Home Buying in Burke>Question Details

Rsking2, Home Buyer in Burke, VA

Is it good practice that a realtor, with support from their company, would offer to hold a second mortgage from a short sale sale for the new buyer?

Asked by Rsking2, Burke, VA Tue Jan 26, 2010

This option was offered to me when I was negotiating a short sale. The seller's realtor offered to mortgage what the seller owed on his second mortgage because we did not have that kind of cash to pay off the sellers second mortgage. It is hard to believe that this offer didn't come from the banks, but from he seller's realtor.

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I think there is a way in which it can be handled, if all parties fully understand what exactly is taking place.

Perhaps the realtor in question should recuse himself from the deal, and use a colleague. Though, in terms of it being a "TOTAL" conflict of interest, it's difficult to say with the information provided.

I think there are some issues that need to be disclosed, and the motivation of the realtor should be brought into question.

But, if he's simply trying to help and he's not taking advantage of one party or another, due to his professional status and information that he's withholding, I think it's an arrangement that can be workable.

The key points again, are to investigate and understand the situation fully and completely. If you feel at all uncomfortable, I would suggest not moving forward in this format.

This is not unheard of, and I don't think it's unethical, so long as proper procedure is followed. But, he is now a party to the transaction as Kim mentions below. That does complicate things, and it would be ideal if he excused himself from his representation duties, and had another realtor step-in, on his/her behalf.

That's about all I can suggest given the limited information, but I would not jump to the conclusion that anything nefarious is taking place here, without really examining all the pieces in play.

Good luck, and I'm sure others will have additional information to add. If I can be of further assistance, or if you'd like to discuss this in more detail, feel free to e-mail me at any time,

Eric M. Abrams
CA DRE#R01862927
1 vote Thank Flag Link Tue Jan 26, 2010
I agree in part with my colleagues below. This transaction would be a unique one and many pieces would need to fall perfectly in place. First, the first trust would need to be paid in full..second, the new first trust would have to be made fully aware of the second at or prior to closing...no "silent second" which is one that is recorded but not on the hud...3rd, your down payment would typically need to be substantial to allow for such creativity.

I imagine the agent does not want to lose the home to foreclosure..thus getting no commission...so he is doing some outside the box thinking..which is great..as long as it is legal. Just because the "company" supports it..doesn't make it good. I will however, not rush to judgment as I don't know all the facts. There is some possibility that this is fully legitimate and above board..but in my 22 years..I have not come across it. Myself and my colleagues below most certainly would love to have ALL the facts to see how this is being "sold" to you.

I must ask the same question Vicky asks...What does your agent say?
0 votes Thank Flag Link Wed Jan 27, 2010
So is the first lien holder getting paid off in full? If not, then I suspect someone - actually probably everyone - would have to commit fraud to get the 1st bank to sign off on this. While I am a huge fan of creative marketing and financing techniques, I am having a big problem wrapping my mind around this and coming up with a way that this would be acceptable. I don't think I'd want to be party to the transaction..... what does your agent say? If I were your agent, I think I'd have to walk away from the deal unless there is some thing more to this story that makes it OK.
0 votes Thank Flag Link Tue Jan 26, 2010
Seems to be a TOTAL conflict of interest. I cannot imagine that ANY legitimate real estate company would approve of the practice!
Web Reference: http://www.jimmccowan.com
0 votes Thank Flag Link Tue Jan 26, 2010
Well, they put themselves in the position of being a party to the contract, which they have to disclose to all the other parties. It's not a practice of which I have heard or would participate. What does your own agent have to say about it?
0 votes Thank Flag Link Tue Jan 26, 2010
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