patrick.net

#1. You are clueless for even using a buyers agent. This is the whole problem.

#2. Listing agents in hot markets will barely return phone calls from buyers agents. They have thier own buyers lined up , or buyers agents from the same brokerage office. Or thier 'assistant' who has a RE lic will write it up (kind of a double dip in all 3 scenarios)

#3. If you are 'lucky' enough to be allowed to actually bid against the listing agents picked favorite buyers you will have to outbid every offer by a lot. They will normally take a lower offer and flush the highest offer. Reason: hand picked buyer gets a good deal, is verified to be very unlikely to back out of deal by listing agent one reason being THEY ARE GETTING A DEAL. The dumb 'highest bidder' is an unknown and likely to bail in escrow as he is paying top dollar AND there might be appraisal issues.

#4 remember it goes back to how the LISTING AGENT is compensated. You show up to a house for sale with your private limo driver and want him to pay your driver 2.5% of the deal?? good luck! if he can dual agency the deal he makes way more. Its like a poker game with a 30k pot - everyone wants IT ALL.

BTW all this is legal somehow the way they do it. The loan owners dont have any profit incentive. none. The bank doesnt either - all losses are borne by taxpayers in banking in modern era.

What you MUST DO is watch the new listings on redfin or similar site. On first day of listing call the listing agent and tell him 'i am not using a realtor i want you to write up an offer on this home for me'. get it? Legally the any agent who lets you in the door to a home must be paid a commission so do not 'let them show you homes' no home a buyers agent shows you will you be allowed to buy - for the most part. You will be allowed to overpay for crap though.

Good info Pockyclips, interesting thoughts on the issue. If you are right then I would never get a chance at a short sale with a buyers agent in tow. Can you qualify yourself tho? Where ate you getting this info?

Its well known to work this way forever. On short sales the situ is even worse since the homeowner is very very easy to convince to present the lower/hand picked offer to the bank. If there were profit for them, the owners are actually more difficult to convince to take a lower offer (but happens all the time, the good agents are good at this, people bad at it cannot make a living in RE it will be part time job for them probably).

During the last bubble i was getting outbid, wasnt allowed to buy. I finally got my own license to 'get my own commission' which is also bad (greed head idea). So i have worked in RE. I worked in an office with agents and you learn the biz. How to pay kickbacks legally to a mortgage broker and not violate RESPA laws (this is why all agents 'want you to use thier mortgage guy'). How to take take bribes to let someone buy a house ( this is called 'short sale negotiation fee' and is legal).

The whole industry revolves around doing anything and everything you can to maximixe your income with the least amount of work/risk/lawsuits.

Why dont you go to realtor.com - find 10 random listing agents that are over age 40, call them up and ask them 'hey do you think using the listing agent to write up my offer increases my chances of winning the bidding war by a little bit or by a lot?' this will cost you nothing but about an hour of your time. Half the agents will lie and try to line you up to use them as your buyers agent. The other half will say 'yeah duh!!!'.

Here is an analogy. Buying a car. Normally there is only one salemen. BUT you could hire a buyers agent to drive you around town for a year looking at new, used, hot rods, etc. and they would only charge you what 20k for this service? why are you adding more salesmen? are you not capable of usin realtor.com or redfin? can you not drive yourself to a house?

buyers agents are the devil

one last thing. i know 3 friends who bought shorts in last year. ALL OF THEM got a screaming deal ALL OF THEM used Listing agent to rep them. Read the forums, you will see ALL frustrated buyers have buyers agents. This is an open secret in RE industry.

http://www.wisebread.com/the-cost-of-a-free-ride-why-not-to-use-a-buyers-agent-submitted-by-ken-rick

i know a guy who paid 40k under the other higher offer due to the agent flushed it to double dip a short sale. its legal too.

You would think the banks would get a law passed letting the bank pick the Listing Agent on a short sale. BUT the nar is all powerful. So underwater loan owners pick thier cousin vinny like the movie and the games begin. Also half the short sales are fake, only trying to extend foreclosure/get loan mod which doesnt help the disaster that RE has become.

The bank has every right to ignore offers. It is up to them. They send out their own appraisers. If they think they can get a better deal, they will foreclose.

Owners own the house. They find a buyer, and tell the bank "I'm under water and want to sell, here is an offer I'm willing to accept, will you accept it". It's the owners duty to find the buyer, it's the owners duty to find the deal they are most comfortable with.

Banks are given the offer and allowed to either accept it, counter it, or ignore it. The bank can turn around and say they aren't approving a short sale because they believe the home owner can currently afford to pay the difference.

