Tampa Short Sales - Submitting Multiple Offers To The Lender
Posted Jun 27, 2008 @ 9:25 am, Viewed by 479 Visitors, Read 538 Times.This post is addressing short sale in the Tampa (Florida) area and offers that are submitted.
I understand what a lot of you are saying about unethical agents when it comes to short sales. Lord knows there are many unethical and incompetent agents. Some of you feel that it is unethical for an agent to submit multiple offers to the owner and the lender. I disagree with you, as does the State, which tells us to present all offers to the owner. I have spoken with Carol Austin at GTAR several times about this issue along with the issue of basing commission upon third party approval. As agents we have to present all offers to the owner. With offers that are contingent upon banks’ approvals, the seller can continue to present other offers up to the point when the bank agrees to one of them in writing. If the lender finds out that the agent and owner are withholding offers they will not be happy and most likely kill the deal.
Think of it this from seller’s perspective. You own a home and have it listed for 122 days. You owe $272,000 on it. An offer comes in at $212,000 and your agent submits it to the bank. Three weeks later the bank is still looking at the short sale package, but hasn’t approved it yet. You get two more offers at $218,000 and $230,000. Of course you want to sign them and submit them to the lender – why wouldn’t you? But your agent holds on to them and doesn’t present them to the lender. The home sells at $212,000 and nine months later the bank files a deficiency judgement (or 1099) against you for the balance of the loan - $60,000, while it could have been reduced to $42,000 should your agent have submitted the $230,000 offer.
From the seller’s agent perspective, it’s only ethical to present other offers to the lender. You need to make sure it is written in the offer “contingent on third party approval from the lender”.
Note 1: I do abide by GTAR’s rules. I change all my listings to pending in the MLS.
Note 2: If I get an offer, I will present it to the seller. Who do you think is going to get sued if an attorney finds out you just costed your seller $12,000 or $80,000 in additional deficiency judgement (or 1099) fees because you withheld higher offers from the lender? Do yourself a favor – write up a good contract and protect your own ASSets.
It’s not what you do, it’s how you do it!
Lance Mohr is an honest and hard working real estate professional specializing in Tampa Real Estate, Tampa Foreclosures and Tampa Bank Owned Homes. If you are thinking of buying or selling a home I hope you give us a call at 813-317-4009.
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Dan,
The pending thing is a big concern of mine. I have a home listing that was getting a lot of showings on it and then we received an offer. The offer was contingent on third party approval from the bank. Five days later another agent called me and asked what had happen to my listing. I explained everything to him and said if he wanted to summit an offer I would present it to the owners. Of course it was contingent on third party loan approval. To make a long story short – the home is pending, we have two offers to the banks and I explained everything (in a written email) to both agents.
As far as the same price offers and a lawsuit – It’s contingent on the BANKS APPROVAL – NOT OURS. Banks are not home owners that are looking at just the price. Then will also look at the qualifications, earnest money deposit, contingencies (such as “AS-IS with right to inspect&rdquo
, the dollar amount in the contingency… a few months ago I have a bank accept an offer that was lower because the buyer did not do an “AS-IS with right to inspect”. The homeowner agreed with the bank and I on this.
I do agree with you on first right of resusal. Just keep everyone informed and put it in writing.
Lance:
I agree with everyhthing you wrote. The problem is that very few short sales actually close, and if they do it takes months. Agents on both sides of the transaction have to work much harder on a short sale all the while without any idea what they will be paid, if they will be paid at all.
Most short sales experiences have not been plesant. Many lenders are not cooperative, accessable, etc.
Banks should have no right to interfere with commission. Agents should demand that NAR take a stand on this. Lenders have absolutely every right to approve the short sale or not, but should have no input regarding commission. Approve a sales price that takes into account the commission the same way an REO property does.
In my opinion, lenders have caused the scenario you are writing about simply by their disrespect towards agents who are trying to do their job. Is it right? No. Understandable? yes.
John,
I agree with you as well. It's not just the banks though. Most Realtors do not know ANYTHING about short sales. They go to these free classes taught by someone how doesn't know anything and then they think they're a pro. I've been doing short sales for over 8 years and have paid over $7,000 for my education on them. I am SICK of agents submitting offers on a short sale like they would to an individual. Then the uneducated Realtor blames the bank for not accepting the offer.
As far as the commission – our industry just has too many uneducated real estate agent prostitutes!
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I have been in real estate for over 10 years, and in mortgage banking for 5 years before that. I strive to continue learning and educating myself every day, and I enjoy passing on the benefit of my knowledge to my clients and fellow Realtors. I can be reached at 813-317-4009. All calls are promptly answered! Visit us at Tampa Real Estate. Read More
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Hey Lance nice post, How do receive multiple offers if it goes into pending status? Problem is no one wants to stick their neck out and inform anyone what the right and wrong way to handle short sales.
Hypotheticly if you have two signed contracts at the same price and everything is identical and both are contingent upon lenders approval and the bank approves the amount of the short sale. Who gets the home? Rememer all the bank does is approve the short sale payoff, the agreement is still betweeen the buyer and seller, in this situation wouldn't you be open to a lawsuit from the buyer who didn't get the home but had the same offer?
There really is no way to win no matter what way it is handled. I agree with you that you need to get the best possible offer to the bank and need to submit all the offers.
If it is our duty to get the highest and best possible deal for our seller then our mls would prevent us from doing that correct? How do we expect to get multiple offers when the mls rules say you have a contract and needs to go pending.
The way to go imo is <a href="http://www.realestatewebmasters.com/showthread.php?t=25933&page=2">first right of refusal</a> since our mls allows you to keep it active in this case unless they have changed that also.