Worked 6 months on a file. Short sale gets approved on March 1st. We can’t meet the deadline to close by March 25th. We expect the bank to give us an extension afterwards, b/c it’s all cash.
The property’s MLS listing expired on April 1st, but property went under contract on March 15th. So it’s currently still under contract.
But, 2 weeks ago, homeowner gets another agent buddy of her’s involved. She gives him authorization to contact bank. He submits offer higher than ours.
THEN, BANK THROWS US OUT OF THE PICTURE!?!??!?
I’m the listing agent, with the property under contract, but I have no say in this anymore?
This makes me sick to my stomach, if anyone has a solution to this, PLEASE post it. :huh
If your the listing agent then technically you should be happy for your client because your fiduciary responsiblity is to net the seller the highest and most in the shortest amount of time. What I might recomend is do not put the listing on the mls until you are very sure you are about to have approval. Have the seller sign a withhold form and also use a facilitator agreement. Then you dont have any Fiduciary Resb. except confidentiality. When you feel you are going to get an approval then throw it on craigs list and mls and find your end buyer…dont forget to entertain seller financing…you dont want to miss an opportunity to use other strategies like maybe a c/d or lease/option or lease purchase.
One more thing…Approval March 1st and you could not close by March 25th with an all cash offer?
Something is not right there…you should consider getting a new title company or something…you should be able to close an all cash offer in less then 10 business days.
Love2invest,
It’s a shortsale, so the seller is netting nothing. My goal is to get the deepest discount from the bank and flip it. The cash deal didn’t close b/c the end buyer w/ a mortgage backed out. I did what you mentioned though, I listed the property only after we were nearing the approval letter. Listing the property helps, b/c if you list it at the right price, it will influence the bank’s decision to accept an amount near the listing price. Not sure what you mean by the withhold form or facilitator agreement, never worked with those documents?
Anyhow, good news today… I got in touch with the bank rep and was able to have them re-accept my cash offer and dismiss the other two offers. I’m crossing my fingers for another approval letter within the next 48 hours!! :biggrin
I don’t mind the taste, but the diarrhea is not for me :flush
NJ,
If you sign a listing agreement you are representing the seller with fiduciary resposibilities. There could be some conflicting representation if you were trying to sell the property (netting the seller the highest price, even if they cannot recieve anything from the sale) and the fact that you have a low offer on the property that youare trying to convince the bank that is fair. It could become an issue if the bank comes after the seller for a huge deficiency, one that you helped induce and the seller decides to sue you for not trying to get a higher price.
I am not saying you would lose in court…just remember that people love suing these days and having to go through court probably isnt anybody’s idea of a good buy/sell, no matter what the profit!
I am not an agent but an investor.
I do short sales all over the country and I always have the sellers sign a compensation agreement, stating that they are hiring me to conduct a short sale and that upon closing I will be compensated ___%.
I do this for the exact reason that happen to you. I typically purchase the homes and resell them but some times you deal with people who are not on the same page.
Then if you have a situation you can file this with the city and your lien will be put on title, like a mechanics lien. Then you get paid even if your seller or another agent backstabs you.
I understand what you mean, but keep in mind that my offer to the bank is subject to the bank NOT pursuing the deficiency judgement. The bank MUST settle the mortgage at the reduced price. This should be a clause in every short sale you do to protect the homeowner.
I understand what you are saying…so if the bank decides they do not want to agree to that contigency then do you walk from the deal? I have had banks not agree to that but never come after a homeowner for the deficiency. It seems that you would have to do that many more deals to get one to close.
Do you put that write on a Addendum to the Purchase agreement?
Also, are you purchasing the home in your name? If so, have you ever had a bank say they wont pay you a commision?
If I’m the listing agent, no, of course you don’t want to also be the buyer. Major conflict of interest for the bank. Find an investor to purchase the property or if you have the funds, get a trustworthy friend/family member to be the buyer.
I haven’t had a bank disagree to it yet. It’s put in the cover letter of the short sale package, and the bank must indicate satisfaction of loan in the short sale approval letter. If a bank says no, I would indicate to them that the homeowner has no funds, which is why the lost the home in the first place!
I’ve seen a friend’s approval letter stating that it does not satisfy the loan amount, my friend ignored it, and a few months later the bank contacted the homeowner for the $80k deficiency. He told the bank the homeowner doesn’t have any funds, which was true. Not sure what happened afterwards, still have to follow up.
