Home Selling in 89128>Question Details

jamiejames89…, Both Buyer and Seller in Las Vegas, NV

Is it illegal for a realtor to list a short sale for a family member?

Asked by jamiejames89104, Las Vegas, NV Sat Nov 17, 2012

My friend is a realtor and wants to list his moms house as a short sale. is this legal?

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Answers

11
If the owner is doing a HAFA Short Sale it is illegal for a Relative to List their home for sale. I know this by experience. When I listed my Mother's home for sale as a Short Sale. The ironic part is down the road she didn't qualify for HAFA.

Also find out if the loan is owned by Freddie Mac or Fannie Mae. If it is. Have the owner call the Bank first and go through their short sale process before you list it. Or you may disqualify the seller from some of their incentives.

Chris Harrison
Barrett & Co., Inc.
1 vote Thank Flag Link Mon Nov 19, 2012
Great question Jamie,
The banks that I have worked with allow and even encourage the listing by a family member. The concept is that the Realtor who is related will really protect the Borrower (Seller). The banks are all about protection and not have anything happen that would cause a lawsuit later.

That said, if the Listing agent is related to the Borrower (Seller) within one order of consanguinity, (husband, wife, children, etc.) the Listing agent will not receive a commission. That relates to a higher net to the bank (Investor). Their logic is good as well as this results in the higher amount of funds to the Investor.

I suggest you locate a 3rd party Realtor to list and sell the property. The friend could receive a referral fee for referring Mom to another Realtor. I pay thousands of dollars a year as referral fees to other Realtors doing this process. Do not look to the Realtor that pays the highest referral fees. If it is to good to be true, it most likely is. The amount offered as a referral fee to your friend has absolutely nothing to do with the agents ability to do the transaction. The ability to complete the sale is the most important factor for this topic.

Remember that the short sale is to provide relief to the Borrower (Seller) and not provide a Realtor with gold lined pockets.

Be sure the selected Realtor has the qualifications to complete a short sale. Look for the CDPE, CSP, CRS, CDAT designations.

Ask the possible Realtor these questions:
What do the designations mean?
How many short sales have they have closed in the past year?
How many listing they have?
How many properties have they lost to foreclosure in the past year?
Have the Realtor explain a service release to you and why it is done.
How many service releases have they stopped?
What is the largest deficiency they have been able to mitigate?
Do I have to pay income tax on the deficiency? When is the tax due.
What is HAFA?
What is a RMA?
What is a ARASS?
What is NHHF?
What is RESPA?
How can I keep the property?
What else do you do to earn money?
Do you negotiate with the banks or do you farm it out to others? Do you expect me to pay for the service? (My Broker has determined that it is a violation of RESPA to require a Buyer to pay for this service.)
An agent well versed in short sales will be able to answer all of these questions to your satisfaction. I will be thrilled to explain my answers to these and any other questions you may have.

As a CDAT, my first option is to work all possibilities for you to keep the property if you want to. The Banks are using government programs to allow people to keep their homes instead of selling them. Many home owners do not know about them.
Last and not least, be sure you get a written "Seller Cost Analysis" (Seller Net Sheet) from the agent BEFORE you list the property. It should show $0.00 at the bottom. There should be absolutely no fees involved to the Borrower (Seller) for selling under short sale conditions. No money prepaid, no negotiating fees, no title fees, no attorney fees, no nothing. My clients are never, ever charged any fees to short sell their property. There are very few circumstances and exceptions for a no cost short sale.

Contact me or view my web address http://www.shortsell4free.info for more information about short selling your property for no cost to you.

I wish you well.

New Web Sites:

http://www.SHORTSELL4FREE.INFO

Please contact me immediately if you know a person that cannot make their mortgage payments. I will work with them to avoid foreclosure or bankruptcy at no charge or fees to them.



