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The Phantom Short Sale Buyer - Do You Believe in Ghosts??

By
Real Estate Broker/Owner with Satar - Amiri Property and Financial Services Corp.

phantom

The Phantom Short Sale Buyer - Do You Believe in Ghosts??

 

So you get a call from a frantic homeowner who you have been marketing to. She waits till the last minute to contact you and ask for your help as her home will be auctioned off at a Trustee's sale next week. Assume that you exhausted all your options, such as using your investor contacts AND your client has no money to file for Chapter 13 Bankruptcy to stall the foreclosure. Let's also assume you feel like you can get a 200k offer on a short sale and get it approved based on the comps. Would you feel comfortable to put a short sale package together and fax it to the lender that day with a purchase offer from a phantom buyer?

Just in case someone doesn't understand what I am asking, a phantom buyer refers to submitting a purchase offer to the short sale lender for a person that does not exists. It is merely a tactic to get the short sale process started and auction post poned until a real buyer can be found.

 

Comments (23)

Minna Reid
Reid Real Estate Group LLC - Jacksonville, FL
Associate Broker

Satar - there is an easier way to get this done. Have your investor friends make an offer, or if you don't know any call the we buy houses signs you see around town and tell them you need a buyer - NOW. You'll get a lowball offer, but thats fine, ANY offer will stall the bank. If you can make the low offer fly, all the power to you and you'll have two happy customers. If you can't, at least you'll have gone through the process, found out what the bank WILL accept and now you can find a new buyer for your "approved short sale".

 

Sep 29, 2009 08:41 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Minna - You are absolutely correct. Any short sale agent that doesn't have an investor's contact list is shooting themselves in the foot. Assuming that even your investors didn't want to touch this, would you feel comfortable submitting a fake offer?

Sep 29, 2009 03:17 PM
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

+1 to what Minna said. I definitely would not write a fake offer myself.

Leilani

Sep 29, 2009 06:09 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thanks Leilani for the comment. Can I ask why?

Sep 29, 2009 06:28 PM
Minna Reid
Reid Real Estate Group LLC - Jacksonville, FL
Associate Broker

No I would not write a fake offer. I'm not willing to commit fraud for a customer. Plus think about it, how are you going to explain that to the client? Theres no way not to look like a con artist. Is he really going to respect you for that? Or refer you? And if something goes wrong eventually - guess who will take the blame? Guess whose license is at risk if it all were to blow up in your face somehow.

Sep 29, 2009 11:53 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thanks for the followup. Was curious as to why people would or wouldn't do this.

Sep 30, 2009 05:24 PM
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

Hi Satar!  No phantom buyer for me either--Minna has the right idea though--by using one of your investors to do this, you're perfectly legal.  Risking your license to get this one sale and save this one client would not be worth the phantom offer!

Debe in Charlotte

Oct 01, 2009 06:23 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thanks for the comment! So far no one believes in ghosts!  Maybe I should make it member's only, but I made it public so anonymous bloggers can comment.

Oct 01, 2009 06:30 PM
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

Hey Satar!  I like your short and simple post but if you have a "fake offer" are you referrring to a fake buyer?  Or just a number that they are not willing to pay?  If it is a fully executed purchase contract, the buyer can always walk during their contingency even if the seller has accepted but if it is a starter home, one day on the market should get yo ubout 10 offers here in OC. I am with everyone on the investor list.  How do you feel about it?  You have to be really careful with some of the things that people are doing. 

Oct 02, 2009 12:23 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

It's a fake purchase offer. The buyer does not exist. The logic is to send a fake purchase offer in with the short sale package so it will be complete and to post pone the auction. During that time, you find a real buyer while the short sale is being processed. It used to be easier 3-4 years ago as the approval letters didn't have buyer names on them. However now, it can be a pain. Especially if it is Countrywide loan.

I agree with the investor list. I am assuming that none of them are interested.

If you think about it, even based on your comments (such as buyer can walk, etc.), who will know except you and your seller? Is it really bad to do this since chances are, they buyer will walk anyway? Maybe we can call this a victimless crime where the morals of one situation (house foreclosing on seller) outweigh the morals of another situation (lie to the lender that there is a buyer).

Again, thanks for the comments.

Oct 02, 2009 05:20 AM
Tim Krueger
Morovish Properties - Costa Mesa, CA

Great idea!  But I would use a real buyer, but an investor who will low ball the property just to stall it is great and hey you might get the offer accepted!  

Oct 08, 2009 05:21 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thanks for commenting. I agree with you.

Oct 08, 2009 06:07 AM
Nogui Aramburo
Linda Craft & Team, REALTORS® - Raleigh, NC
Real Estate Professional in the Raleigh Area

Satar the only people that can do that are people without real estate licenses.

Oct 16, 2009 04:44 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Nogui - You are absolutely correct. In fact, there were a lot of things I was able to do before being licensed. However, who will find out in this case?

Thanks for taking the time to comment.

