possible trouble with the short sale

I might be starting to have a little trouble with the short sale I’m attempting to do and need some guidance. The bank wanted a listing agreement for the property so I hooked the seller up with an agent I know. The L.A. was signed and the property was placed on the mls. Would’nt you know but a couple of offers, higher than mine, were faxed in to the agents broker. My question is if the property should be listed as pending since I have a signed sales contract with the seller?
For future reference should the seller tell the listing agent not to actively market the property on the mls. The seller wants me to purchase the property but after that is indifferent as to who the buyer is. She just does not want the foreclosure on her record.

On another note the bank makes me sick. They have lost the first copy of everything I have sent them, from faxes to express mail. And talk about getting them to return your calls… good luck. To all other newbies remember to keep on top of the lender. That means keep calling until you get in touch with the person you want. No secretaries, assistants or voice mail. Also call to confirm reciept of all faxings and mailings.

Ok, since I have not gotten a response to this post. I will provide my own thoughts.
If the bank asks for a listing agreement in the SS, either exclude it or tell them that there was not enough time to list the property and present all of your other info. Otherwise I guess your best bet is to get the listing agent to not market the property actively if that is o.k. with the client.

I feel stupid inviting a real estate agent into this deal in the first place. In the future I will keep everything “in house”.


This is a tough one. I have not had too many banks ask for the listing agreement, however some are at this time. I know that some lenders such as GreenPoint and Bank of the West are doing so in many cases.

What I have done is bring an agent on staff and use his services for situations like this. When I do so he does the listing, however does not actively market the property on the MLS.

I hope this helps - good luck

Could you explain a bit more for a newbie what the bank is doing here? Are they saying ok we’ll do a short sale but we want the property to be sold thru an agent so there’s competition for the house? IOW, completely disregarding the fact that you’re negotiating this SS because YOU want to buy it?

I do not believe that the bank is completely disregarding my wants, but they just want to know that the borrower is trying to get them all of the monies owed. This is my first SS so I do not know for sure. I feel that the broker I arranged to list the property with is trying to maximize his commission by continuing to accept offers and informing my cliet about these offers. And yes I know this is his job to inform the client about all offers, but the client has a signed contract with me. When she heard about the offers higher than mine she started asking me for some $$$$ under the table. I need to get clear with this broker about what we want done. I think I will have to cancel the listing.

How can I protect my position in this property? The only thing I have is a sales contract with the seller which the bank will undoubtably modify.

I am a broker owner in Charlotte, NC. In NC we have an exclusive right to sell listing agreement and an exclusive agence agreement. The exclusive right to sell agreement allows a full commission to be paid regardless of who procures the buyer. The agreement also specifies (correction) has a box to check allowing the agent to lace in the MLS. The exclusive agency agreement allows the seller to also sell the property without a commission. This would have been the better of the 2 forms to use for your purposes. That is if your state uses these forms. If an exclusive right to sell had been used the and you had a contract then the property should have been pended immediately in the MLS. Not only that, any inquiries should have been addressed in the following way. The property is currently under contract however we would consider a back up offer. To me the agent did you a complete disservice and should be reported to their broker in charge and also to the state licencing agency. It is a shame that in an effort to make a fast buck the agent did not look at the big picture. More than likely you would have listed or at minimum offered your future referrals to him as a thankful gesture. In closing, when the listing agreement was signed a larger corporate entity probably is not the best way to go for what you were looking for. Independent broker/owners who are hungry for your business, immediate or future would have placed 0% or a flat fee of a couple hundred bucks to do what needed to have been done in the slot for commission. Having worked for the larger national firms for a half dozen years or so there is no way that they would allow for their agents/brokers to bring back listing agreements without compensation. In the end bigger is not always better. Good luck in your endeavors. David Graham, Broker/Owner

did the bank agree with the short sale or are they encouraging the seller to seek a higher price through an agent and not agreeing to your purchase price. it sounds to me like you made it easy on a seller, but the seller would have had to bring money to the table if the bank did not agree to the short sale, which it sounds like they in fact did not. just for clarification, who is your client and in what capacity are you calling them that. a client is someone you owe a fiduciary intrerest to, and in this case that seems to be yourself, as you are not an attorney? or a real estate agent.


if you have a signed contract, aren,t the seller obligated
to it. regardless of any other offers? does the bank have
the right to disregard a signed contract? thank,s

the sellers may be obligated to the contract, but if they cannot release mortgage due to payoff it probably will not close. you can insist but you will be purchasing a property that has an existing mortgage balance, and therefore you would still owe something on the old mortgage.

