Foreclosure in 95864>Question Details

Sacto Buyer, Both Buyer and Seller in 95864

My husband and I want to buy an REO in Arden Park (Sacramento, CA) that hasn't gone on the market yet.

Asked by Sacto Buyer, 95864 Thu May 13, 2010

We called the contact person posted on the door, and met with him (the agent) and his broker. We are interested in using the listing broker, but want to make sure that there wouldn't be a conflict of interest. The home should go on the market any day, and they are just waiting for the go ahead from the bank and the asking price. The listing broker has said that it would be advantageous for us to use him as our agent because of his relationship with the asset manager. We would be an all cash offer.

If we are the first to submit an offer, and it fits the asset manager's criteria, we are told that it is verbally accepted and it goes for higher approval. During this time, the broker cannot pass on to the bank any additional offers that come in. We are really interested in this house and if it's priced as the broker has suggested, it seems to be a real bargain.

Is this chain of events consistent with your experience? Is there a conflict of interest? First REO for us..thanks.

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Answers

7
Voices Member’s answer
Dear Sacto Buyer: If you are comfortable with the listing agent, which it sounds like you are, and you are clearly knowledgeable about agency relationships, your decision to work with the listing agent would not be uncommon in today's Sacramento market. That listing agent will owe you and the bank owner his or her best efforts to work on each of the partys' behalf to conclude the transaction.

But I have to tell you that if a higher or better offer comes in, the listing agent will have a duty to present that offer to the bank owner. That will put him or her in a difficult position with you. Homes in Arden Park are a hot commodity right now.

Good luck.

Erin Phillips
Keller Williams Realty
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Fri May 14, 2010
Thanks for your responses. We currently live in Arden Park and are very familiar with the inventory and prices here. We've been looking ourselves for quite some time to get into a bigger house. Does an asset manager typically 'collect' offers for a while (5-7 days) before moving one up the ladder?

BTW, I don't think it matters for the 'procuring cause' but no agent showed me the house. I am a CA broker (only practice commercial property management) so I was given the lockbox code.

Thanks again. I appreciate everyone's candidness.
0 votes Thank Flag Link Thu May 13, 2010
You might want to google "procuring cause." The agent who showed the home is not automatically entitled to the commission. That is a misconception in our industry.
0 votes Thank Flag Link Thu May 13, 2010
I agree with both agents. One thing neither of them mentioned is what is called PROCURING CAUSE. That means the agent that shows you the house first gets paid even though they may not have been the one writing the contract and doing all the work. That agent would not be able to act in both the seller's best and your at the sametime knowing he gets paid even if you are represented by another agent and they are doing all the paperwork..

Arden Park has many great homes for sale right now. You'll have a better advantage in my humble thought by looking at more then one home. Also in REO's you do not get disclosures that tell you about the property such as what repairs have been made, what doesn't have permits. This type of information is important to chosing a home and knowing what expenses you'll occur later on down the line.

These disclosurers come with other homes such as short sales, regular sales. The information contained in these disclosures are important.

Good luck
0 votes Thank Flag Link Thu May 13, 2010
Hello Sacto Buyer. It's good to know that there is a listing agent out there who admits that he'll play favors with the asset manager to get his own buyer's offer accepted. Will he submit the offer to the bank a second after he put the listing on the MLS? One would think that the bank wants the property to be marketed properly to attract the best offer for the bank. The question is, would this listing agent submit any first offer quickly to the asset manager or just his own buyer's offer? I am also wondering how the bank would feel about the listing agent sharing with you what price he suggested for this property. This could potentially not be in the bank's best interest. If the listing agent is willing to compromise the bank's financial interest, do you think he will look out more for your best interest? I think your instincts are right on. Any dual agency (i.e., one agent representing the seller and buyer in the same transaction) has an inherent conflict of interest and that's why the majority of states do not allow dual agency situations.
0 votes Thank Flag Link Thu May 13, 2010
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
it is legal but in my opinion it is impractcal to have a fiduciary duty to both parties. Buyers come and go but his REO business is more lasting if he treats them right. They could be more important to him than you are.
0 votes Thank Flag Link Thu May 13, 2010
I suspect you already know there is a conflict of interest concerning dual agency but want to believe that there is none because it would appear to be in your interest to believe that. It is very difficult for a listing agent to engage in dual agency without a conflict. How can you get the seller the highest price and the buyer the lowest price?

When you read an REO's bank addendum, generally it includes verbiage that will allow the bank to sell to a higher bidder anywhere along the way. It happened to an agent in my office. His buyers were packed, ready to close escrow and the bank said, "Hey, we received another offer, so we're not selling to you." They get away with this stuff, too.

You might want to rethink your strategy. Especially since this is your first REO.
0 votes Thank Flag Link Thu May 13, 2010
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