Home > Blogs > Brian Brumpton > Boise, Idaho Real Estate News and Information

If the listing agent will do it for you, they'll probably do it to you.

By Brian Brumpton

Real Estate Agent with Keller Williams Boise

November 17, 2009 08:07 AM

Mad Maddox I was recently asked by an agent if they could outbid my current offer on a short sale that had been submitted to the bank.

The agent got very huffy with me when I explained that I was only going to submit one offer at a time to the lender and that it wouldn't be fair to the current buyers for me to simply let them be out bid after patiently waiting for me to get a short sale approved.

His reply was "You're not going to submit it to the lender even though the law requires you to present all offers?"

To which I informed him that Idaho State Law requires me to present all offers to my seller which I will gladly do. However, the lender is not a party to the contract so I'm not required to submit it to them.

Since there is not a whole lot of set standards for dealing with short sales, here's my stance, a buyer who wants to submit a higher offer is welcome to and should the lender counter back at a higher price and the first position buyer doesn't want to accept the terms, the second place offer will be submitted.

You're welcome to disagree but I prefer to work with integrity and give the buyer who has put in the time to get a fair shake at having their deal worked. I don't agree with the agent mentality to shop short sale offers to drive up the price. It might not be illegal but it sure feels unethical.

Contractually, depending on what addendums you have, you might not be able to just bump buyers will nilly whenever a higher offer comes in.

I want a buyer's agent to feel comfortable in submitting offers on my short sales and know that an accepted offer is going to be worked until it's approved or dead and only then will I go looking for other options. If you were the buyer in first position wouldn't you hope the same courtesy was being extended to you?

Re-Blog

Comments(15)

Comment

Show All Comments Sort:

Tim Lorenz

TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA

949 874-2247

I feel the same way but the state of California states in its short sale adendum to the buyer that the agent for the seller will have to send all offers to the bank if they request them. I have not worked with a bank that has asked for any offers only the ones I send. But should they require them the buyer is so informed.

Nov 17, 2009 08:25 AM

Tim Lorenz

TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA

949 874-2247

I feel the same way but the state of California states in its short sale addendum to the buyer that the agent for the seller will have to send all offers to the bank if they request them. I have not worked with a bank that has asked for any offers only the ones I send. But should they require them the buyer is so informed.

Nov 17, 2009 08:25 AM

Michelle Gibson

Hansen Real Estate Group Inc. - Wellington, FL

REALTOR

Brian - I wish every real estate agent handled short sales this way, which in my opinion is the proper way.

Nov 17, 2009 08:27 AM

Jeff Payne

The Payne Group at Keller Williams Success Realty - Panama City, FL

Panama City Real Estate

You've got it right, while it is the sellers decision, you can and should inform the seller of the best practice of not submitting more than one offer......

Nov 17, 2009 09:15 AM

Brian Brumpton

Keller Williams Boise - Boise, ID

Boise Idaho Real Estate

Jeff,

Right as always, it is ultimately up to your seller and it's key to educate them about the right way to do things.

Nov 17, 2009 10:08 AM

Richard Weisser

Richard Weisser Realty - Newnan, GA

Richard Weisser Retired Real Estate Professional

Brian...

I am torn on this one ... but the reality is that it is the DELAY that causes so many problems. If there were just a way to get a quick reply regarding approval a lot of our problems would just go away!

Nov 17, 2009 11:24 AM

Janna Scharf

Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID

Coeur d'Alene Idaho Real Estate Expert

An agent asked me if, with a full price offer and non-refundable earnest money, we would agree not to accept any other offers until theirs played out. YES! She wrote that into the purchase contract and we have a lightning fast approval and are heading into closing.

An agent asked me if, with a low offer, we would agree not to accept any other offers until theirs played out. I advised my sellers not to agree to it. But, since this buyer was willing to let them stay on as caretakers for a few months after close while they transitioned, my sellers agreed to it. The purchase offer came in without anything mentioned about the agreement. A MUCH better came in a few days later and the sellers decided to submit that one to the bank for review even though they had said they wouldn't. It didn't sit well with me, having agreed to something different, but I followed their instructions because without it being in the contract, they weren't bound to their agreement. Talk about a can of worms, and ticked off buyer's agent and livid prospective buyer with ME in the middle doing damage control. /very uncomfortable.

I would never intentionally shop offers to drive up the price, and I hate that with short sales "anything goes." It's crazy-making stuff...

Nov 17, 2009 01:03 PM

Marney Kirk

Cummings & Co. Realtors - Towson, MD

Towson, Maryland Real Estate

Brian, unfortunately in Maryland, we are required by law to submit any and all complete offers to the bank. So though you WANT to do the right thing for that buyer, legally we have to submit...

