Foreclosure in Minnesota>Question Details

Carl, Real Estate Pro in South Saint Paul, MN

Disservice to clients & realtors or just part of the game?

Asked by Carl, South Saint Paul, MN Mon Oct 8, 2007

With the increasing numbers of property's entering into the market that are pre-foreclosure, bank owned or the home owner is going through bankruptcy and other issues; do you think the listing agent is providing a disservice to clients & realtors by not disclosing a potential time line for closing in the agent remarks of a listing? Should the buyers remarks have a similar statment?

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Hi Carl:

Not only listing agent is providing a disservice to clients and Realtors by not disclosing the proper status of a property such as short sale (or potential short sale - which is really a short sale, to be realistic), bank owned, foreclosure of what not; the L.A. is doing HIM(HER)SELF a disservice by not doing so.

It is best for the buyers and selling agents to know as much up front as possible on what is involved when making an offer.

For example, if they know this is a short sale, then assuming the selling agent is somewhat knowledgeable (and if not, should hurry up and get some knowledge) about short sale, he should be able to consult his client on what might be involved before making the offer. Then they will be fine when they are going through the process. The deal will be a lot more secure for the sellers and the listing agent. If all pertinent information is not disclosed up front, it is quite possible that the buyers might pull out; then the sellers and listing agent will have wasted so much time and effort to negotiate the contract and present the offer to the lenders.

So, why wouldn't they disclose everything that they know? To me, it just reflects their lack of judgement or possible incompetence in the subject matter

Sylvia
0 votes Thank Flag Link Wed Oct 10, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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You must disclose everything, even the timeline.
0 votes Thank Flag Link Mon Oct 8, 2007
Carl, anytime you see that pesky disclosure "subject to third party approval", just know that it could take 4 weeks, 8 weeks or even longer. If you call the agent, they may be able to give you rough idea, but with these distressed sales, there are no guarantees. Just part of the deal when getting properties for a steal.
0 votes Thank Flag Link Mon Oct 8, 2007
Carl,
It's a guess when a "Short-Sale" will close. With a bank owned property or "REO" closing can be more definite but getting it presented is another story!! I refer you to the "thread" which Jim states below. We hashed this one out before. Regarding IF a listing agent should disclose if the property is a "Short-Sale" or "REO"-ABSOLUTELY!! We have some who tape dance around this by stating in the MLS, "Subject to lender approval" or "Subject to accountant approval or IRS approval", blah,blah, blah! If it walks like a duck, quacks like a duck, it's a Duck! And you would think in a Buyers Market the lenders might be all warm and fuzzy to get their properties sold? Read the following taken from a listing on a REO listing:

“Seller offering credit up to $3300 in closing costs and a $1500 bonus to selling agent. Submit all offers on CAR form w/proof of funds for cash offers or pre approval letter from direct endorsement lender and copy of deposit check (3% of PP). Seller reserves the choice of title/escrow. Please allow time for response to offer. No reports available. All required disclosures will be provided upon acceptance. Offer As-is. Please fax to..”

Now granted, we have some closing costs for the Buyer, little bit of incentive to the selling agent but “direct endorsement lender”?, 3% deposit of Purchase price? Seller chooses title and escrow (then they can pay for it!), Please allow time for response to offer (how MUCH time!!), Offer “As-Is”, then, don’t waste my time with your offer, “Fax to”. You just can’t wait to show one of these properties can you!!!?? What a lovely experience. This is the world once the banks get into Real Estate!!
0 votes Thank Flag Link Mon Oct 8, 2007
Carl,
We list a lot of short sales and once we get a purchase agreement we do let the buyers know that the close date is not a guarantee and it could take weeks after to get it to close if at all . The reasons are that each bank handles short sales differently and sometimes those banks handle each property differently too. The other reason is that the banks are bogged down with so many short sales and foreclosures they constantly lose paperwork and lose track of what they are doing. Also if there is a 2nd bank it makes it even more complicated. It is extremely important that the listing agent be on top of the banks every week and sometimes everyday. If the listing agent is not good at following up with these banks to make sure that the paperwork is moving along, the buyers could end up waiting months! By that time the buyers usually have found something else or they will walk.
Hope that helps.
0 votes Thank Flag Link Mon Oct 8, 2007
This question is a continuation of two other threads:

http://www.trulia.com/voices/Home_Selling/nd_part_Is_it_an_e…

and the link in the web reference:
0 votes Thank Flag Link Mon Oct 8, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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The closing date is always negotiable just like the price is. The seller may prefer a closing date but the buyer could negotiate a different date. With foreclosures, short sales etc we have to work with the bank and they may not even give us an answer for well over a month. By that time the buyer may have lost interest or the seller’s situation may have changed. The bottom line is as a listing agent you represent the seller (unless dual agency is created) and try to negotiate the terms they require.
0 votes Thank Flag Link Mon Oct 8, 2007
No.

I have seen "allow time for response" frequently in the agent remarks. Other red flags (maybe just amber lights) are "subject to court confirmation" and "subject to lender approval"
these factual disclosures put a buyers agent and their principal on notice that there are some issues to get through even after initial acceptance.

Pinpointing a specific time line in the MLS before an offer is even presented is problematic because the listing agents duty to the seller is encourage offers. Unless the seller specifically tells the listing agent to insert a timeline in the MLS remarks, I don't think the l.a. can do it.
0 votes Thank Flag Link Mon Oct 8, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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