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Kris, Real Estate Pro in Tracy, CA

Things to watch out on short sale as a buyer

Asked by Kris, Tracy, CA Wed Mar 21, 2012

Hi All,
I am working with a realtor looking for home. She just happenned to a listing of her own friend's own home last week and I really like that home. This is a short sale. Now, the plan is my realtor is going to represent both seller and buyer. She is a nice person but on the flip side I want to make sure she didn't end up favoring her friends on the whole transaction itself. What are things I should watch out for? Here are some question I have
1) On short sale scenario, Should I ask the seller to be vacate the house right after the offer is accepted? Or Is it okay for seller to vacate just few days before closing?
2) On my purchase contract, what other terms/contingency I should put in?
3) What are the other things I shoud generally watch for in the short sale transaction?

I am confident she will give me good advice but want to make sure I hear from this great forum as well.

Robert

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Answers

9
Find out if your Realtor has a broker they hang their license with. You can have the broker oversee the transaction to make sure you are protected.
0 votes Thank Flag Link Thu Mar 22, 2012
Your agent should be answering these questions for you, that's why they are your agent.
And yes, having a dual agent can work, so don't be swayed by that. It's just one of those scenarios where the agent really has to stay neutral & give each party the best service possible without jeopardizing either side. Any good agent, will educate you to the market about short sales, pricing, negotiation etc, so that you can make an educated decision should you go through with offering on one of their listings. As you can see, it's a touchy subject for many, but done correctly it can work.
0 votes Thank Flag Link Thu Mar 22, 2012
Hi Robert,

Congratulations on the purchase of your home! As real estate professionals, we do often represent both buyer and seller in a "dual agency" and must maintain the highest level of integrity when conducting transactions.

1. The short sale process can be lengthy. Once the seller accepts your offer, it must be submitted to the bank for approval. Typically, unless the seller has already found another residence, they usually stay in the home during this process. It can take months to receive an approval from the bank so i hope you are in this for the long haul. There is a page on the contract that references when possession of the home will take place. Please review that with your realtor for clarification.

2. With a short sale, the "terrms" are typically established by the bank. You will receive documents to sign from the short sale lender with regards to purchasing this property. Please review those documents carefully and ask questions if there is anything you don't understand. All other terms/contingencies should be discussed with your realtor.

3. Hopefully I answered this question with the first two responses. The main thing you need to know is, have patience. The process can take time, but if you get your dream home in the end, it was worth it!

LaRonica Fisher
Real Estate Agent
DRE# 01901563
(209) 834-6990

Imara Mortgage & Realty
68 E. 11th Street, Suite 120
Tracy, CA 95376
0 votes Thank Flag Link Thu Mar 22, 2012
The industry teaches it Terry!! It's real estate sales. It has nothing to do with high school. It would seem we do agree that Robert's presence here is cause for pause in the direction he is considering. But again, it's clear - her duty is to the seller. Robert's interests are secondary in this situation to the seller's, but that doesn't mean he gets sold down the river.

I'm not going into the strategy's of short sale negotiation here, but if the agent is honest and short sale savvy, this situation would be advantageous for both buyer and seller for a number of reasons.
0 votes Thank Flag Link Wed Mar 21, 2012
Well, we must be in High School, because if everybody does it then it must be okay! Listing your friend's home is one thing, but then bringing the buyer to a deal that you know often has major complications is quite a jig-saw puzzle to navigate. You are trying to keep your friend's home in escrow and not have the buyer drop out, you are trying to help the buyer get the best possible deal, and I would wonder whether a short sale is the best option, and then there's the bank to deal with that may come back after a BPO and think the house is worth more and then the agent has to advise if the house is worth more, or there may be a second and the transaction goes on forever. Or what if the buyer sees another house they like and are considering dropping out of this escrow. The main fact is that the buyer is here looking for advice, says it all to me!
0 votes Thank Flag Link Wed Mar 21, 2012
@Terry - enlighten me and explain what conflict of interest you see. Real estate agents list their friend's homes almost as frequently as Amway sales people would sell soap to their friends. RE agents take classes on relationship building and database development to create "friendships" to cultivate sales. I think I would be more compelled to have conflict concerns if the roles were reversed and Robert was the seller and she was his agent who brought her friend in as a buyer, especially if this was an equity sale, not a short sale. Her fiduciary obligation in this deal is with the seller.

The dual agency exists due to the same broker, not the same agent....and in my mind, that's where conflict usually lies, but in CA is "made right" via disclosure. Again, I go with Gus!
0 votes Thank Flag Link Wed Mar 21, 2012
Dear Robert, It's not unusal for an agent to represent both buyer and seller, but in your case there is a different element to the mix and that is called "a conflict of interest". A conflict of interest doesn't mean that anyone is not honest or trying to do their best for you. But it clear you understand that it exists and your agent obviously understands it exists or she wouldn't have told you that the listing was was the home of a friend. It is unfortunate that your agent didn't offer to have another agent in her office represent you. A short sale can be a very long and complicated process. One of the pitfalls I can see up ahead is that often one must decide whether to keep waiting for the bank to respond or to drop out of escrow. I suggest that you tell your agent your would like her to refer you to another agent in her office. By doing a referral, she should still get a referral fee, and will be kept in the loop, but you will have your own independent agent to advise and answer your questions. As far as your questions go, there will be many disclosures from the bank, so read them carefully word for word. Owners are not allowed to rent back or gain anything from the sale. You have a lot of good questions, and you deserve good answers. Just remember, your agent is a professional and you have nothing to be embarassed about in your concerns. Your agent will be still getting the listing commission and perhaps a referral fee as well.
0 votes Thank Flag Link Wed Mar 21, 2012
The real question is, "Does this realtor know what she is doing in regards to negotiating a short sale?" I am not a fan of dual agency (1 broker representing both seller and buyer), however, in a short sale situation, in practical terms, the transaction evolves to buyer/seller across the table from the bank and a single agent, who knows what they are doing and why, can be an advantage.

The part that is concerning is "listing of her friend's."

What many listing agents in short sales fail to realize is that their fiduciary role is slightly different than in equity sales in the sense that they need to get the home sold - that doesn't mean for the highest possible price....it means find a viable buyer and get the deal closed so that their client doesn't get foreclosed on by the bank.

Now, just by the type of questions you are asking and the fact that you are here, it is hard not to feel that there is some concern in your mind regarding the realtor. Really, she should have educated you about question #1. Question #2 is for your agent to answer - and you might want to touch base directly with Gus below since he is from the same area. Question #3 is wide open in terms of answers, but I would say the #1 thing to look out for is a short sale listing that is taken by a friend instead of an experienced short sale agent. I would ask her how many she has closed and if she negotiates them herself personally. As a buyer, you enter into a short sale deal, and you are pretty much in the passenger seat of the bus....hoping the agent driving the bus knows where they are going.

Good luck. Call Gus.

BeachBrokerBill
CA DRE 01775528
0 votes Thank Flag Link Wed Mar 21, 2012
You should have your own representation, its that simple
0 votes Thank Flag Link Wed Mar 21, 2012
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