Thanks Chris for your posting. I will certainly pass it on. All I have to say is Amen... I feel that the agents who list these properties ridiculously low know that the bank will no way take the offer. Banks do communicate and give guidance to the listing agent. I have personally done short sale listings in the past (prefer not to) and I had no problems with communicating price with the banks and getting guidance on where the price needs to be.

Sat Apr 26 2008, 19:00

Joshua and others.

I thought I would share a related anecdote regarding
--------------"all offers are subject to bank approval"---------------

2 weeks ago, our board handled a grievance where the short sale in question was listed for (say $100,000, because I didn't ask the actual price). They had the "all offers are subject to bank approval" clause in the listing.

The offer came in at full price with no contingencies. The listing agent tried to get the bank on board, and they said "NO!" The deal was unable to go forward, BUT the selling agent filed a grievance for their commission and the board ruled in their favor. The listing Realtor had to cough up the commission.

I am a little more skiddish about short sales since this ruling.

The thing that actually makes me most nervous is that the board has not announced the ruling to the rest of the REALTORS. The only reason I found out is that I know the Realtor who lost the grievance.

I guess there are no guarantees but death and taxes.

Sat Apr 26 2008, 17:27

Personally I hate short sales. I would rather the property go to auction knowing that most lenders will re-purchase the property, then they list it with the CEOs wife or girlfriend (or both) ! I still have the buyer, and 3% commission!

Sat Apr 26 2008, 14:17

Joshua, the agent disclosing to you the highest offer to date it not a ethics violation if he/ or she has permission from the seller to disclose the highest offer.

I too have watched agents lower the prices of foreclosures and short sales that they already have offers on. That disclaimer that "all offers are subject to bank approval" almost gives them permission to do with the price what they want. I believe these agents are reducing the price after they already have 20 plus offers on the table to increase their phone calls to obtain buyers for other properties... just my theory.

One of my girlfriends who is also a Keller Williams Agent just sold a short sale...by the time the bank was done they only received $1200 a piece in commission for a deal that took 6 months to bring to the closing table. Banks are cutting the commissions. I have had other agent friends remain strong with the banks regarding their commissions and they have one the battle so we need to realize that we dictate what we are worth. When the home goes into foreclosure and back onto the listing block... the commission is not negotiable once it is placed in the listing service so why should it be on a short sale. Something for us all to think about!

Sat Apr 26 2008, 08:14

Ethics Violation? Technically no, the agreement is with the Seller not the bank, everything gets "skirted" with the subject to clause.*

* The only problem would be if they were suggesting a higher price when there were no offers. The ethics violation here is that the agent has disclosed the highest offer.

This is not an REO we are talking about, it's a Short Sale.

Fri Apr 25 2008, 02:12

i am not sure lisa, but I think Joshua is talking about reo's. When I list a short sale property I always put in the mls "subject to bank approval" in, also that any commision reductions by bank to be split 50/50 between buying and selling agent...
Leanne

Thu Apr 24 2008, 20:38

Yes, it is a trend. I've heard from other agents who are hoping to sell short that the bank has told them to drop the price to something guaranteed to produce offers. There was a short sale in Morningside recently where a home originally priced around $900k was dropped to $500k and I was told they had something like 12 offers on the table within 24 hours. I've seen multiple examples recently. It appears to be becoming a popular strategy among agents who market short sales. The listing will have a disclaimer in the MLS like "subject to bank terms and approval."

Wed Apr 23 2008, 12:09

wow Joshua, I haven't heard of this one yet! I agree with most of the posts that you have received, that you should contact your board, in my area the rules state that you have to have a valid/signed listing agreement for the price that you put in the MLS. I would write my offer and submit it, as mentioned in other posts no one knows for sure what a bank will or will not take. What we do know for sure is that they want these properties sold asap!! So if the agent is playing weird games, I don't know for sure here people I am just assuming this has to be coming from the agent, just give them your best offer and see where it flies..
good luck
leanne

Wed Apr 23 2008, 06:57

At my MLS board, I've been told that you only have to state somewhere - something like "price and terms are subject to lender approval" to get around the MLS rules, contractual gotchas, etc..
It's clearly a tactic to get multiple bids going, (and it unfortunately works) enabling the lender to pick the highest - without any contractual downside because the lender is not legally a party to the transaction. Neat huh?

Wed Apr 23 2008, 00:12

Joshua,

This does not have much impact on you or your client, but I would be interested to know about the listing agreement the agent has on this home.

If someone makes a full price offer at what the home is listed at and the seller does not take this offer then the seller would be obligated to pay that agent his/her commission unless there are some other stipulations included in their listing agreeement.

I'm not sure if this is a violation, but it's sure not smart. Who thinks they are going to sell a home for 10K above the list price in this market!

Tue Apr 22 2008, 11:16

Hey Joshua:

I have been a Principal Broker for 14+ years and this issue is interesting. First your local MLS guidelines should address the listing price. When a listing is usually entered into a participating MLS a form of proof of listing price is required i.e. a copy of the listing contract. The local MLS that you participate with would and should have governing power of this issue. The agent asking for more is just pure blovication! Write your offer with the terms your client wants and submit it to the listing agent. In other words let's see what the lender responds to in writing. It sounds like you have a listing agent fishing the price and seeing how savvy you are. My advice, put him or her to the test! Put it in writing your way.

Tue Apr 22 2008, 09:40

Dear Joshua,

This is interesting. Is it that the bank is trying to collect buyers and hoping for a bidding war? I would be stressed that if the bank is not able to fullfill their "marketing price/offer" (on the lower of the priceses explained above) that you could have an ethics question on your hands. But if the bank is serious about selling and they believe this choice in marketing will deliver the results they want....????

I would be interested in how this one plays out. Do keep us in the loop.

-Karissa

Tue Apr 22 2008, 09:23

The agent most likely does not know what the bank will or will not take. Example: We have under contract one where the agent said they would not take a contingency for the sale of our purchasers home, that there could not be a due dilligance period, and they would not negotiate on price. We got the first two plus $15,000 off list price & $3,500 in closing.

Tue Apr 22 2008, 06:12

Talk to your broker. This may be an ethics violation.

Tue Apr 22 2008, 04:35