Steven Goldman, CRS
Broker Salesman
Certified Distressed Property Expert (CDPE)
Certified Default Advocate (CDAT)
Certified Short Sale Professional (CSP)
Certified Probate Real Estate Specialist (CPRES)
REO-BPO Certified
GRI, ABR, SRES, CNHS, PM, CCI
Realty One Group
10750 W. Charleston #180
Las Vegas, NV 89135
Direct 702-242-1372
Fax: 866-286-2099
E-Mail: crssteven@teamgoldman.info
http://www.teamgoldman.info
1 vote Thank Flag Link Sat Nov 17, 2012
Is it illegal for a broker / investor to pay the seller $20,000 in cash under the table after the bank has [a] closed the short sale of the home for considerably less, [b] the seller has agreed in writing that he or she was not getting any additional monies that are not revealed on the HUD
0 votes Thank Flag Link Tue Apr 15, 2014
It is not illegal, but most short sale transactions are ARMS length transactions, meaning the family/member can not be compensated and will not be allowed to collect a commission.
0 votes Thank Flag Link Mon Nov 4, 2013
The simple answer is no, it is not. Arms length has nothing to do with it. However, the real question is, will the broker allow it? Also the agent , if he/she does their homework, may find out that one or more (if more loans) may not allow the commission to be paid to the agent, essentially allowing the agent to work for free.
0 votes Thank Flag Link Mon Nov 4, 2013
The honest answer is: not necessarily.

But the truth is dependent on the terms of the loan, the bank involved, and a dozen other complicating factors, as some of the other responders have indicated.
0 votes Thank Flag Link Mon Nov 4, 2013
The lender might prefer it to be more "arms length".
0 votes Thank Flag Link Mon Nov 4, 2013
Great information Chris. Thanks for sharing.
The comment is real true about short sale incentives
In the old days, we did not call the bank until we had an offer. Now with so many programs available to prevent a foreclosure, times have changed.
Call the bank as soon as possible and ask what programs the Investor will cooperate with. Timing is everything.


New Web Sites:

http://www.SHORTSELL4FREE.INFO

Please contact me immediately if you know a person that cannot make their mortgage payments. I will work with them to avoid foreclosure or bankruptcy at no charge or fees to them.



Steven Goldman, CRS
Broker Salesman
Certified Distressed Property Expert (CDPE)
Certified Default Advocate (CDAT)
Certified Short Sale Professional (CSP)
Certified Probate Real Estate Specialist (CPRES)
REO-BPO Certified
GRI, ABR, SRES, CNHS, PM, CCI
Realty One Group
10750 W. Charleston #180
Las Vegas, NV 89135
Direct 702-242-1372
Fax: 866-286-2099
E-Mail: crssteven@teamgoldman.info
http://www.teamgoldman.info
0 votes Thank Flag Link Mon Nov 19, 2012
Hmm, it's not against the law, but the agent must disclose it to the bank, and the bank may have consequences, such as the possibility of denying them a commission, and they may not trust his opinions so strongly as he has a personal attachment to the transaction.

It's definitely recommended for your friend to find a 3rd party REALTOR to complete the short sale and your friend can help his mom and oversee the transaction but it keeps him at an arm's length to the transaction.
0 votes Thank Flag Link Sat Nov 17, 2012
I am not going to say that this is illegal, but the listing agent have to disclose in the listing agreement and for the public that he is related to the seller. Also for the bank who supposed to approve the short sale is going to be A BIG FLAG, and nobody can predict the finalization of that deal.
Also another thing to consider is how familiar is an agent with Short sales. What designation has? What is a closing rate on Short sales. You can find a lot of usefull information in http://lasvegashomeownershelp.com
0 votes Thank Flag Link Sat Nov 17, 2012
Most banks/investors require the the transaction to be an "Arm's length transaction".
Here is part of the wording from such an affidavit from BOA.

l hereby affirm that this short sale is an "Arm's Length" Transaction. No party to this conlract is a family member,related by blood or marriage.

Obviously, fraud would be committed by signing the affidavit and having the listing agent being related to the seller.

James Martin
LVRE4U@hotmail.com
0 votes Thank Flag Link Sat Nov 17, 2012
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