How does a short sale work when working direct with listing agent?

Asked by Anxious Buyer, Irvine, CA Sat Mar 8, 2008

We are wanting to put in an offer on a short sale property in Irvine. The property has been on the market for approx 45 days. We have contacted the listing agent direct . He said that he will represent us but seems to be stalling on putting the paperwork together. He was curious /surprised that we contacted him directly since there is no sign on the property or infomation on any websites. Just good research on our part. He told us he has 2 other offers and suggested that we come in 5K higher. Nothing has been presented to the bank as of yet. He expects the bank to respond in around 10 days. Is he playing straight with us?

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Robert van d…, Agent, Fountain Valley, CA
Sun Mar 9, 2008
Anxious Buyer,

I would suggest you call your agent/the listing agent and personally ask him what is his delay in getting the offer to the bank. I'd be surprised, what with the listing agent not advertising the home very much, that he really has 2 other offers! Although multiple offers have been coming in lately, he's making it sound as if he has now 3 buyers for 1 property which he didn't advertise???? Maybe, just maybe its the case. You have to ask yourself, "Is the home worth the additional $5,000?" Are you willing to move on and keep looking if it is true. You should really sit down with your agent and continue doing your 'good reasearch' to find out what is really going on and if that home is 'really worth the extra $5,000.'

And off the subject, congrat's Danielle on being another well rounded real estate agent.

Robert M. van der Goes
2 votes
Dot Chance, Agent, Burbank, CA
Sat Mar 8, 2008
There are a lot of great responses here intertwined with the venom being spewed! Wow!

Jim, what do you do for a living? I am very proud to be a Realtor and take my WORK very seriously. Apparently, you do not have a grasp on what Realtors do.

We are held to a code of ethics that I take very seriously. Not only would I let a client know that they shouldn't get into a transaction - I have told them that. It would not benefit a buyer or me as their representative to try to talk them into doing something that is not right for them.

Hopefully, the tone of your comments will lighten up!
2 votes
Patti Philli…, , Carlsbad, CA
Sat Mar 8, 2008
Anxious Buyer -- Since you don't know whether or not this agent is playing it straight with you, why don't you get someone to represent YOUR best interests- your own realtor? It cost you nothing, yet they can see to it that you are getting taken care of and negotiating the best deal for you. I know some very aggressive realtors in Irvine, contact me if you would like for me to pass on their names.

Patti Phillips
2 votes
Jim Gleason, Home Buyer, Solana Beach, CA
Sat Mar 8, 2008
Now Danielle is slowly admitting the truth. The real question is why a buyer would want a person with a degree in Fine Art Photography representing them on the biggest financial decision of their life.

Plus let's face it. The buyers agent only gets paid if the deal is consummated. That means they push the buyers to agree to make the purchase. Are they truly an independent representative of the buyer? I say no way. They want to make a sale. Will they honestly tell the buyer that it's not in their best interest to close the deal when they know they won't get paid?

LOL!!!! It's time people get educated about the real estate industry. It's full of snakes and vipers.
1 vote
Mark, Home Buyer, Orangevale, CA
Sat Mar 8, 2008
I seems to me that on a short sale, the buyer and the listing agent have aligned incentives so why is a buyers agent necessary? The seller has no skin in the game and just wants to get it done. Why would the seller agent be motivated to do anything less than shoot straight with a potential buyer and work to the best price the bank will accept? Can someone please explain what a buyers agent really would bring to the table in a short sale? It does seem more streamlined to go straight to the listing agent in this scenario. Besides the fact that many buyers agents don't want to get dicked around in a short sale anyway? So what is the flaw in this thinking. Short sale the listing agent and the seller should both be in the same camp as the buyer... working "against" the bank to get 'er done.
1 vote
Jim Gleason, Home Buyer, Solana Beach, CA
Sat Mar 8, 2008
I always prefer to go directly with the listing agent and not deal with an unnecessary middle person. Don't let real estate con artists tell you how complicated it is and how you can't handle it on your own. They are just trying to scare you into using them so they can collect a commission off of you.

When you deal directly with the listing agent, you can get a better deal because there isn't the added commission of a buyers agent.

Personally, I wouldn't be buying any real estate right now. The bubble has burst and prices will remain in decline for a long time to come.

Be patient and watch the carnage from the sidelines. You'll be able to get a much better deal 1 or 2 years from now. The short sale/foreclosure cycle is just beginning. This is going to get much worse before bottoming.

