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A FSBO Short Sale, I Thought I Had Seen it All!

By
Real Estate Agent with Mapleridge Realty, CT 203-206-0754 REB.0759001

A FSBO Short Sale, I Thought I Had Seen it All!

Homeowners have a resentment towards using an agent to sell their home because they believe that we do not do enough work to justify the commissions we earn. When things get tough, however or their attempts to sell themselves get difficult, then we are sought out. 

The phone call started out normal:


Can I get a BPO on my home?
You mean a Comparative Market Analysis don't you?
No, the bank told me to get a BPO from a local agent. I then asked him to please explain.

The voice on the phone explained that they were trying to get the bank to accept a short sale offer on his home, and when the bank had gotten the appraisal back, it was $25,000 higher than the offered value and the bank would not accept the offer. The seller was then told that he should fix the noted lead issues on the home and then try to get another offer as the home would then be worth much more.

This was all very strange and made little sense, not just the part about the bank working directly with a homeowner, but no lawyer, none of the typical documentation that we normally use to get a short sale transaction completed, but also that the bank would have a direct dealing and be so close on dollars with no additional costs involved such as commissions, legal fees, etc, and still expect the home owner who is underwater and delinquent on their loan to do repairs.

Before I met with him, I did some research on the home and reviewed the comparables, and the homeowner was more in line with the value than the appraiser. I did not do a BPO, and also explained to him that even if I were to do one, I would have to submit it with the disclaimer that it was not intended to be used in place of an appraisal by a licensed professional.

I will be interested in watching how this home owner progresses with his process and hopefully he will be able to avoid foreclosure. They are certainly giving it their complete effort as short sales are seldom easy and more often than not require an experienced short sale real estate agent and lawyer to get through the banks systems.

A FSBO Short Sale, I Thought I Had Seen it All!

 

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Edward (Ed) Silva
Broker Associate

Serving Central Connecticut Sellers and Buyers

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Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

I've never seen it either and would be very hesitant to recommend any buyer to consider entering into a contract on it.

Jul 20, 2011 01:23 AM
J. Philip Faranda
Howard Hanna Rand Realty - Yorktown Heights, NY
Associate Broker / Office Manager

The owner probably thinks he has a better chance with the bank if there is no commission for them to absorb. 

You save your insurance company performing surgery on yourself as well I am told. 

Jul 20, 2011 01:33 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I have heard of for sale by owner short sales but I haven't personally run across anybody dumb enough to try it. There's just no logical reason for it, and the legal liability / potential for future lawsuit is tremendous. People outside of the business looking in are typically an interesting lot, though.

Jul 20, 2011 01:53 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Brenda, we never know where someone else's thoughts may be. I wish them luck.

Kay, he hasn't even given consideration to a lawyer, and I was not going to take it on myself to be his mentor

Lenn, a little photoshop work takes care of that liability. Desperation makes people loose their common sense

Rene, I like that term, although I wouldn't like to see a lot of those out there

Gita, no lawyer helping them as yet

Richard, I kept my distance but to get involved would require a time out being called and start with a lawyer's intervention.

Keith, I didn't want to get too heavy into their history, but obviously the bank did, possibly as a way of checking to see if a loan mod would work as the owners have had the house for almost 15 years.

Christine, a buyer has very little exposure here. They probably didn't even offer up the usual required documentation or even presented a check, but I didn't ask either.

Philip, as I was listening to their story all I could think of was the saying "a Lawyer that represents themselves, has a fool for a client."

Jul 20, 2011 01:59 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Elizabeth, to get involved at this point means a lawyer getting in there first. This is one of those 10 foot pole deals.

Jul 20, 2011 02:01 AM
Barbara Altieri
Better Homes and Gardens RE Shore and Country Properties - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

Ed -- I have never heard of this as well. Very odd. I'd love to know how this turns out.

Jul 20, 2011 02:12 AM
Justin Dibbs
Fairway Independent Mortgage - Ashburn, VA
Mortgage Advisor

Wow, that's pretty risky.  I'm not sure what they could be thinking??  I've never heard of a FSBO short sale, until now.  Not sure I'd want to jump into this one.

Jul 20, 2011 02:13 AM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

We will never have total real estate automation as long as people are involved in the process to deal with, help, sort out the wrinkles, property buying, selling knots, snarls.

Jul 20, 2011 02:31 AM
Sarah Rummage
Benchmark Realty LLC, Nashville TN 615.516.5233 - Nashville, TN
Love Being Realtor® in the Nashville TN Area!

I think this is a case of the seller's hearing 'all about' short sales on TV and newspaper, and thinks it is easy. 

One seller told me that he 'wanted to see about getting into a short sale program.' Yeah, like it's signing up for a tour of New England in the fall.

Sarah

Jul 20, 2011 03:18 AM
Jim Gilbert
Samson Properties - Fairfax, VA
The Gold Homes Team

Most loan servicers will refer you to an agent if you don't already have one.  

Attempting a short sale FSBO is like attempting do-it-yourself spinal surgery.

Jul 20, 2011 03:49 AM
Tim Fennell
The Legends of Real Estate, REALTORS® - Jacksonville, FL
Jacksonville Real Estate

Is there any reason not to simply charge the owner and provide the BPO? He gets what he needs for the bank and you make a few bucks.

Jul 20, 2011 04:24 AM
Jason Burkholder
Weichert, Realtors - Welcome Home - Lancaster, PA
Associate Broker, Realtor, e-Pro, CMS

interesting, I have never run across that

Jul 20, 2011 04:43 AM
Sample Sample
Gila, NM

Yep, not something we hear about too often and definitely not something we would recommend to other homeowners in the same financial position. Real estate agents DEFINITELY earn their commission in a short sale.

Jul 20, 2011 06:04 AM
Mike Yeo
3:16 team REALTY - Frisco, TX
Love Phil's humor. Next time I have a surgery needed, I'm calling Phil.
Jul 20, 2011 06:42 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

How'd they pick up the buyer?  Wonder if it was "arm's length" or their Cousin Vinny?  

Jul 20, 2011 08:04 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Barbara, something leads me to believe that I may well hear from them again.

Justin, every day is a new leaning experience in real estate

Andrew, I would think that up there in Maine where everything is less hectic that something like this would sort itself out

Sarah, I didn't get into the how's with the seller, it just baffled me that the bank would be leaing thewm along like this. BTW, do you have the date on that New England Tour?

Jul 20, 2011 10:40 AM
Mike Russell
Mike Russell Real Estate Group - Overland Park, KS
Overland Park Kansas Real Estate

my momma always says, stupid is as stupid does. Good luck with that one, my guess is that the buyer is also unrepresented.

Jul 20, 2011 11:18 AM
Cameron Wilson
Labrum Real Estate - Murrieta, CA
The Short Guy - Murrieta,Temecula,Menifee Californ

That FSBO has a fool as his client. The bank will chew him up as they have more knowledge about short sales and it's par for the course for them to instruct the seller to rip off an agent for a freebie BPO.

Jul 20, 2011 12:48 PM
Karen Bernetti
Southington, CT

People just have no idea how hard agents work - ignorance is bliss I guess

Jul 21, 2011 04:18 PM
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Ed - I won't even take a short sale if the seller doesn't have a financial advisor and an attorney involved!  Unbelievable!  I'd say he is headed into foreclosure for no good reason.  I agree with Michael, the buyer must be unrepresented as well.  No agent would walk into this situation without an MLS agreement for his/her commission.

Jul 24, 2011 04:30 PM