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Buyers Agents: JUST STOP being so flakey!

This is a post a long time in coming. I'm tired of flakey agents. Let me explain. (and as an addition here since I'm already getting complaints - I realize fully that the BANKS are the ones pushing into these impossible situations - believe me, I know that)

I do a lot of short sale listings. We receive an offer, say from your buyer. We work in good faith with you to get your buyer's offer accepted. Per our MLS rules, we have to take the house off the active market and change the status to "pending, subject to lender approval." As with most "contingencies" most agents stop showing at that point.

And, I'll be honest with you - when you're contract with one of my properties, your client sticks it out with us, they'll almost certainly get the house (most short sales are approved). We don't submit multiple offers to the bank (they never want multiple offers, OUR job is to go thru them and get highest and best). If we get a better offer than yours, we offer you the option of upping your offer or taking a chance the lender will want a higher offer (in our contract we reserve the right to submit another offer to the lender, but we hold no duty to the lender to do so).

So when I read things like this on Trulia, written by an agent:

"It is sort of the "wild west" out there right now. If you signed a "Short Sale Addendum" you will notice that the listing agent has the obligation to keep marketing the property and to present any offers that come in to the bank. It is the agent's fiduciary duty to get the highest possible price for the bank, and that means that yes, someone can come in with a higher offer than yours and potentially get the house."

My answer is , IT IS NOT THE WILD WEST! We have no such obligation to keep marketing, we have no such fiduciary to the bank on a short sale. Our obligation is to our seller and to see this short sale thru successfully.

In California, if you are a buyer and you write a contract on a short sale, you also submit a Short Sale Addendum with the contract. That Short Sale Addendum asks you to fill in a date. So what that means is that YOU HAVE A CONTRACT until and unless we don't hear from the bank by that date. Technically, you can't just change your mind. Technically, you should not be writing offers on other properties. Technically, we could go after your deposit - yes even though its not deposited into escrow yet (call CAR legal if you don't believe me).

Think about it, I am working to get your deal accepted in good faith. If you are writing contracts all over town, thats not good faith on your part. P.S. What if our offer was also approved, now your client just bought two houses?

So when I get an email like I did today (this short sale has been in process for less than 3 weeks):

Sorry but the Buyers got tired of waiting for an answer and withdraw the offer. Hope you are able to work with one of the other offers you have. Any questions feel free to call but they are in escrow on another house.

... I just want to scream. In fact, maybe I did a little today. As a listing agent, don't I have the right to expect you'll uphold your end of the contract, just as I am on my end? We picked this offer to work with as it was the highest, best, and cleanest. So now you're telling we can go ahead and select one of those inferior offers - thanks. The bank was working on an approval for YOUR offer.

So buyers agents, please... think before you withdraw offers, write on multiple properties and act flakey. I know short sales are hard. I know not all listing agents operate ethically, fairly and legally like I do. Heck most of them have no idea they're not doing it right! I know what the contract says. If you don't , please ask your manager - or your attorney.

I know I'll probably get reamed for this posting BUT REMEMBER laws are different in all states. In Trulia someone from New Hampshire answered a question for my local (CA) area:

The lender mandates that the broker market the property and submit all offeres until the time the lender signs one of them accepting it.

Sorry, but not true. Maybe your contract in New Hampshire mandates that, but lenders don't.

Posted by Catherine Myers, Walnut Creek, CA Real Estate on 10/29/2008 05:19 PM

Comments (17)

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17 Comments on Buyers Agents: JUST STOP being so flakey!

OCT

2008

It is different in every state and it has to be frustrating as a listing agent to deal with the flakiness let alone with the banks and the sellers. Short Sales and even Standard Sales are hard to get done right now, not because of underwriting guidelines but due to lack of participation from one or more parties in the file and that drives me nuts at time.

FLAKEY ?
In Virginia you don't have a contract till acceptance and you have every right to pull out before that time. Your state may be different but I think that is rather odd. When you have to wait three weeks for an answer I think the bank is FLAKEY. I understand that your job as the listing agent is difficult at best but 100% of the difficulty is the bank not being able to make a decision. I feel bad for you and your client but don't lay the blame on the buyer and his agent. It is no more their fault than it is yours. The FLAKES are at the bank. That is the simple truth.

I wouldn't go out and look for other offers. But if someone wanted to write a backup I would take it.

