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Your Short Sale's Approved...but if it doesn't close on time, I'll cut your commission! WHAT???

This was my latest conversation with a negotiatior at GMAC. Oh, and did I mention that I represent the seller? They give us barley 30 days to close......I beg for more but the negotiator doesn't budge. The buyer is financing with a USDA loan and the lender that the buyer has chosen is notorious for never closing on time.

Now we're 9 days from closing, and the file won't be out of underwriting until early next week. Then it has to get turned around to the USDA for a few days. There is just no way! What's a girl to do? The negotiator is telling me to find another buyer! Like I can just tell this one, "sorry, it's just not working out anymore?!" We're in escrow! We have a ready, willing, and able buyer who is paying market value for the home and just may need a few extra days to get the loan done.

Am I being punished for not bringing a cash buyer to the table? I get that the bank wants to close on time, but c'mon! I know I'm already going to be punished (reduced commission) when I bring in my own buyer or I network with the agents in my office and one of them brings me a buyer (reduced commisson).......but now i'm basically being punished if I advise my sellers to sign off on the offer of a first time buyer?

Maybe it's just a threat to get me to ride everyone daily throughout the transaction....but there is only so much that I can do as the listing agent. More importantly, why are the banks making it more difficult to get a first time buyer into a home?

I checked on a listing that closed the other day....my FHA buyer had submitted an offer on it a month or so ago, but there were multiple offers and we were outbid. We submitted way, way over list price! We thought for sure we had it in the bag! This was probably the 8th offer we had submitted and my buyer finally understood how the game needed to be played. But the seller actually chose a much, much lower offer....that was cash. I'm talking over $30k difference in price! Are you kidding me? What is going on here?? I called the listing agent, and they informed me that the seller was concerned about the appraisal. There were comps to support our offer. Let's say that the home appraised for $10k less than my client's offer.....that's still $20k on the table! I just don't get it.

Posted by Jessica Sulliman on 07/15/2009 02:38 AM

Comments (13)

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Originally posted at: Short Sale My Queen Creek Home: Your Short Sale's Approved...but if it doesn't close on time, I'll cut your commission! WHAT???

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13 Comments on Your Short Sale's Approved...but if it doesn't close on time, I'll cut your commission! WHAT???

JUL

Well, welcome to short sales! I get so many crazy things told to me by different negotiators. However, it's usually per diem charges, not commission reductions.

Anyway, I have the answer to this:

"I checked on a listing that closed the other day....my FHA buyer had submitted an offer on it a month or so ago, but there were multiple offers and we were outbid. We submitted way, way over list price! We thought for sure we had it in the bag! This was probably the 8th offer we had submitted and my buyer finally understood how the game needed to be played. But the seller actually chose a much, much lower offer....that was cash. I'm talking over $30k difference in price! Are you kidding me? What is going on here?? I called the listing agent, and they informed me that the seller was concerned about the appraisal. There were comps to support our offer. Let's say that the home appraised for $10k less than my client's offer.....that's still $20k on the table! I just don't get it."

The mistake I see agents make is that treat a short sale like a retail listing. A high offer means nothing to the seller. Any listing agent that submits the highest offer to the bank is only doing their client a diservice. I'll take a cash offer over an FHA offer any day. A cash offer doesn't need 30 days to close or lender approval to pay my commissions and other expenses that the short sale lender won't pay.

Read my blog on how to buy a short sale and you'll hardly lose an opportunity to purchase a short sale. You'll never look at a short sale listing the same way again. Also, my blog on submitting the highest offer will show you my logic for not doing so.

Good Luck!

I'm not sure about the last comment but. . as a listing agent for short sales, when I receive multiple offers I recommend to pick the one that gives us the best chance to get the short sale approved.

Sometimes a low cash offer form an investor isn't to your sellers best interest

Banks will cease to try to gouge real estate agents when real estate agents cease to roll over.

That bank has no authority to dictate the compensation for the agents. That matter is between the seller and the listing broker. The listing broker has offered a co-op and the seller broker has agreed to accept it.

The bank is just doing what real estate agents are letting them to.

Don't let them.

I can understand banks accepting a cash offer in this market. There have been buyers who had to back out because of losing their job.

Jessica, Lenn is right on target. As long as agents "roll over", banks will keep doing it.

I agree with Lenn and you know what if you really are going to lose commission I would ask to speak to a boss or overseer there and Talk the Talk to them. Let them know that if this occurs not only will you never do business with them again but you will tell the entire realtor world that GMAC cuts commissions on Short Sales and then see if they can ever get rid of their homes!

There is no excuse for the buyer's lender.....short sales are hurry up and wait and hurry up again...that is plenty of time to close....we have done it in less than a week....and with a USDA loan...go to the lender's boss/manager...they are most probably not familiar with a short sale process....and the title company may not be either....take the lead...show the way....get it done...the lenders make the rules...forget the "don't let them",...you are not in control...take control of the lazy lender and close it...you can !

Next time you represent a seller in a transaction with GMAC, I suggest you send them a nice little note that if they don't have an answer by a certain date the amount of money they are getting will go down by a $100 a day and explain to them that is how you thought they do business.

Hi Jessica: The real problem may just be that the 'negotiator' the bank has on the file may not be the sharpest tack in the box, and they think that by playing hardball they are doing the bank a better service. The real saviors in most of these deals isthe REO agent that hasthe listing, and the lawyer for the seller. If the REO agent knows their business, they will iron out the details with the agent up front and make sure their contact at the bank gets a proper appreciation for the local market. Many of the banks are hundreds of miles and time zones away from the market and they try to run the process by the script that has been given to them.

JESSICA,

It seems to me GMAC is just playing the game. They are going to pressure the person they are in contact with...that being you. Remember that if the loan if backed by Fannie Mae--that is all smoke because you are protected from the commission being reduced. If it's not I'm certain the lender will not risk a deal that is so close just to make a point. If they approved the deal that means they like the numbers. Give the lenders what they want to hear then when the time comes ask for the extension. No need to get flustered at this point.

Submitting offers that do not appraise is counter to getting the property sold. Having to go back and renegotiate a lower price can trigger a demand for some kind of contribution from the seller to make up the difference. At the very least it can extend negotiation for a new approval with the lender not being open to the change in price. If that can be avoided by submitting an offer that is closer to market value then you have a better change.

This high offer scenario is being played out by those who believe a higher offer will keep them first in line for those that like to submit multiple offers.

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Satar: Thanks for the comments! Yes, I close several short sales per month and I have seen some crazy things as well, but now they're getting personal! :-) I haven't read your blog yet about why sometimes it makes sense NOT to submit the highest offer, but I couldn't agree with you more. Typically, the highest and best offer you have today will be long gone by the time you receive an approval, so it makes sense to get the more common offer approved for quick resale later. Also, I get the drive to take a cash offer over an FHA offer if they are similar, but c'mon, $30k? It seems like it would be worth the risk to the seller for $30k. Especially if there are comps to support the offer? Also, it was a bank owned listing that my buyers had submitted the offer on.

JUL

On bank owned, I have no idea. I have a friend who is an asset manager for AHMS, and he said that they ideally want to recover as much as possible and that they didn't like agents who would list it low to sell fast (he called it "burning"). You're right, I can see a 5k difference, but not 30k. He probably didn't even bother with your offer as he wanted to get paid fast. Who knows.

On a short sale on the other hand, I deny FHA buyers if they barely have the 3.5% to put down as I need cash from them for other things.

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