" me as an ignorant & simpleminded boob - whatever, you're entitled to that opinion, obviously I disagree.
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I really appreciate having you part of the discussion. Ethics and fair dealings are really important to my business and it's nice to know there are others out there that share the same philosophy.
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Permalink Reply by Jeff Payne on
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Stephen, I have no issues with your point of view, I just disagree that this is "rampant" . Mark just wants to disagree
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Permalink Reply by Bryant Tutas on
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WOW! Took almost 170 comments for the fangs to come out :) great circular discussion guys
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This discussion did get a little off track. And as online discussions typically do, turned into a pissing match with people insulting each other, accusing posters of using multiple accounts, and beating on straw men.
There is an old joke about what happens when you argue with people online that I won't repeat since it's not very PC, but it's funny because it's true.
Interesting discussion though for the most part, and it's been enlightening in many ways. I hope all of you who say you're ethical truly are. You don't need statistics to know that there are plenty of agents who let expediency trump ethics, and that's a slippery slope to start down. I'm glad this forum exists and we have a place to have discussions like this.
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Permalink Reply by Smitty on
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I AGREE WITH GEORGE!!!! I hear harps playing. It has been one of the best discussions on this topic I've seen.
My only point is you cannot assume premarketed listings are unethical unless you have intricate knowledge of the transaction. I could never assume I know anything about another agents listing unless I call and start asking questions, and I MAY do that if I think things don't make sense or add up, so I think if George and Stephen truly feel wronged in some way then they should challenge it. I would have no problem opening up every one of my files to the local board of Realtors.
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Thanks for your contribution Smitty..
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George, I want to apologize for letting this get off topic. There were way too many assumptions being made and the one that that I hope we can agree on is that each and every short sale is completely different. Each seller has different needs and there are rarely two short sales that are exactly alike. With that being said, I do know that there are illegal and unethical activities going on out there and can speak for my area that there is a very very small number of deals going under contract before they hit the market. Since Jan 1, I found one that actually had -3 DOM in MLS and a 2.7% on day one, and 2% on day two. All of those had different brokerages on each side.
Does having a 5 day market period mean the home will sell for more than getting an offer on the first day? Maybe, maybe not. Again, it just depends. Slimy agents would find a way around it anyway.
Does the bank need to have a policy stating property needs to be on the market for a certain amount of days before offers can be accepted? I would think if they thought this was a problem, they would make that requirement. It would be a bit hypocritical since they dont require it on their REO all of the time.
Back to the original post.... Not all banks require their REO to be seasoned on the market. Some do but I can tell you that Bank of America does not, at least the Bank of America REO that I list do not require it. Some of the investors require it and some of the files that need MI approval, but more often than not, they dont require it.
Assuming that it is harming the neighborhood is only an assumption. What will happen if the 43K over list price offer does not appraise for list price based on comparables? You will only find that out after the bank agrees to the $43K over the asking price offer and approves the short sale. If buyer walks, what happens to the seller? I know that I am making assumptions here now but that could just as easily harmed the seller. Great for the neighborhood if you can pull it off but bad for your client if you can't.
If the OP got 11 offers in one week, what would it hurt to wait another week to see if you can get even more offers? At what point is a property seasoned on the market? What if there were 11 offers in the first hour? Is that enough time?
You and Stephen make very valid points and I appreciate you being here sharing with us.
It is an interesting topic and one that needs to be discussed.
Again, my apologies for letting this get off topic.... I just tend to get a bit sensitive when fraud, and ethics violations are being thrown around without any real proof. I rarely double side transactions, last year out of 117 transactions, I had one that was double sided and it was a short sale that was actually quite strange (good story). I also rarely have short sales go under contract before they hit MLS. I know it happens but I certainly would never accuse anyone of unethical behavior unless I knew the entire situtation and story. As far as ethics go, I am the first one to walk away when things start to look and smell bad no matter the financial gain. My reputation is very good and I plan to keep it that way.
Back to the regularly scheduled program
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OK, here is the story of the one double sided short sale that I did...... Keep in mind that everything was fully disclosed.
I get a call from a buyer who was referred to me by a previous short sale seller. They knew she was going to buy a short sale and referred me. Buyer wanted to purchase the home that she was renting, seller agreed that he would sell the home to her. Seller called his bank, a very large regional bank, and told the bank that he wanted to sell the property and that his tenant wanted to purchase the home. Bank told him to contact a realtor to sign a listing agreement and to sign a contract with the buyer. The bank would not give seller a price, said to have his Realtor do a market analysis to establish price. Fast forward.
Listing agreement, purchase agreement both signed and sent to bank. Property was not put on market as per the banks instructions to NOT put it on market, they just needed an MLS sheet and didn't care that it was not actually ever "on market" I did a CMA which is how we came up with offer price, plenty of good comps in the neighborhood and 3 homes almost identical to the subject house. Easy CMA.
Bank sends me their short sale package, typical stuff. Bank processes short sale, FULL disclosure that tenant is the purchaser, bank had copy of lease and even called the tenant/buyer to get access for their appraiser to get in to do their appraisal.
Appraisal comes in $5000 over offer price, bank asks for $5000 more, buyer agrees. Buyer now has her appraisal and it comes in at the original offer price. Buyer is OK with the extra $5000 because she wants to get it closed.
Long story short, this one was under contract before it ever went into MLS, buyer paid the banks appraisal amount which was in my opinion a fair number. Bank fully aware that seller was renting to the purchaser and fully aware that the property was never on the market. The short sale was approved and closed with full disclosure to all parties including the bank.
Everything fully legal and disclosed, agent double sided the transaction, home sold for $5000 more than the buyers appraisal. True Story.
My point, we should never assume we know what happened unless we have the facts of what actually happened.
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Permalink Reply by Mary Funderburg on
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That's awesome, you know what your doing! :)
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In my experience they only require that we have put it on the MLS, reduced or raise the price to match the purchase contract and that's it. It does have to be active on the MLS, but not for any significant period of time,
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