Think for yourself and don't be swayed by self interested con artists. Most realtors don't even have a college degree and yet hold themselves out as an expert. In my opinion, they are experts in nothing other than spewing a bunch of snake oil double talk.
1 vote
Joe Homs, Agent, Laguna Hills, CA
Sat Mar 8, 2008
The short sale process is very complex and should be handled by a short sale specialist agent. The clock is ticking as the lender will foreclose on the home within 120 days. He should have contacted them and sent in the short sale package along with your offer. If you need any assistance please let me know.

Joe Homs
Foreclosure & Short Sale Specialist
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1 vote
Patrick, Home Buyer, Clifton, NJ
Sat Mar 8, 2008
Here in North Jersey, I am going through the same thing right now. Not specifically with short sales, although, being in the market for the past few months has been tough.
It comes down to whether or not you think the property is worth it. Fact is, you may never know whether or not he is playing straight with you. Think about the home, check out for the area comps, and come to a reasonable number in your mind. Then, regardless of what anyone else is bidding, stick with your number.
This serves two purposes:
1) You will not overbid on the home and end up with "buyer's remorse" a few months later.
2) You will not get so wrapped up in the thrill of winning that you stop at nothing to get the home.

This is just my two cents. Then again, I don't have a home yet, so I may not be qualified to answer.
With short sales, the offers are usually bundled and from what i understand, the bank chooses the most solid offer. Yours may be lower, but if you are putting a higher percentage down, they may assume that you have a better chance of receiving a final mortgage commitment than another buyer. In addition, if you have a great banker lined up, you may be able to close quicker than someone else. These two things are very attractive to banks.
I am not so sure that going through the listing agent in serving you well though. Personally, I have an excellent realtor who identifies herself as a "buyer's agent." She strictly shows homes listed by other agents in addition to doing independent appraisals. This really limits the likelihood of shady deals.
I hope this helps.
Patrick, NYC metro area.
1 vote
Sandra Carli…, Agent, Newport Beach, CA
Fri Mar 14, 2008
If nothing has been submitted, I'm not sure what he is waiting for unless its for approval for a certain sales price if obtained (or more offers).

Mark - My answer to anxious buyer is going to coincide with my answer to your question. Why does a buyer need their own agent on a short sale? Aren't the goals the same?

NO - The listing agent still represents the seller in a short sale, not the bank. The listings agents job is to help the seller go short by a little as possible so that the deal has a chance of sticking to potentially save the sellers credit. When selling short, both the first and probably second mortgages have to agree to take less. They don't want to and aren't really on board with the idea yet. You will probably be waiting 2-6 months for a yes or no from the bank. (That's assuming both the 1st and 2nd are at the same bank.) The home may go to auction or foreclose before that.

In the meantime, the listing agent is gathering all the offers that come up. Shopping each one as it comes in against the next. The listing agent didn't need a sign to advertise the listing. Anyone watching tax records or NOD's will know that something is up with that house. It isn't rocket science. In fact, Short Sales, Foreclosures, Bank Owned/Reo's are probably the only seller's market going on right now.

A buyer's agent will tell you that you will probably get a better deal going after a motivated seller that has negotiating room (equity) in their home. You will also, most likely avoid a multiple offer situation which would drive the price up.

A buyer's agent will tell you that a seller that has equity can actually make repairs on a home or credit you for anything that is wrong. The people that are selling short right now, bought at a time when sellers wouldn't make ANY repairs and now you are buying into their mess on an as-is basis. Banks won't repair a home (usually) and sellers that have to sell short are doing it because they don't have any more money.

Jim - You haven't been entirely honest with me... You said that I was the only Realtor you were tormenting and here I find you hissing at Danielle... My heart is broken. ;(
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0 votes
Jim Gleason, Home Buyer, Solana Beach, CA
Sat Mar 8, 2008
Realtors are pretty worthless in my opinion. The good thing about the bubble burst is that most of them will be forced to earn a real living. I predict you'll be doing wedding pictures within one year.
0 votes
Jim Gleason, Home Buyer, Solana Beach, CA
Sat Mar 8, 2008
By the way, Danielle has a degree with Fine Art Photography. I didn't realize that curriculum included real estate negotiation, law, finance, construction, land use, and zoning.

0 votes
Jim Gleason, Home Buyer, Solana Beach, CA
Sat Mar 8, 2008
If you go direct with the listing agent, tell the listing agent that you prefer to deal direct and would like a concession on the buyers commission. 9 times out of 10 they will agree to that because they would prefer to deal direct than through a buyers agent and they will net the same commission either way.

You have to know how to play the real estate game. Right now, the best way to play it is from the sidelines laughing at all of the idiots who are trying to sell to the few remaining buyers who haven't heard that the bubble has burst.

2 years ago, realtors were telling buyers they had to buy now or forever be priced out of the market. That turned out to be a bunch of nonsense.
0 votes
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