Agents Listing Short Sales Work Around Bank Negotiations
By Tony Severino on Jul 23, 2010 in Foreclosures
In Nevada, real estate agents are reporting that they are streamlining the short sale process by list
ing properties on MLS far below market price to elicit multiple offers. They believe that this streamlines the negotiation process with the bank or other lending entity because it gives them many different offers to work with and heightens the homeowner’s odds of getting out of their pre-foreclosure status and into a short sale before time runs out and the foreclosure is enacted.
This sounds like a pretty good idea to me, and it appears, so far, to be making at least the sellers, buyers and agents happy. However, they could be setting themselves up for a fall. After all, at least some of those buyers are likely investors who would like to pay as little for that property as possible – and we all know how Freddie Mac and other lenders feel about that. With the new scrutiny on short sale negotiations and short sale investors not endorsed by the federal government – and by that, I mean everyone in short sales who is making a dime – these agents who are artificially deflating the values of their homes by listing them low could be next on the list of targets. Is this ethical? I don’t know…. slimy, ethical, all those are realtive to the perople in the game, I get that. But does it pass the grandma test. Would you do this if it was Grandmas house?
As always, just make sure that whatever tricks and techniques you use in short sales are approved by your short-sale-specialist lawyer. As a real estate investor or agent, you cannot afford right now to have your methods questioned in the short sale arena… and Big Brother ( or Sister) is watching you…..
Heres another FYI….. Do you know what F.B.I. means.. Forever Bothering Investors.. I’m just sayin
Thoughts? Is this ethical or am I not seein something?
Tony Severino
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5 Comment(s)
By Mike Henderson on Jul 23, 2010 | Reply
Very interesting topic Tony. This may be an example of situational ethics. Most agents want the highest selling price for maximum commission.
If the agent is working with investor/buyers they want the lowest price. The agent works for the bank. The Realtor’s ethical code is what makes them more trustworthy?
By Julie Oyler on Jul 23, 2010 | Reply
IN MY BOOK, THIS IS AS UNETHICAL AS H___. NO EFFORT HAS BEEN MADE FOR A LOAN MODIFICATION. THESE SO CALLED PROFESSIONAL PEOPLE ARE ONLY INTERESTED IN THE ALMIGHTY DOLLAR. WHAT GOES AROUN COMES AROUND. I SURE WOULD NOT WANT TO BE IN THEIR SHOES.
By Nora on Jul 23, 2010 | Reply
Seems to me that the homeowner (grandma?) has nothing to gain from the short sale, and will most likely have to move out anyway. I don’t think that the neighborhood would suffer a drop in value compared to the house going into foreclosure & sitting vacant for a number of months. I do think that the bank would stand to lose with this kind of sales tactic though, if the house actually happens to sell for under market value. If there is something unethical about this, then it’s up to the bank to find out what the market value is and get the R.E. agent to list the property according to what they are comfortable with.
By Dale on Jul 23, 2010 | Reply
I really do not see why the lender is complaining. The lender is one to say yes or no to the offer. The lender performs their own automatic valuation…sends out BPO and is handled by their own Mitigation officers..upon reviewing comps and discussing deal with agents. Fact of the matter is the lender failed to do for original deal now the loan is in trouble. Real money in real offer is fine.. take the house out of foreclosure asap, save lender further expenses..save home owner credit and save the neighborhood the eye sore and further erosion of pricing by long standing vacation house ! This is a problem we are facing and our solution may not 100% perfect…but it is solution.
By John on Jul 24, 2010 | Reply
One issue that has not been discussed here is when a R/E agent lists a property they have a fiduciary responsibility to the homowner and only the homeowner, not the bank. If the agent is not selling the property with focus on helping the homeowner, instead of obtaining their all precious commission. They in essence become agents of the bank especially when they accept prices that are dictated by that bank. They then face recourse from irate homeowners faced with deficiency judgements that are greater than necessary.
In a short sale situation If the agent is worth a damn they make sure that the bank is accepting the shorted amount as payment in full on the previous loan or don’t do short sales. Furthermore most agents are only focused on a commission not really the processes that are available to the homeowner prior to the last ditch effort to dump the property by way of short sale, when in fact the property may have been saved through one of the other avenues first!
The practice of teaser listing prices to create bidding wars on properties is absolutely reprehensible the agent automatically Realigns their position as a bank rep and does a disservice to the homeowner, and creates false values on the property as well as taking advantage of the miss informed consumer.