SHORT SALE SELLERS BEWARE | This Could Happen to You
A listing agent has a buyer/investor negotiating with the lender to purchase the short sale listing. This is an actual situation I've just encountered. I won't identify the agent.
REALTOR REMARKS QUOTED VERBATIM
"TENANTS RIGHT, UNABLE TO SHOW, TENANT NOT COOPERATING, PENDING EVICTION, NO LOCKBOX, SHORT SALK NEGOTIATED BY 3RD PARTY. This is a short sale &; is contingent upon lender approval. Call listing agent pruioer to submitting any offers,. All offers must be accompanied by the AAR Short Sale Addendum.";
I telephoned listing agent who confirmed eviction in process; tenant won't allow showings.
Home on MLS 25 days. Foreclosure sale date September.
MY CLIENT WANTS TO MAKE OFFER
Home listed 25% below comps. It's 4 years old in popular community; nice exterior. We're familiar with community, floor plan and amenities.
My buyer decided to offer based on exterior condition. If interior gets trashed by tenant, they could cancel if lender wouldn't repair major damage that may occur. My buyers are
experienced so we didn't expect problems.
LISTING AGENT DIDN'T RETURN CALLS
- Telephoned agent as per MLS instructions. No return call
- Following day I called again. No return call.
- Weekend passed.
- On Monday I called, third time. My message said I'm concerned you may have become incapacitated and can't return calls; so if I don't receive one today I'll call broker.
- At same time I sent email requesting a call.
That evening, at 9:00 pm, the agent's call went to my voice mail. Left no message.
Shortly afterwards, agent emailed.
EMAIL CHRONOLOGY
My first email
<<<Hello (agent)
I hope you are ok, because I’ve called and left several messages over the past few days with no return call.
I need to speak with you regarding (address)
Please call me on my cell phone 480 226 1630
Thank you,
Bill>>>
Agent response
<<<HELLO BILL , I HAVE ONLY RECEIVED YOUR VOICE MESSAGE TODAY. I AM SORRY NOT TO RETURN YOUR CALL ANYTIME SOONER AS I WAS WITH A CLIENT ALL DAY TODAY. THE PROPERTY ON (street name) IS AVAILABLE. WE ARE UNABLE TO SHOW THE PROPERTY DUE TO UN COOPERATIVE TENANT. WE DO HAVE A FEW OFFERS IN AND BEING NEGOTIATED BY A THIRD PARTY NEGOTIATOR. NOTHING ACCEPTED YET. YOU ARE WELCOME TO PUT IN A OFFER IF YOU LIKE.>>>
My response, playing dumb
<<<Hello (agent),
I don’t understand. Has the seller accepted more than one offer?
It seems to me that the seller can only accept one offer, contingent on lender acceptance, and that offer is to be submitted to the bank for negotiating, and any other offers are back up. What’s happening in this case?
Bill>>>
Agent response
<<<There is a investor/negotiator negotiating this file. As he is in to make a buk him self . there for any accepted offers would be a back to back closing.>>>
THE PLAN
The agent is "apparently" in cahoots with an investor. Investor is the negotiator. Investor submits lowball offer to listing agent, who gets seller acceptance. Investor negotiates with bank for low price.
Investor will have a buyer at higher price to flip property to at COE in back-to-back transaction. End buyer funds. That money goes to fund investors transaction.
STONEWALL TACTIC
Agent stonewalls others, preventing higher offers.
Stonewalling includes "Renter not cooperating" and "I didn't receive your messges"
SELLER'S PROBLEM
Seller can become seriously damaged in this plan.
- Lenders don't allow buyers to assign contracts.
- Buyers must disclose if they're investors
- Flipping in back-to-back transaction is not illegal, however, lenders don't allow it
- If buyer/investors fail to disclose, that is "possible" fraud
- There is strong chance this transaction will fail at last minute
If transaction fails near foreclosure sale date, seller will lose home to foreclosure and credit is damaged more than through short sale
Agent "apparently" working in best interest of investor/negotiator to obtain lowest price. Violation of Code of Ethics.
AZ is non-recourse state, and until end of 2012 there's no forgiven-debt tax. Seller has some protection. However, if short sale is unsuccessful, sellers credit is badly damaged.
Sellers doing a Short Sale should heed this advice:
- Study the short sale process
- Never allow agents to have buyer/investor negotiate short sale.
- Be sure agent lists home near the comps
- Read MLS print out; make sure agent writes information you've approved
- Be sure agent markets home to Primary Residence buyers, not investors.
- Get copies of agents Electronic Lock Box showing reports .
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