The SS proposal required by the bank asked for a listing agreement. They simply want to see the seller is making an effort t repay whats owed. The bank is in the process of reviewing the BPO. The loss mit person told me that they should have a decision by this Tuesday. I hope my low offer does not turn them off. It feels like I have a rapport with the loss mit person so I hope she will counter my offer.
I use the term client because the seller contacted me asking for help in getting rid of this property before the foreclosure is put on her record. Since I have been working on her behalf to put together a proposal for the banks consideration, I consider the seller my client.

I think this deal might be dead for me…

I faxed over the offer that the bank told me to send in and was told that they had received a higher offer from the listing broker. This really P!ssed me off since I was the one who had the place listed in the first place. My advice to other investors is, even if the bank wants to see a listing agreement either send in your SS package without one, list the property then delist it or have a VERY friendily broker on your side. The ladder I thought I had. The new offer was 35% higher than mine but was not a cash offer and was contingent upon financing and inspection.
This was to be my first deal and I guess I am a little emotional about possibly losing it. It hurts that I did all the leg work and someone else can just slide in and take it from me… Yeah I know, “welcome to the real world son.”
Is there anyway I still might be able to pull something out of this deal? What if I attached a lien onto the property for my services? The homeowner will sign anything I put before her if she can walk away with something. We had already agreed on $2k for items left in home. Again, I am a little emotional about this right now. If anything I have learned SO much from this experience that I will be much wiser the next time around. -Thanks

I read all your posts about the short sale that you were working on. I am about to go down that path myself so I wanted to get some sage advice. I am not sure if the deal that you think is dead is the one where the lady was behind 32 payments or this was another deal. Nevertheless, I think that all your work was a lesson learned. (1) You did provide the homeowner with a sense of comfort knowing that she felt protected from the foreclosure (2) You learned a lot of valuable things in the process and (3) Now you will be more prepared for the next one. Don’t look at this as a waste of time. It wasn’t. The people that you met and the steps you took are all going to make you better for the next one. You can be an advisor to a newbie. Trust me, we’ve all made mistakes we regret (mayble like listing the property with that greedy broker) but when you look back at that for what was learned it makes it all better. There’s no way you could have known that what happened was going to happen. Never fear, you are one better for it. You will get compensated for your time on this one next time around. Hang in there and don’t be discouraged. :slight_smile:

Yes this is the deal where the HO was/is now behind 37 payments behind. The good thing is I have learned so much about the process. Thus far it has been a great learning experience and confidence booster. It’s great to know that you can help people and yourself, although I think I have failed at helping the HO since the offer higher than mine will not close before the foreclosesure court date though I’m sure the bank can delay the proceedings. He!!, the HO has managed to avoid foreclosesure for 3+ years w/out filing for bankruptcy, she is a survivor.

On a side note. How can I protect my position in the future? It’s jacked up that I can do all the leg work and then have someone else just step in and out bid me. I mean what is the purpose of me getting a signed contract with the HO, this new offer does not have one. Why did I have to submit a hardship letter, personal financial statement and a HUD-1 when this new offer has had to do none of that. It just aint fair… boo hoo, whannnn. Siriusly… Is there any way to protect my position in the future.

Too sad, but it happens all the time.
You should have put the listing on the MLS and immediately
set it to “Pending” status.

Right now, your option is probably to place a voluntary lien
on the property for the services rendered + the $2k for the
homeowner all bundled up.

Good luck

When this property became listed, the agent had a fiduaciary duty to the client, the seller, to present all offers. The agent works for the client the owner. Part of that being getting the highest possible price, reducing the owners debt liability.

You do not have a contract. If you want to present an offer, do so through the agent. All offers are subject to bank approval. The seller does not have the final say so. The bank has to sign off.

The seller is NOT your client! You have not entered into an agent/client relationship. You were a potential buyer. It would be impossible to represent her interest above your own, as required by law.

This agent did NOTHING wrong. Personally, I would be very appreciative for the lead and give you a big thank you with gift cards at the place of your choosing.


Another thought:

The Realtor could not put status as pending, as again, you did not have a contract signed by the bank. That would be unethical and subject to a liscense violation.

Personally, I don’t take flat fee listings. These listings are MORE work than a regular listing. The bank allows all commissions to come out of proceeds. The owner gets nothing anyway, and they need someone to represent their interest.

you said,“I think I will have to cancel the listing.” Sorry, it is not your listing to cancel. You are not a party to the listing. The listing agreement is between the owner and the broker, not you.

You also said, “I mean what is the purpose of me getting a signed contract with the HO, this new offer does not have one.” Wrong again! All offers MUST have the wording “subject to bank approval” and yes, the new offer had to have the owner signature prior to being submitted, so in fact, they DO have a contract. You do not.

Any by the way, real estate is competitive. It is not who is first, it is who is the highest. Can you blame the bank for a.) taking the highest bid?, b.)accepting a valid offer?, c.) requiring the services of a professional? d.) trying to get get the highest sale price on the open market?