Do You Tell The Short Sale Lender "Buyer Walked"?

Real Estate Broker/Owner with Rulnick Realty, Inc.

 Short Sale buyer walks

Karla Leahy started an interesting discussion on  She asked "Do you inform the short sale lender when you no longer have an offer?"

From what I’ve seen the thought process behind not divulging the buyer walked is:

1. The lender will complete an appraisal or BPO that will speed up the next approval

2. The seller’s pre-qualification may be completed and ready for the next attempt

3.  With some lenders, you can sneak in a substitute buyer

Bottom line, it “saves time” for the next buyer, the one you hope closes.

BUT--  IS IT RIGHT TO NOT DISCLOSE THE BUYER WALKED?  Why should the short sale system be clogged because you are trying to speed up your next offer?  Is it right to allow the lender to continue to work on an approval when there is no longer a contract? Sometimes there is another twist on trying to speed up an approval.  “Fake” or “starter” offers are sent in to the lenders to get an appraisal ordered, when the “buyer” has no intention of closing.  The “buyer” might even be the real estate agent.

Some of the lenders have a few hundred thousand offers in process. HOW MANY ARE LEGITIMATE OFFERS?  The “real” buyers (and the sellers) suffer through longer wait times because others have tried to game the system, "dead" deals are being processed or offers with no hope for approval have been submitted.  If lenders were only processing contracts that could actually close, all short sales would be speeded up, right?

So, I ask "Would YOU call the short sale lender and tell them to stop working on the sale if your buyer walked?" 


It's Wendy!

Available Short Sale Agent Training:

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR     Rulnick Realty, Inc.

Destin FL Real Estate

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

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Wendy Rulnick, Broker/Owner Rulnick Realty, Inc.

Call Wendy Rulnick 1-850-650-7883 ext 204

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Wendy Rulnick is the marketing choice for sellers on the Emerald Coast who want to list and get their homes and condos sold in Destin, Sandestin, Bluewater Bay, Santa Rosa Beach, 30-A, Watercolor, Seaside, Rosemary Beach, Seacrest Beach, Kelly Plantation, Regatta Bay, Destiny and more.

Rulnick Realty



Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Fernando Herboso - Broker for Maxus Realty Group 10/18/2009 12:33 AM
  2. Rob Arnold 10/18/2009 10:12 AM
  3. Pam Ackley 10/18/2009 11:15 AM
  4. Roland Woodworth 10/18/2009 04:22 PM
  5. Eric Reid 10/19/2009 02:13 PM
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Ed Junker
Re/Max Crown Realty - Sebastian, FL
Good neighbor, great Realtor.


Sure, I would tell them the buyers walked, but I may take as long to get around to it as they have taken to responding to the package in the first place!

Oct 19, 2009 04:08 AM #60
SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO

To answer your question:  Hell yes I would call!

You are absolutely right about clogging the system.  Trust me, it's clogged.

Oct 19, 2009 04:34 AM #62
James Lyon
Vista Pacific Realty - Sacramento, CA

I have had multiple offers on most every listing that I have had and continue to market for back up offers. This is exactly one of the reasons that I do so, so that I do not have to deal with a lender with out an offer in place.

Oct 19, 2009 04:56 AM #63
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

I agree with Bill, Steve & Neal on this - it's their fault so make it known (they're incompetent time wasters that's not getting the job done).  I don't think you should fake offers just to get your listing attention, that is another problem that adds to the bad situation.

Oct 19, 2009 05:00 AM #64
Brad Howell
RE/Max Metro & Capital Creek Development, LLC - Seattle, WA

When I read the responses, I see both sides of the argument but I also noticed many agents voicing opinions as if the lienholder were either their client or customer (the other party). I'm referring specifically to the position of disclosing to the lienholder that the deal is dead due to them dragging their feet. In Washington we have fiduciary responsibilities to our client and to the customer. Those duties however are not required by law to be given to third parties such as the lienholder. Therefore, when one mentions "material fact disclosure" as an argument for needing to disclose to them, I find no common sense or legal reason to do so.

I do not agree at all with forging fake contracts - that is ethically wrong.

Maybe if we fax in that the deal is dead it would solve the problem... they inherently lose paperwork so while an agent could feel in compliance with" disclosure", even if it is not due, it would inevitably get lost by the loss mitigation depts so they would continue to work on them. Or imagine that... they might all the sudden start paying attention to their fax machines more.


Oct 19, 2009 05:31 AM #65
Laurel Starks
Starks Realty Group | Powered by KW - Rancho Cucamonga, CA

My client is the seller, not the bank.  I have a fiduciary contract with my seller; I have never signed anything with a bank.  If a buyer walks and there is no fish on the line, a foreclosure will not be postponed.  How can I look my seller in the eye and tell them they lost their house, because I opened my big fat trap?  THAT is not working in our client's best interest. 