Oct 17, 2009 04:32 PM
Minna Reid
Reid Real Estate Group LLC - Jacksonville, FL
Associate Broker

You sound pretty dead set on doing this. You know who will know? Your seller. And when things go sour guess who the finger gets pointed at? YOU and YOU alone.

I mean is it really so hard to find a buyer in one day? Even putting it on the mls at a sell in one day price, will get you a buyer in a day.

Why go this ridiculous round about way? Plus you are just perpetuating the common theory that realtors are crooks who will do ANYTHING to make a commission. Do you really want to do that?

 

Oct 18, 2009 04:14 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thanks Minna for the comment.

"You sound pretty dead set on doing this."

My apologies. I am not advocating a stance nor am I contemplating a decision. My goal is to bring up a common short sale situation and discuss a strategy used and then debate whether or not one would approve of this and why.

"You know who will know? Your seller. And when things go sour guess who the finger gets pointed at? YOU and YOU alone."

Yes, the seller will know. It is explained to the seller that the foreclosing lender will need to see a purchase offer in a short sale package to halt the foreclosure to process the short sale. The phantom buyer is coming in at the purchase price that will invoke a real offer and be accepted by the bank if there was time to market the short sale. In other words, the approved short sale price with the phantom buyer will generate a lot of real purchase offers. 

The seller understands this is in the best interests for them. They are already in a sour position and the phantom buyer is trying to sweeten the situation.

"I mean is it really so hard to find a buyer in one day? Even putting it on the mls at a sell in one day price, will get you a buyer in a day."

True, but that process will usually take time for the buyer to see the property and the buyer's agent to put together an offer in a manner in which it will be approved and is beneficial to the seller. The phantom buyer, on the other hand, is the perfect buyer with the perfect purchase offer. He is able to make an offer in 5 minutes without seeing the property and getting signatures. He is also represented by his own phantom broker which will maximize lender contributed commissions as well.

"Plus you are just perpetuating the common theory that realtors are crooks who will do ANYTHING to make a commission."

The logic behind this is to prevent a client from having their home foreclosed on. It also buys your client time to stay in their home for free to recoup or save as much money as possible for their exit strategy. Since the seller benefits and understands why the agent is doing this, the agent is not seen as a crook (by the seller) even if the short sale fails.

And really, this is what this blog is all about. Do you believe in ghosts? I'm guessing you do not. ;)

Take care and thanks again for commenting.

 

 

Oct 18, 2009 06:58 AM
Nogui Aramburo
Linda Craft & Team, REALTORS® - Raleigh, NC
Real Estate Professional in the Raleigh Area

Satar, from reading your above comment, one would be willing to violate ethics to achieve ethics.

Let me explain. Violating ethics would be creating a buyer out of thin air. That violation would be criminal if it came with a bogus offer on paper.

Achieving a resolution for your client is also upholding the REALTOR code of ethics...

I don't think it would fly with the Real Estate Commission. If the bank asked you would have to disclose this information and creating this situation may end up harming one of the parties. Even if you don't represent the bank, ethics is pretty clear on disclosure of material facts.

Oct 18, 2009 07:49 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Nogui - Very good point. I guess then it will come down to your level of acceptance of risk should the lender call Ghostbusters on your transaction. ;)

Thanks again for the followup. You bring great insight and contribution into the discussion.

Oct 18, 2009 08:46 AM
Anonymous
Horton

I just came across this. I find it ironic the real honest approach of telling the seller about the phantom buyer and offer vs the agent's saying get a real body and a real offer then even though they have not seen nor want the home at this fair price it is (legal). Wow. So a real body vs phantom with same intent to stop the foreclosure for the seller who is suppose to the client and the who's interest is the highest reason to do things make it all OKAY? Truth be told...going through the motions ...doesn't make it any less. It is the same thing. The loop hole you want to take to make it ethical and legal in your mind really comes down to the intent of what you are trying to accomplish. Before any CDPE training. Anything you can do to stop the foreclosure is a benefit to not just the seller but the whole community. Now ...one unhappy person will all the good done by stopping the foreclosure and make it into loan fraud. Where is the fraud in stopping the foreclosure,...where is the loss,  who lost, how much.  The intent is to stop another house from foreclosing, make the process faster, communicate to everyone on the file so all the ducks are in a row. Agents get agents in trouble for stuff like this because they assume it was done with only "fraud or misrepresentation or to steal cients or business" !  Now that we finally have some training, they is becoming a be careful agent motto. Do what is best for you to keep your license no matter what the cost is to the house, public, client or other wise. Agent do what is best for you and and only you first.... don't assume anyone will understand... In the end...everyone wants someone to blame and who do they blame first.... The realtor. YOU!   Sorry for typs...on droid!  Best wishes!

Apr 12, 2011 10:20 AM
#22
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thank you Horton for the comment. Just to clarify, the seller is aware of the situation and the intent. The investor's intent is to really purchase the property, if they can get it at a low price.

Apr 13, 2011 04:05 PM