Short sales can be very frustrating for both agent representatives. The problem we have experienced in Texas, Dallas area is that the lender does not even pretend to have their act together. They refuse on the front end for a conventional loan to acquire an upfront appraisal by a certified appraiser to help assist them as to what is realist market price or fantasy what they think they need. The lender simply relies on a Broker Price Opinion of someone who just does not understand valuation and not being paid enough to consider doing any fashion of an attempt to be accurate. It's a total shame that some much valuable time is wasted on such foolish decisions. What could be a meaningful process of selling and purchasing a home at a reasoable level is denied. The lender loses files, acts like they do not receive paperwork and what they deny is the Certified mail signature of the receipted paperwork. It clearly is a broken system. One that burdens way too much time for the buyer in a lot of instances. One that burdens a hard working listing agent doing all the right things. The result...foreclosure. One that could be avoided if the lender would treat this with respect. I know they are burdened by files stacked a mile high. Way not take some of that money they lost by indecisions and no responses that could have been made and hire the right staff levels and good people to help with this mess.

Your frustration is felt from this distance.

Best of luck to you!

Connie Goodrich

Keller Williams Realty - Dallas, TX - McKinney Area

Barb, as I see it, short sales are hard no matter what. They are long and we're dealing with broken banks, uncaring people and just plain stupidity on the part of the lenders and the investors - I would hope we all could work together to make the offer work. Hard to do that when you never know when the rug will be pulled out from under us.

Barry, as I said in my post, it is different in every state. I acknowledge that. In California, the seller DOES accept the offer subject to the short sale addendum the terms of which spell out the timing for lender acceptance, inspection and escrow timelines. So here, we DO have an accepted offer, just most buyers agents don't seem to know that.

Catherine, if I take you at your word that you are ethical and conscientious, will you take me at my word that I am also ethical and not at all flakey? OK? That said, I must disagree with many of your points based on numerous experiences I have had representing buyers in short sales and bank owned property purchase offers.

Typically, I have found lenders (as individuals as well as teams or committtees) to be both arrogant and inept. Worse than that, I believe that many of them are actually attempting to practice real estate in California without a license. Yes, the listing agent is providing cover, but the practices are, in fact, being devised and employed by unqualified and unlicensed bank and mortgage officers.

Want to scare away perfectly good, well-qualified buyers? Let the bank drag out the approval for weeks, shop the offer around, make verbal statements, refuse to put anything in writing until the last possible minute, hit the buyers with undated, unsigned, over-written, paranoid "counter offers," and generally attempt to bully the buyers as if they, the bank, are doing the buyer a favor by even considering their pale and puny offer.

Rant concluded, I want to compliment the bank I represent as a listing agent for foreclosed properties. My bank is wonderful and the special asset management team is terrific. The members of the team are responsive, kind, humane, and smart enough to let real estate professionals conduct the business of real estate.

ThinkBob

John, right. If we got another offer, or even multiple offers -great. But we still have "one" offer accepted and sent to bank , the others are in back up, or they just move on. But they will know where they stand on my deals. Sounds like you are thinking along the same lines.

Connie, boy I have a whole other post in my head about the STUPIDITY of Citimortgage and their investor throwing away a good deal based on a BPO. The BPO is 30k higher (more than 15%!!!!!) than the valid buyer appraisal. They won't deal. I've submitted trend reports, current comps, declining market guidelines and everything I could and investor just says no. Seller is thinking of just giving up at this point. IT is not worth what they think it is and they will not listen to any data, graphs, graphics, comps or reason. It is beyond belief and there is nothing we can do it seems. I wish the press cared. I wish someone would do a story on this and analyze the loss this investor will be taking if they dont' take this deal. OY VAY! (oh and I should say Citimortage is not alone, just the one I'm dealing with today)

Bob, I certainly will agree with you that at most fault here is the bank. The bank forces buyers into horrible situations. They either want the house and they wait and risk losing out on other opportunities, or they wait for their all important word. Its a disgusting mess most of these banks ask us to operate in. They should be ashamed... that is if they cared.

As a buyer's agent in Oregon, I have written on quite a few short sales and each listing broker has a different story as to what the bank wants. Some want all the offers they can get, others go pending right away and the broker could care less if they get another offer. It is very frustrating to be playing a game and having the rules changed all the time. I call the listing broker before I write the offer and try to get the new list of rules before I write an offer. But honestly, we don't hear a word from the lender for over 45 days... I am telling my buyers to walk way, there is too much on the market and too much at stake.

I am so fed up with the banks the arrogance and lack of concern for the buyers to try to change things at the last minute. When do you think they will get the message they are the problem and we are the solution they need to adjust to the market or continue selling to the bargain shoppers that will wait for them.

