I just received an offer on a home that unfortunately is a Short-Sale.  Now as everyone knows short-sales are discounted before they are put on the market, usually about $30k to $50k.  The asking price for this home is $255,000.  It is a 3 bedroom 2 bathroom home that is less than 10 years old.  It needs no major repairs.  It is in quiet family oriented neighborhood in Fontana.  The only thing it really needs is the lawn taken care of and weeds pulled.  Guess what the all cash offer is for???     . . . . . . . . . . . . . . . .                              $150,000. 

I ask you is this agent for real? 

Number one, this was someone's home.  They raised their children here, and are friends with the neighbors.  Do agent's who discount a property by almost half of its value, insulting the seller, expect the homeowner to roll over and take it up the shorts.  These families are in trouble, NOT STUPID. 

                child3                           child2                           child1

THEY ARE NOT MY CHILDREN.  BUT, THEY ARE SOMEONE'S CHILDREN MR. POTTER. . . .                                     (It's A Wonderful Life)

Number two, as an agent for the Seller it is my responsibility to advise my client that they may be taxed on the difference between what is owed on the property and what it sells for. Let's see Mr. Client you owe $350,000 and this offer is for $150,000 - you could be taxed for . . .ahh lets see . . .  $200,000 by the state.  Oh Yes that's a good deal (because its all cash). 

JokerNumber three, Do these jokers (oops I mean AGENTS) really think that the lender taking a loss is going to think that it is better to close a week or so sooner and get cash then it would be to wait the extra time and oh yeah get $200,000 more.

Number four, lets just suppose for a second the bank says oh yeah lets take that offer.  The deal closes.  Your buyer has just devalued the entire neighborhood, including their own property. 

Number five, this so called agent has just reduced his/her commission by almost half (41%).

Number six, if I thought this offer would be approved by the bank, don't you think I have clients of my own who would purchase a lovely 3 bedroom 2 bath home for $150,000.  You wouldn't see it on the MLS because it would go straight to Pending it would sell so fast.

I would like to suggest that as an agent we are responsible for educating our clients.  Clients need to know the consequences of their actions.  When my clients suggest putting in a really ridiculous offer I explain to them the above scenario and let them know that they would already be getting a good deal.  I then suggest to them a more appropriate offer for that particular property.

And if they don't listen to reason, there is always Twanda! (referenced from the movie Fried Green Tomatoes)

 

10 Comments on AGENTS - DON'T BE RIDICULOUS

MAR
26
2008
167,648 Points 6 Featured Posts Outside Blog
Ok...its a Short Sale. Question....why is it a short sale? How many DOM? When did they buy the property? What kind of condition is the property in? Did the Buyers look at the property first or is this a Letter of Intent from an Investor? Is the Agent making the offer OR is their Buyer making the offer?
8:17pm • #1
What is the current market value of the home?  That is the number the bank will look at it.  I am sure the bank won't even respond to that kind of offer.  He is wasting everybody's time, including his own clients.
8:19pm • #2
272,065 Points 3 Featured Posts Hit Router

Kathryn, A short sale helps the seller.  The buyer is looking for the lowest entry that the bank will accept.  Quite simply it is an entry point to negotiate with the bank and no one should be offended by it.  You should try to help your clients understand that just getting an offer is a great start even if they are a bit delusional.

Oh yeah,  check out the stuff on my blog about the mortgage and debt forgiveness act :

http://activerain.com/blogsview/413812/The-Mortgage-and-Forgiveness

 

You can help your sellers because they will not be held responsible with a 1099 like they would have in the past! 

Good luck!
8:21pm • #3
1 Featured Post

There are agents who would argue that they are not the principle, and that the buyer is in charge of the offer, they just present it... It's a good time to remember that we have an obligation to not present frivolous offers as well. When you add into the mix a short sale, where the sellers are desperately trying to avoid forclosure and retain some dignity, an offer like this is not just frivolous -- it's callous and cruel. You get someone's hopes up that they may be able to avoid complete financial disaster ("Hey, an offer is coming in on your house!") and then crush them into squishy bits ("It's an offer for HOW MUCH?"). If a house is fairly priced as a short sale, then it's a good deal.

This reminds me of a story I heard from another agent about ten years ago. A ridiculous offer was coming in and he said to the buyer's agent, "Are you going to stop by the mortuary on the way to my office with your offer?" The buyer's agent asked, "Why in the world would we do that?" The seller's agent replied, "There are bodies there you can strip things off while you're at it."
8:22pm • #4

Robert,  This property is in good shape, has new paint, tile roof, etc.  It is a Short-Sale because he was in a car accident and has not been able to work (not that this information is available to the buyers).  It has been on the market less than 30 days.  The buyer is not the agent.  Investor or not, does it really matter? I figure you are trying to point something out to me.  What am I missing?

Mark, homes in the area valued at $289,000 to $305,000. 

Ron, Maybe in Texas you won't get a 1099, but in California our Governor has not signed the bill to release Short Sellers from the tax liability.
10:00pm • #5
MAR
27
2008
272,065 Points 3 Featured Posts Hit Router

Kathryn,  the Act is not a bill anymore. It is a federal law at this point. The IRS is a federal entity.  The governornator should have nothing to do with it.

http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

Also, notations in the MLS that this is a shortsale would keep me from including this home in legitimate comparables. Most appraisers would see that as well.  Unless all homes in that neighborhood start going for those short sale values, then home values should be fine!

 
12:25am • #6
Ron, My understanding is that the Feds can control Federal Income Tax.  But, Each State controls the state tax.  The most restrictive laws rule.  The Governator has a lot to do with it in California, client's are still responsible for the state taxes on the difference. Maybe Texas has agreed to forgive the state tax.  And Average Home Prices do not to my knowledge exclude short-sales.  So average home sale prices are what CAR and NAR go by.  Fontana is one of the hardest hit areas in California for defaults.  Most of the homes are short-sales.
1:28am • #7
3 Featured Posts
Kathryn is right. The State of California has not passed legislation to forgive any deficiencies on short sales or foreclosures. The feds only control the Federal taxes, not the states, and federal law does not always trump state law. So in a 35% tax bracket on a $200,000 deficiency, you would owe $70,000 to the state for taxes. OUCH!
6:44am • #8
1,451,607 Points 46 Featured Posts Outside Blog Called Shot Master
Kathryn, Good post. It is sad to see short sales. I hope we can help more home owners save their homes .
7:10am • #9
APR
07
2008
 Gita, Thank you, I do too.
10:59am • #10


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Kathryn Tharp ~ Rancho Cucamonga Real Estate Specialist

Rancho Cucamonga, CA

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