In this market, in Southern California, obtaining another buyer is as simple as clicking "Active" in the MLS and watching my fax machine blow up over the next 48 hours.  Until I have a replacement buyer, the bank does find out the buyer walked.  Period.

Oct 19, 2009 06:24 AM #66
Cat Zwicker, CRS
Desert Sky Real Estate, LLC - Redmond, OR
Down to Earth Service; Out of this World Results!

Yes,  I think it would be in the best interests of professionalism to notify the lender when a buyer walks on a shortsale. However, the reality is we represent the seller as a client, who may be just weeks away from a foreclosure that the previous offer had suspended and has now opened a window of opportunity to get another offer ASAP.   The lender is not a client or a customer in the terms of the real estate transaction; I think it is extremely interesting to see how this has been interpreted here. 

Thankfully, we generally have had the luck of having multiple parties interested in our properties and have been lucky so far that a back offer was usually waiting in the wings.

Oct 19, 2009 06:30 AM #67
Dan and Amy Schuman
Howard Hanna Real Estate Services - Solon, OH
Luxury Home Specialists

Wendy, very good post and we enjoyed reading the comments. When all is said and done, we represent the wishes of our sellers and as many have mentioned, the banks created this system that causes this behavior. The current system does not seem to reward telling banks that the buyer walked, but there are certainly ways to structure the transaction so this problem doesn't occur in the first place.

Oct 19, 2009 08:25 AM #68
Peter Di Eduardo
West End Residential - Morristown, NJ

I plan on notifying the seller's lender by whatever means necessary that my buyer s walking.  After months of wasted time and incompetent parties involved its time to move on the a real seller that's motivated. 

Oct 19, 2009 09:23 AM #69
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

I'm so sorry Wendy...

I did read this. I just got sidetracked and forgot to comment.

It's too late now. Everyone else has stolen all my words :)


Oct 19, 2009 10:42 AM #70
Jim Paulson
Progressive Realty (Boise Idaho) - Boise, ID


I can't imagine having to fabricate a lie down the road to cover my deceitfulness of non-disclosure!  Lenders do not have a "don't ask - don't tell policy".  As Realtors, we take the Realtor Pledge.  It appears several of the people have forgotten it, so I have included the link:$FILE/R_COE-Pledge-of-Performance.pdf

If you don't disclose, you are guilty of violating Article 1 and 2!  

Duties to Clients and Customers

Article 1 = REALTORS® protect and promote their clients’ interests while treating all parties honestly.

Article 2 = REALTORS® refrain from exaggeration, mis-representation, or concealment of pertinent facts related to property or transactions

Oct 19, 2009 10:45 AM #71
Jim Paulson
Progressive Realty (Boise Idaho) - Boise, ID

I wonder how many of the previous 71 responses will realize after reading my post #71 that they have put in writing their willingness and their documentation of their infractions?

Be careful what you blog my friends!

Oct 19, 2009 10:47 AM #72
Brenda Harmon
Century 21 Beal, Inc College Station, Texas - College Station, TX


And if we can ever get them to take our calls we will be glad  to fulfill the COE.  Do bankers have one?

Oct 19, 2009 11:10 AM #73
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Depends where we are in the process. It is different with every bank, if you have a negotiator or if it was just submitted.

Some banks shred the files and start totally over...and others will keep it open.


Oct 19, 2009 11:42 AM #74
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I never have told them a buyer has walked or would I. They will have to start all over if I do from what I've seen from other agents mistakes. Let them continue to do their work and you do yours to find a new buyer.

Todd Clark -

Oct 20, 2009 02:35 AM #75
Petra Norris
CDV TransAtlantic, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Wendy - I would not tell the lender simply for the #1 reason that I represent the seller.

Oct 20, 2009 08:50 AM #76
Minna Reid
Reid Real Estate Group LLC - Woodbridge, CT
Reid Real Estate Group

Jim - the bank is neither my client or my customer in a short sale.  I represent the seller.

I also would never tell them my buyer walked until I had a new buyer in place.

Oct 21, 2009 03:29 AM #77
Angela Niece
REMAX Results - Eden Prairie, MN

Not sure how it would help the seller or the lender to tell them. 

Nov 05, 2009 03:49 PM #78
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

There have been many times when I wanted to...haven't done it yet.

Mar 09, 2010 03:28 AM #80
Sheri Rogers
Power Rentals & Investments, LLC - Desoto, TX

Yes, I would. When in doubt, disclose.  Saves on a lot of confusion.

May 24, 2010 12:26 PM #81
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