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Bank of America's Bogus War Against Short Sale Dual Agency

Let me begin with the fact that I have never been a dual agent on a traditional equity sale.  The only sales I have ever “double ended” were short sales.  In fact, I began doing dual agent transactions out of necessity on short sales in order to hang on to buyers and get the transactions closed.  I find that if I can communicate directly with the buyer they are less inclined to walk, and I also find that I am better able to locate a buyer who will be patient enough to wait through the process.  So, I had to consider dual agency to truly help my seller clients who were in financial distress and up against powerful bureaucracies.


12433923070?profile=originalNow apparently, Bank of America has decided that dual agency is “problematic,” and has adopted policies to discourage it, including a substantially lower offer of commission to real estate brokers who work both sides.  For a short time this year, Bank of America even adopted a mandatory addendum prohibiting it -- but they backed away from that pretty quickly and instead adopted policies to create large financial incentives against it.  Further, they dictate that even if the seller or buyer could make up the difference in the negotiated commission (which most can not) they prohibit that as well.  Wow.  



I spoke to a Bank of America negotiator just this week that told me that dual agency was “problematic” and cited the fact that it wasn’t allowed in certain states to support his claim.  Now in that particular instance, they had a full appraisal of the home and accepted the price and major terms of the sale -- the only big problem they had was with the commission.  He categorized their position as “not negotiable.” Another negotiator freely admitted that the commission I negotiated with the seller would be paid in full if two agents were on the file. Wow.



My problem with their stance is that my state (California) has not outlawed dual agency, and I really don’t think Bank of America should be in charge of that decision.  And of course, since they are so large (in fact “too big to fail”) the policy decisions they make are beginning to have de facto legislative effect on the real estate market.  By discouraging dual agency to the point where it is not economically feasible for a smaller or one person brokerage to do it, they are in effect restricting the kind of services I can provide to clients in distress.  And, I feel it interjects Bank of America too far into my client relationships.  



12433923095?profile=originalFurther, I find their policy, dare I say it … hypocritical.  In my area MLS, agents are required to disclose whether they have a “variable rate” of compensation for dual agency, i.e., if you are going to discount your commission when you represent both sides, other agents must have notice of that fact.  I have seen no such disclosure on the many REOs that are listed by Bank of America REO agents.  So, apparently dual agency is not as “problematic” when Bank of America wants to get their own listings sold quickly and off their books.  Wow.  



At the close of my discussion with this particular negotiator, he did try the old  “investor guidelines” routine.  However, because I have run this issue up the chain in Bank of America before, I feel confident in saying that this is coming from Bank of America.  And, I think it is a dangerous and disruptive policy that does further harm to homeowners in financial distress in California and in other states where dual agency is allowable.  The irony for me personally is that bank/servicer inefficiency actually inspired my own decision to begin doing dual agency.  My question now is --  what will Bank of America do next?


And haven’t they done enough already?



Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

* Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice and is for information purposes only.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Copyright © 2011 Tni LeBlanc *Bank of America's Bogus War Against Short Sale Dual Agency*
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If you are an owner of a home with a second loan that is a Home Equity Line and you are having trouble paying your mortgage you should do something about it right away. I know you have probably heard that banks are taking up to 2 years to foreclose so you have plenty of time, but there is a dirty little secret in the mortgage world.  HELOCs are not entirely like traditional mortgages, they are more like credit cards. If you do not pay your first mortgage your lender needs to find a way to collect the money or take your home back. However, with a HELOC the lender can turn the account over to a collection agency, get some money for it right away, and you are left to deal with the debt collector.  

This can become a potential problem if you decide that your best option is a short sale. If you decide to sell your home as a short sale it is often easier to negotiate the payoff to the second if it is still owned by the bank, rather than the collection agency. The bank sold to a collection agency for pennies on the dollar, and would be more likely to let you go for the amount that the first lender offers.  By the time it goes to collection that entity had invested money and will expect to make a profit by getting a settlement larger than what they paid. If you cut out the middleman (in this case the collection agency) it should be cheaper.

So, if you can not pay your mortgage, don't just stand there, DO SOMETHING.  Whether is is going for a loan modification, refinance, or short sale, get started earlier rather than later. It will be less stressful in the long run, and generally much less complicated.

 

If you have any questions about short sales in the Silicon Valley please feel free to contact me.

 

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

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Just out of curiosity as I was browsing the shortsale deals that have closed in my area. I found that several transaction had the same agent listed as the Listing and Selling Agent. I have not been in this type of situation before so I would like to know if anyone has any feedback on this.Lenders do cut commission as we are all aware in shortsale situations. Some reduce it more than others, depending on the overall numbers shown in Hud1.Common sense dictates that lenders will cut the commission when they see that the Listing Agent is double dipping in the sale. They feel that they have already taken a huge loss and want to stick it to someone else. For those who are involved in representing both sides, what have been your outcome?
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