Leslie, I agree with you. That is why here in CA we do have a short sale addendum. The buyer's agent enters a date on the addendum. The date by which we must hear from lender or they will walk away - or if we're getting close, they can choose to extend. But at least then we're all dealing on a level playing field and I know my deadlines with them... not that they just feel like another property next week, or they right a deal on mine and I dont' even know they've written already on 2 or 3 others. And its irritating if they just walk or write on another property before their own imposed date, just isnt' a leveling playing field if I never know when a buyer is going to drop.

Terry, I don't think they care. I don't think they have the capacity to care. All this crap in the media that they are trying to help people is BS. They don't have enough man hours, their guidelines are too stringent for most marketplaces and they hang their hats on BPOs and other factors that end up being irrelevent by the time they're even entered into their systems.

No matter how many times we tell our buyers that it will take awhile to hear from the bank, the buyers get frustrated. It is human nature to keep looking for homes just in case another one comes around you like more. It's not anyone's fault, except for maybe the banks. If they don't want to answer short sales, then foreclose and move on.

Catherine - I think I must be living your life. Buyers (and some buyers agents) feel that when they write an offer on a short sale, that they are only negotiating with the lender - not the homeowners and not the listing agent. They don't consider that if they choose to walk away, and/or are writing offers on multiple properties, that they are affecting the SELLERS who are trying to sell their home, even though they are selling short.

Here in Connecticut, offers are also accepted subject to lender approval. We have a short sale addendum that we wrote per our board's instructions, but some buyer agents refuse to have their buyers sign them (which is silly, because one of the main points on the addendum deals with commissions, and is a benefit to the buyers' agent!).

I've seen many write multiple offers. I've seen many write multiple low-low-ball offers just to see what may happen.

However, on the other hand, I've heard from many listing agents who believe they must obtain multiple offers and must submit all offers to the lender. I've seen agents complain when a lender wouldn't submit a counter offer - why would they if they've already asked for your highest and best and your offer was 40% under market value?

Many agents don't get it. Buyers don't get it (though it's not their job to get it - it is their buyers' agent's job to educate them).

I've had clients wait as long as 6 months to receive word from a lender. If you can't wait, then don't consider buying a short sale. It is that simple.

I work with Catherine exclusively on short sales. We drink a lot of mochas and lattes.....Can you tell?

Bottom line in our area is this: Our Board considers a short sale offer as a ratified contract even though the lender or bank has not accepted the price and/or approved a short sale. Agree with it or not that is our boards ruling.

As Catherine has stated we have a multitude of agents who have absolutely no idea of the mechanics of a short sale and they are leading their clients down a road they may not wish to travel.

Then we have the morons on the other side who have no concept of reality and apparently do not understand the loss from $360000 short sale to $230000 REO sale a year later . Now you and I know their loss was greater than the $130000 for various other reasons BUT....look at the math!

There is no rhyme or reason.

I will say though we have been encountering some negotiators who at least have shown intelligence and a willingness to work thru some things. The process definitely needs to get toned down to a reasonable time period.

I will also state we have had many happy buyers and agents who chose to work with us and stick it out to a successful close . It was well worth the wait for them.

Now who is it I am to call in the AM because the appraisal performed over 4 weeks ago supposedly is not in the system yet and was not reordered and/or followed up with????????? Where is my Latte?????

OCT

2008

I think we all need to put everything into perspective. For instance, most banks do not have adequate personnel to handle the increased amount of short sale requests. However, I do think that the selling has a duty to make sure that their clients know that they WILL NOT receive an immediate response on a short sale offer. In fact, I think 3 weeks is pretty good in my area. On my short sale listings, I make sure that everyone signs a short sale disclosure which states that the bank may take up to 30 days to approve the deal.

NOV

2008

Every Lender has a different time-line for reviewing and approving a Short Sale offer. I have found that the first offer, even if it is a solid offer is countered. Buyers are trying to move forward in their life and 60 to 90 days not knowing is just toooo much to worry about. Agents are fighting forevery commission check and will write an offer on a tradition sale in a second because they know it will happen much sooner. It goes back to the old rule " I have to take care of myself first" Now let me say I am a listing agent working mostly Short Sales and have experienced the same things, but now at least you have a selling price that "should" get approve sooner with the next offer! Hang in there everybody, it is not going to get any better soon, IMO.

NOV

2008

I enjoyed reading your post and the comments as well

Thanks

Don

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