Nov 17, 2009 01:09 PM

Brian Brumpton

Keller Williams Boise - Boise, ID

Boise Idaho Real Estate

Richard - Part of the delay could be attributed to giving the banks multiple offers so they think they can sit on their hands and wait for the offers to roll in. If the banks could speed up their process, they could probably net near market value for the properties.

Janna - As with all thing there are exceptions to every rule. You want to advise your seller to do what's right for them. If a seller in a accepted a contract in a normal transaction and then someone came along and said I want to pay even more. You couldn't back out of the contract originally accepted could you?

Nov 17, 2009 01:12 PM

Brian Brumpton

Keller Williams Boise - Boise, ID

Boise Idaho Real Estate

Marney,

In that case, you should do what is required of you by law. That probably doesn't exactly make short sales appealing to buyers.

Nov 17, 2009 01:14 PM

Kay Van Kampen

RE/MAX Broker, RE/MAX - Springfield, MO

Realtor®, Springfield Mo Real Estate

You are a great example to follow. All short sales should be treated as any other offer. First offer shoudl be sent to the lender for approval, with all other offers as back ups. The law states present all offers....and in this case, the seller is still #1......not the bank.

Nov 17, 2009 01:34 PM

Dan Edwards 425-276-7008

Keller Williams Realty - Bellevue - Bellevue, WA

You are certainly asking for it if you keep the negotiations open. My though is to work for the highest and best and once you have a contract you have to honor that just like any other transaction. A bird in hand is worth 2 in the bush!

Nov 17, 2009 03:05 PM

Brian Brumpton

Keller Williams Boise - Boise, ID

Boise Idaho Real Estate

Deborah,

You'd have to take up the "gray area" of whether or not the lender is a party to the contract with the NAR. According to them, they're not.

I've never had a lender ask for offer submissions on a short sale, I drive that process as the agent (are you referring to REO's?).

If you've got that many offers on a short sale in 2 weeks, you've probably priced it to low for the lender to accept anyway. The entire reason for a lender to accept a short sale is because it will net them more than foreclosure. If you've priced it so low that you're creating a bidding war, you're not doing them any favors. They can just as easily give properties away on their own.

As for my fiduciary duty, it is to my seller not the lender. Be careful not to mix up who you're representing, it's a fine line you have to walk.

I always advise my sellers to do what's best for them and I know that a quality buyers agent is going to call and ask me how I handle multiple offers before they ever submit one. How likely would you be to advise your clients to submit an offer knowing that I'm going to bump you the next time a higher one comes along?

This is a contributing factor to why buyers and their agents have such a sour disposition on short sales. I've also experienced first hand what happens when lenders have multiple offers. They can't keep which one they're working straight.

I do appreciate your input, and I think we all know there are a lot of "gray areas" in the short sale arena.

Nov 18, 2009 09:31 AM

Melissa Zavala

Broadpoint Properties - Escondido, CA

Broker, Escondido Real Estate, San Diego County

Good Evening, Brian. I'm sorry to say that I've got kids and dogs downstairs, so I do not have time to read all the comments this evening . . . but I will definitely share my California-based $.02.

In the state of California the Department of Real Estate and the California Association of Realtors have a specific form called a Short Sale Addendum. This Addendum allows the buyer a few different options: 1) initial deposit check into escrow once lien holder approval is received from the bank, and 2) initial deposit check into escrow within 2 (or 3?) days of acceptance by seller of the offer. There is also a line item in the addendum that allows for different variations on how many offers can be submitted to the bank. Also, in California, you can only have one escrow open per transaction at a time. So, a buyer who has his initial deposit in escrow is much safer because he essential holds a first position (contractually) over all others.

I always tell those who want to present back-up offers (especially high ones) that it is what it is--a back up offer. The bank decides the price. If the bank wants more than what Buyer #1 has offered, I will tell Buyer #1. If he doesn't want to come up to the new price, we will cancel the escrow and move to Buyer #2.

Your fiduciary obligation is to the individual whose name is on the listing agreement. And, unless you have listed an REO, then you owe your duty to your seller--your obligation to do what is in the seller's best interest. is in the seller's best interest may be the most quick and efficient closing possible. And, if submitting 27 other offers to the lender will impede a quick and efficient closing, then maybe it is not in your seller's best interest.

I'm sure I'm gonna get an earful on this one. But I support your moves on this. While the laws and rules in Idaho may be different, I think that you've acted professionally and I agree totally with your decisions. As a side note: many, many lenders only want one offer and tell you that. So, in some cases, it is only possible to submit one at a time.

Have a great evening!

Nov 18, 2009 01:47 PM

Jeff Payne

The Payne Group at Keller Williams Success Realty - Panama City, FL

Panama City Real Estate

Brian, you are a wise man. Your duty is to your seller and NOT the lender!

Nov 19, 2009 01:12 AM