Bank of America’s Bogus War Against Short Sale Dual Agency
Let me begin with the fact that I have never been a dual agent on a traditional equity sale. The only sales I have ever “double ended” were short sales. In fact, I began doing dual representation transactions out of necessity on short sales in order to hang on to buyers and get the transactions closed. I find that if I can communicate directly with the buyer they are less inclined to walk, and I also find that I am better able to locate a buyer who will be patient enough to wait through the process. So, I had to consider dual agency to truly help my seller clients who were in financial distress and up against powerful bureaucracies.
Now apparently, Bank of America has decided that dual agency is “problematic,” and has adopted policies to discourage it, including a substantially lower offer of commission to real estate brokers who work both sides. For a short time this year, Bank of America even adopted a mandatory addendum prohibiting it -- but they backed away from that pretty quickly and instead adopted policies to create large financial incentives against dual representation. Further, they dictate that even if the seller or buyer could make up the difference between the offered commission and the previously negotiated commission (which most can not) they prohibit that as well. Wow.
I spoke to a Bank of America negotiator just this week that told me that dual agency/dual represenation was “problematic” and cited the fact that it wasn’t allowed in certain states to support his claim. Now in that particular instance, they had a full appraisal of the home and accepted the price and major terms of the sale -- the only big problem they had was with the commission. He categorized their position as “not negotiable” where there was only one agent on the file. Another negotiator freely admitted that the commission I negotiated with the seller would be paid in full if two agents were on the file. Wow.
My problem with their stance is that my state (California) has not outlawed dual agency / dual representation, and I really don’t think Bank of America should be in charge of that decision. And of course, since they are so large (in fact “too big to fail”) the policy decisions they make are beginning to have de facto legislative effect on the real estate market. By discouraging dual agency to the point where it is not economically feasible for a smaller or one person brokerage to do it, they are in effect restricting the kind of services I can provide to clients in distress. And, I feel it interjects Bank of America too far into my client relationships.
Further, I find their policy, dare I say it … hypocritical. In my area MLS, agents are required to disclose whether they have a “variable rate” of compensation for dual agency, i.e., if you are going to discount your commission when you represent both sides, other agents must have notice of that fact. I have seen no such disclosure on the many REOs that are listed by Bank of America REO agents. So, apparently dual agency is not as “problematic” when Bank of America wants to get their own listings sold quickly and off their books. Wow.
At the close of my discussion with this particular negotiator, he did try the old “investor guidelines” routine. However, because I have run this issue up the chain in Bank of America before, I feel confident in saying that this is coming from Bank of America. And, I think it is a dangerous and disruptive policy that does further harm to homeowners in financial distress in California and in other states where dual agency / dual represenation is allowable. The irony for me personally is that bank/servicer inefficiency actually inspired my own decision to begin doing dual agency / dual representation. My question now is -- what will Bank of America do next?
And haven’t they done enough already?
Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
Copyright © 2011 Tni LeBlanc *Bank of America’s Bogus War Against Short Sale Dual Agency*