Our listing agreements are good from 9 months to one year to avoid potential issues like this. And buyers back out all the time so definately protect yourself (and your client). Sounds like a matter of timing for you. I never receive higher offers, I always get lower offers. In my case, it helps with my negotiations : )
Good luck
Solution: you get the home owner to sign you the deed. Then you have ownership in the property. For another buyer to buy the house, they have to purchase it from the person with ownership interest - that’s you. This only works if you are truly purchasing the house. If you’re the listing agent, however, this won’t really work - since you never purchase the house. When it all comes down to the bottom line, you’re only advertising and marketing the home. From that angle, you just do like all the real-estate agents I run into do. They want me to sign an exclusive contract that allows only them to get a comission from the sale of the house. Even after that contract expires, they still get their comission for a few months if I, or anybody else, finds another buyer. No, I don’t sign with them often. If I do, its when I’m at the point of being ready to sell the homes that I already have ownership interest in. Then I have them list, market, advertise and sell it. I pay them their comission. On to the next short-sale.
Dean,
Just to backtrack, this is a double close. My investor is first buying the house cash, then flipping it to an end buyer. I did have the owner notarize the deed over to my investor, but I haven’t recorded it yet b/c it’s just for purposes of flipping the property.
BUT, now my attorney is saying that since she’s married, her husband also has an equitable interest in the property. So the deed has to be notarized by both of them to be valid. This is news to me.
This throws things off, because at this point… the owners aren’t so friendly any more and I don’t want to reapproach them just yet as if I need the deed to make the deal work. I feel they’ll sense weakness and refuse to sign. I think the other agent promised them money, while I told them clearly from the start that they would get nothing except avoid foreclosure and save credit.
So what I plan to do now is hopefully get the new approval letter from the bank tomorrow, which will give me exclusive rights, and then have the owners meet at the attorney’s office to get the documents notarized.
This went from a perfect deal to the deal from hell. The uncertainty surrounding this deal is a horrible feeling!
You might want to get that recorded. Even if for just a little time. This is a pretty solid way to tie up the property and prevent others from stabbing you in the back. Actually, get in touch with the homeowner’s investor buddy and have him buy from your end buyer. Its not really a bad thing that more people are involved; just get them to the right place at the right time.
BUT, now my attorney is saying that since she's married, her husband also has an equitable interest in the property. So the deed has to be notarized by both of them to be valid. This is news to me.
This is very true. There are some states don't require it, but if your attorney says so, it probaly is so.
This throws things off, because at this point.. the owners aren't so friendly any more and I don't want to reapproach them just yet as if I need the deed to make the deal work. I feel they'll sense weakness and refuse to sign. I think the other agent promised them money, while I told them clearly from the start that they would get nothing except avoid foreclosure and save credit.
Walking on egg shells. I hate it. I envy the people that have their real-estate investing set up so well (mostly because of a long, successful track record), that they can just brush off flaky sellers without a second thought. It may be true that the other agent might have money. He could be paying "expenses" out of his pocket to "buy" the listing. It sucks. I've had it happen on me. I missed out on a $100,000+ profit deal because of it. It made me so upset that I did my taxes for a month and a half to feel better. Haha!
So what I plan to do now is hopefully get the new approval letter from the bank tomorrow, which will give me exclusive rights, and then have the owners meet at the attorney's office to get the documents notarized.
Go for it! It seems that the real-estate business is very first come, first served, early bird gets the worm, first one to the punch, et. al. Then again, that's one of the major benefits of capitalism. Ya hate it and ya love it.
So how would you make anything. you said you are or was the listing agent then you said that you wanted a big disount so that you would be able to flip it. unless you are partnering with the end buyer to sell at a later time.
Use a deadline in P&S agreement and deadline to close… maybe this could motivate them to go faster… but in this case you’ve been blindsided after alot of effort - try again and repeat… kinda like shampoo directions
I’m the listing agent for the first closing, and yes partnership in the flip
This whole deal has become a HUGE mess. But long story short, I’m back in semi-good terms with the homeowner, and she agreed yesterday to give me another week and a half to get the deal closed, which is all i need. I’ll keep the updates coming…
I am pretty sure that in NY & NJ (and probably most other states) this agreement would require you to have an RE license, unless you are buying for yourself…
“anyone who, on behalf of another and for a fee, 1) negotiates a sale, exchange or rental of real property, 2) collects rent, or 3) negotiates a commercial loan secured by a mortgage must be licensed as a real estate broker.”