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
-
Permalink Reply by Stephen Pringle on
-
Thank you. You are right. It's nice to know there are some agents that do put their sellers interests ahead of their own. I am just surprised banks aren't requiring some marketing time in order to insure they are getting the best offer.
-
Permalink Reply by Wendy Smith on
-
REO's are "pre-sold" all the time, the practice however is not in the best interest of the short sale seller.
Stephen, you received an offer $43k over list? was the starting list price low? I guess it's relative, on a $1m home, $43k isn't much (less than 5%), on a $300k home, $43k is signifigant, closer to 15%
BTW, many short sale lenders DO look at market time. It raises an eyebrow when the house is listed, and immdiately under contract, hmmm...asking price too low?
Also, there are those listing agents that low-ball the list price - a strategy that I do not subscribe to and winds up with wasted work
-
Permalink Reply by Karen Butler on
-
I think that if an offer comes in that's "acceptable" to the seller, therin lies the decision. There is nothing that says a seller has to wait for x period of time to wait for other offers that may or may not come in. All markets aren't seeing 11 offers on a property. Some are good to get one on a short sale. Not our call, leave it up to the sellers. I tend to send in a market analysis with my offers to the lenders, that way they can see what our market is doing, so it doesn't matter the amount of time on the market. I think that as we advise our sellers on market conditions, they are able to make better decisions.
-
Permalink Reply by Jayne Sanders on
-
I love the discussions even though some people have a misguided idea of pricing, banks sellers etc. I did my 1st Short Sale in 1983 in Texas...obviously very different then from now and have been exclusively doing Short Sales for the past 6 years, so I know what I speak of. I double end a lot of my short sales. Part of my listing agreement is that it does not go in MLS for 7 days. The reason is that many of the buyers agents are totally clueless with regard to short sales and submit offers that are so loosy goosy that I encourage my seller not to tie up the property unless we can verify the true intent of the buyer....they MUST put up their money, do their inspections(to determine if they wish to proceed or adjust the offer) and then they are locked in for 90 days and I don't take back up offers....Sound familiar...just like a traditional sale. We also negotiate a price to within the range of what the bank would probably accept(you have to know the ratios) Fortunately I have have a large pool of investors that will follow this proceedure and in turn I alert them when I know I will be listing something. They send the offer the day it goes in the MLS. Rarely if ever do I lose the buyer. I did this as I got tired of buyers not wanting to put any skin in the game, not check out the property, and then when we had a response from the bank their agent could not find them or they bought something else...HOW DOES THAT HELP MY SELLER?.... Obviously the procedure is explained to the seller and they sign up to do it. My fiduciary is to the seller. If the bank comes back with a high counter it is usually because they did a drive by BPO...I attend every one of my interior BPO's and appraisals to determine if they are likely to give an accurate value...I also point out all the flaws and give them a contractor estimate. The name of the game is to be be prepared and I am not bashful about contesting their counter offer price and I usually win.
-
Permalink Reply by Tara Samney on
-
Great post! good point about locking them in for 90. I get way too many offers from buyer agents in which there is a short sale addendum giving them only 2 weeks to get approval and is presented as buyer really wants house...but wants to jump on something if it comes up versus an endess wait. 90 days makes sure agent has given realistic expectations and property doesnt get taken off of market. Thanks for sharing your history with these.
-
-
I have been in your shoes toooo many time. I had to figure out something and this process has been working for over a year
-
-
That is a question I have been asking too. I was looking for properties for a client when the perfect short sale hit the market. I contacted the listing agent within the hour but he informed me that the home was under contract already. Mind you; the bank accepted the offer too (this deal was done before it was placed on the MLS as a mere formality). Of course I asked to be the first back-up offer but the bank already approved the sale. I discovered that the listing agent offered the home for sale to an agent who offered 50K less than my clients did. Bank accepted a low ball offer because the home was never properly marketed and the sale lowered values in the community too. It would benefit banks for short sales to look at more offers than to only look at an accepted offer by the seller. The only people who benefited here: the agents and the sellers.
-
Permalink Reply by Smitty on
-
Really? The buyer didn't benefit in any way? As far as I can see everyone in the transaction won. The sellers got their house sold quick, the buyers got a good deal, the agent(s) both got a sale, the lender got and accepted their NET.
Banks don't accept LOW ball offers. Let's get that clear. So if a house is worth $300,000, they won't take $150,000 for it. They take offers in line with market value, so even though your clients would have offered more money, the bank took the offer that was submitted and made sense to them as market value. Lenders MAY take an offer of $240,000 on a $300,000 home, as some lenders will take 80% of the BPO price which, you would not have access to. So let's say your clients offer was $300,000, it's completely feasible that the home sold for $250,000, as that is within that 80% range.
Yes, listing is a formality, and it's a bummer that buyer's agents miss out on some opportunities, but most list agents connecting a buyer with a seller before it hits MLS are doing a service to the seller, not detriment.
-
Permalink Reply by Jeff Payne on
-
Anja,
The banks do their due diligence and the offer must have been within their acceptable range or they would not accept the offer. It would NOT benefit anyone if the bank looked at more offers, they have a hard enough time looking at one offer. Beside that point, it would be illegal for the seller to enter into contract with more than one buyer. Imagine how upset you would be or your buyer would be if you were patiently wating the short sale approval only to have someone make an offer in the 11th hour that nets the bank merely another $500.
Just because another agent beat you to the punch does not mean something was illegal or unethical
-
Permalink Reply by Tni LeBlanc (805) 878-9879 on
-
I agree some people are abusing the system.
However, some seller give you literally days or weeks to sell the property before a foreclosure sale. So it does depend on the situation.
-
-
Tni,
Good response. I agree that there are those that abuse the system but think it does not happen as much as some think it does.. The bank has plenty, (too many), of safeguards to make sure the offer that they are working meets their guidelines. Time is of the essense with a short sale and getting a good offer to the lender ASAP is the key :)
-
-
The very act of listing it on the MLS when it isn't for sale (an offer has already been accepted) is an act of bad faith.
You're trying to mislead the lender (by sending them a copy of the "listing" ).
There can be no other purpose for the act.
It isn't "a formality", it's a violation of my MLS's rules, an abuse of the system, and probably fraud, depending on who is investigating you.
Many agents here have taken the whole "I have no duty to the lender" thing to an absurd extreme.
One that I doubt a jury of your peers would agree with.
Enjoy your stay at "club fed"!
© 2024 Created by Short Sale Superstars LLC.
Powered by
**********************************
like buttons