Your agent isn't taking you to see those listings because they have no luck with them. You need someone who deals with short sales and understands the process and how to push a deal through. A realtor usually specializes in one type of housing and one type of contract. You've got someone who understands how to deal with an owner and how to make the deal go through. If you want to look at short sale properties, you need someone who does them all the time, and has become a specialist in that type of sale. Any agent can do any kind of sale, but in the end, they're most comfortable with a certain type of sale and that's what they aim for.

After reading all these,I have question,if the dual agent forwarded the best offer then why does bank counters with their own offer? It seems simple but it may not be the case,if every buyer is gonna pursue dual agency. Are we entering a latest phase of RE corruption?

PockyClipsNow says

The bank doesnt either - all losses are borne by taxpayers in banking in modern era.

Based on this "fact" bank stocks should be right where they were years ago. But they're not: http://investing.money.msn.com/investments/charts?symbol=$DJUSFN#symbol=$DJUSFN&event=&BB=off&CCI=off&EMA=off&MACD=off&MFI=off&PSAR=off&RSI=off&SMA=off&FSO=off&SSO=off&Volume=off&period=10y&linetype=Line&scale=Auto&comparelist=$indu,$compx,$inx

OP - It's not that your BA is getting less commission, it's that BA's chances of and length of time to receive a commission is less and greater, respectively, with a short sale, which requires bank approval and may never go through.

Others here may have more experience, but I found that REO listing agents had little decision making power - the bank asset manager picked the buyer, for the most part, from among the available offers.

For short sales, the listing agents from what I could tell just wanted one well qualified buyer to take to the bank to get it approved, whether that seller actually ended up buying after approval seemed to be hoped for, but not necessary, because if/once approved, can be marketed as an approved short sale to other buyers.

One house I wanted to buy, I called the listing agent directly, offered him a double pop, a listing on my old place, and an above asking price. It didn't work. They had 20 offers or something like that, and went with a higher bidder. So if that doesn't work, just calling up a listing agent and offering to go through them isn't necessarily going to work for you. Before I was using a BA, I would often call listing agents, half of which wouldn't return my call, and the other half of which were either trying to get me as a client or assumed I was not a serious buyer and wanted me to get a BA to have that BA show their listing to me.

I went through a short sale in mid 2011 and got the house, but the two RE agents were a PITA throughout the process. It was an unusual house/location that I was familiar with and definitely wanted to buy. The listing agent put the house on MLS but did not post a sign; they allowed potential buyers to schedule a visit during four days, where the seller would escort them on a tour.

I offered a few dollars OVER the listing price to discourage anyone else from competing with my bid. The bank accepted the offer and demanded a closing in two months, which was met - even though I needed a mortgage until I could sell my condo. (The owner wanted the closing three months later but the bank said no)

The home included an integrated system that provided surround sound for a flat screen TV and individual remote-control stereo in four other rooms. This was wired into the house with amplifiers in the basement and speakers in the ceilings; it was a "fixture" that had to remain in the house. The owner, two RE agents and I all signed a bank-issued legal notification that there were no separate agreements involved in the sale. Yet the listing agent said the owner bought the sound system separately for $17,000 and was looking to sell it separately; my "buyer's agent" said I should buy the system separately but she could not be part of the deal, it would have to be cash on the side. Both were violating the terms of the sale. I finally gave the owner $1000 for the flat screen TV, which he could otherwise remove as personal property.

The contract included 6% commission plus a "negotiator" fee of 1%, which I later determined was just more commission. Still worth it to me - I got an almost new house with a 20 mile view for 55% of the June 2006 new home price. (I'm now completing a major renovation and landscaping for an even better home.)

Quigley says

She says they never go through and are a waste of time.

That's mostly true. But some masochist Realtors claim they specialize in short sales. Find the right one and they'll lick the bottom of the barrel right along with you.

PockyClipsNow says

The dumb 'highest bidder' is an unknown and likely to bail in escrow as he is paying top dollar AND there might be appraisal issues.

Also bidding real high is a trick buyers, slimy investors or idiot buyer's agents use to flush out the other bidders. A good listing agent won't fall for it. Or they'll ask the bidder for a high down payment and not allow the contract to be contingent on financing/appraisal.

My broker wrote 176 contacts on short sales last year as the listing agent and/or the buyer's agent. Only 10 became successful sales. That is a lot of work for little reward. Things are better this year as banks are being more cooperative, but there is always the chance that it will be a waste of everyone's time. And the commission paid is always at the lender's discretion with no regard to what it says it could be in the MLS data. With that being said, I think the OP can find an agent willing to show and write contracts on short sales, so long as the OP is willing to offer a fair price based on comps and the condition of the home they want to purchase. No agent will want to work with a buyer who is throwing contracts at the wall to see if one will stick.

