Writing a "block" of offers on short sales? Let's talk about the "trail of destruction" left behind.........
Do you feel, within your context of a real estate professional that it is ethical to write multiple offers on short sales, just to see which one "sticks"?
And I am referring to regardless of what you disclose to the sellers.
I tell you what, let's remove the whole business ethics element for a moment.
Let's take a look at what actually happens when an agent writes 10 offers all at once, and for the sake of argument, discloses to all 10 sellers that they are making multiple offers on properties.
So each of the 10 sellers signs off on the offers, and forwards them to the bank. So that's 10 fully executed purchase agreements.
Now, we as real estate professionals know the proper thing to do is once you have a fully executed purchase agreement, what are you supposed to do? Yes, that's right. Change the status on the MLS to "Pending" or "Backup"
PROBLEM #1 - 10 sellers have taken their property off the market from the MLS and/or from view of other agents looking for their buyers due to those buyer's agents looking only for "Active" status properties.
How many times have you called on the status of a short sale property, to be told by the listing agent that they already have an accepted offer, but do not want to change the status on the MLS, because let's say, the buyer's agent on the offer they accepted disclosed that "they are making multiple offers" so this listing agent does not want to change the status? And so arises:
PROBLEM #2 - Ambiguity and mistrust between agents for lack of adhering to board policy of properly changing the status on the MLS, and out pops:
PROBLEM #3 - listing agents "making their own MLS rules" when it comes to changing the status of their properties.
Let's move on.....
As most of you can attest to, there is probably a solid chance that at least 50% of these 10 short sale properties have received a Notice of Default, due to mortgage payments being in arrears. And here comes.......
PROBLEM #4 - 5 more foreclosed upon sellers, due to an unsuccessful short sale, which could possibly lead to....
PROBLEM #5 - Any possible litigation that could come against a listing agent for either an unsuccessful short sale or advising a seller to accept a short sale that has been disclosed as a "multiple offer" from the buyer.
Now let’s keep going…...
OK, so great. You’re multiple-offer writing buyers get a short sale written approval on a property that they like. Isn’t that dandy? Let’s open escrow!! And Pa knows music, so we can put on a show!!
Yeah! Let’s get our deposit check into escrow, send out escrow instructions, get a preliminary title report from our title rep, get an inspection done, and get the ball rolling!
17 days later…………
What?! We got written approval on the other house on Elm St?! We NEVER thought the bank would give approval on that! YES! YES! We want THAT house instead!! We don’t care about the inspection fee that we’ve paid, we want that house!
And since you’re our buyer’s agent and your priority is our best interest, you can make that happen right? GREAT! So go tell Mr. Escrow officer and Mr. Title officer and Mr. Short Sale Negotiator and Mr. Transaction Coordinator and Mr. Listing Agent that we’re cancelling escrow. The reason? Well, let’s just make something up. We can’t really say that it’s because we found something better, so make up a good lie!
And since the buyer's best interests are above all else, all of these real estate professionals need to put the breaks on, put it in reverse and start all over again on my lovely Elm St house!
We love you so much Mr. Buyers agent that you’re willing to lie and cheat for us! You really have our best interests at heart, and we’re so thrilled that you’re willing to put your business relationships on the line with all the other professionals involved in this transaction. Gee, your swell! We are SO going to recommend you to all of our other lying and cheating friends!!
Waddya mean the seller on the first short sale won’t sign the escrow cancellation? Waddya mean there’s going to be a problem getting our deposit back quickly? Waddya mean you can’t have two escrows open without prior cancellation of the first?
And you told us this is ALL OK because we disclosed this to the sellers way back when we made the 10 offers on all the short sales, right?
So in the end you have:
1 set of happy (lying and cheating) buyers that are in their lovely home on Elm St.
9 Banks that are understaffed due to the amount of short sales that have gone no where because they were never legitimate in the first place and are now probably more non-cooperating with any new programs for short sale expediency
9 pissed off listing agents who each probably have a close relationship with a minimum of 20 other agents, which comes out to 180+ agents who know that you are the multiple-short-sale offer-writing agent in town.
1 disgruntled escrow officer who is now thrust into the middle of a dispute about a deposit and escrow cancellation (hey, maybe you should have disclosed to him too that you were writing multiple offers?)
1 disgruntled title officer
9 sellers who in addition to their financially distressed position, have to try again and put their property back into Active status and hope they don’t end up with a padlock on their door.
1 Transaction Coordinator who has opened a file and done a substantial amount of work who will not get paid because of the transaction not closing.
1 More disclosure that needs to be possibly created due to new lawsuits being filed and NAR having to address the issue, which will cost all of us agents more fees to be paid.
But you, as the buyer’s agent, did great! Right? You really had your buyers best interest at heart above all else. Right?!!
You should be commended, for your loyalty to your buyers, even in the face of leaving such a trail of destruction behind. Right?!
You should be commended for your contribution to the industry you are a part of. Right?? WRONG!!
Just don’t look behind you, that swelling fire you left behind looks like it’s catching up to you and may severely burn your behind very soon……………
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