PockyClipsNow says

#1. You are clueless for even using a buyers agent. This is the whole problem.

For me, I'll take that a step farther, I wouldn't use one of these so-called agents for anything. I obtained dual licenses in two states solely for my own RE knowledge. I want a property I can go look at it myself and make the offer myself and if need be hire a lawyer at the end game, end of story. I don't have to deal with any of these RE morons.

pkennedy says

The bank has every right to ignore offers. It is up to them. They send out their own appraisers.

Just the thought of that statement makes me cringe.

We have been talking with a buyer agent but have not seen any homes yet. She told us that banks will not finance short sales or foreclosures because they are strict on what they will lend for. She said that short sales and foreclosures are high risk because so much could be wrong with them, and that banks will request inspections and appraisals that will show that there is too much wrong with the home and therefore will not lend for it.

Is there any truth to this? She is trying to get us to by new construction or normal resale homes that are fairly new.

Can a short sale purchase be made with a VA certificate pre-approval? Same with foreclosure?

hj2222 says

We have been talking with a buyer agent but have not seen any homes yet. She told us that banks will not finance short sales or foreclosures because they are strict on what they will lend for. She said that short sales and foreclosures are high risk because so much could be wrong with them, and that banks will request inspections and appraisals that will show that there is too much wrong with the home and therefore will not lend for it.

Is there any truth to this? She is trying to get us to by new construction or normal resale homes that are fairly new.

Can a short sale purchase be made with a VA certificate pre-approval? Same with foreclosure?

By your agent's response, I knew you're either a FHA or a VA buyer. It's very hard to get your offer accepted on a short sale or foreclosure with these types of financing.

You want to buy a house with 0-3.5% down payment, and you want a good deal. The reality is that you will have to overpay to get your offer accepted. Therefore, your best bet is new construction or regular sale.

Your agent is an idiot. Instead of telling you the truth, s/he was trying to be nice and gave you a crappy excuse.

So the bottom line is that we need to stick with resale and new construction, even though she gave us the wrong reasons for it... it is the truth.

Well this helps a lot. We thought she was just trying to get more money from us. Maybe she thought I might not understand and wanted to dumb it down for me. At least we know, thanks to your reply, that we really should steer away from short sales and foreclosures. Thanks for that.

We do not buy for investments. I love this place because so many members are very knowledgeable. I learn something new every day here.

I have rarely seen such a collection of misinformation.

Short sale listing brokers have very little say in what offer the bank accepts.

Short sale brokers are required by law licensure rules to submit all offers.

Always use your own broker and in legal matters your own lawyer.

Favoring other in-house brokers is NOT an option. The lender cares about getting the most money, not whose hand it comes from.

Short sales usually pay 5% split between brokerage firms.

They are hugely complicated by second mortgages and this leads to much confusion to the public.

I have completed one in fourteen months and some in eight weeks.

Lenders rarely respond in written form to Buyer's directly.

One of the biggest hurdles , often insurmountable, is the Seller qualifying for a hardship status. Further the lender requires a mass of forms to be filled out to even look at buyer's offers. I have submitted full list price offers and failed to get a response (even sending 44 pages and having a cross country vice-president of the same major lender advocating and making calls.

Why many realtors do not like to deal with short sales include all of the above AND this:

Some properties listed for short sale are written by brokers who have never qualified the Seller with their lender or in many cases even contacted the lender. When your broker/agent writes your offer and submits it to the listing broker you may be dealing with a property or seller that simply will not possibly qualify.

Given the absense of consumer knowledge as documented above you will understand why many realtors do not want to get involved in offers on short sales that often result in a client/ customer being disappointed in them without any real understanding of both the extra effort these sales require and the huge failure rate combined with the fact that realtors do NOT get a dime until a deal closes. It can lead to a lot of uncompensated expense, aggravation, loss of client confidence and all for nothing.

Hello Quigley,

There is a lot of misinformation out there. What pockey says is just that. We help homebuyers get into houses all the time, and usually not our listings. If that was not the case, we would not be in business.

Besides, banks are cracking down on the dual agency. Especially if they have only seen one offer. They feel there is a conflict of interest and deny the short sale on the spot. New trend. BTW Agency is established by brokerage and not individual agent licenses as Pockets suggested.

The real reason your agent may not want to show you short sales is that they take a while to close. If your agent is looking to get paid in the next 30-45 days, good luck in him/her showing you short sales. You really need to get a buyer's agent that is local, and has had success getting buyers into homes that has your best interest in mind.

Unfortunately, there are agents who get their license to make a quick buck, and give hard working agents a bad name.

Good luck with your home search, and keep doing your research.