My real estate agent quit in middle of an active transaction? Now what?

Asked by Just-asking, Reno, NV Mon Nov 29, 2010

I made an offer on a Fannie Mae (HomePath) eligible property. My offer was accepted and a 14 page REO was sent to me for signing. The MLS listing suggested that there was a UP TO 3.5% incentive to the buyer. Now Fannie Mae (on page 11 Additional Terms or Conditions) tells me this, "Buyer is aware of the 3.5% incentive offered by the seller, and is waiving this in order to make the offer more competitive).

My offer never suggested I waive any part of the 3.5%. Ie You didn't write in the offer wanting the 3.5% (selling price) incentive. Therefore, you don't get.

Because I won't sign the waiver, the deal is dead. My agent tell me to sign because it is a screaming deal.. And it would be reckless (his words) not to. And if I don't sign, then go look for another agent. The deal now is expired under a 48 hr/ 2 day calendar (not business day) deadline.

If I get a different agent for the same property, what civil / contractual obligation do I own to the first agency?

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13
Jeri Creson, Agent, Studio City, CA
Wed Dec 1, 2010
Thank you for the expanded story behind this. And though I suspected it, your answer confirmed something for me. Me thinks there's a bit of selfishness happening here with your agent. It smacks of something that is very wrong with our industry, and bears exposing. A good agent will present a client with comps - as impartial as possible - and help a client in a bidding war, or "hot property" situation gain a little perspective and not get too carried away. Sure, we want to make the sale - but by "working your client" or pushing too hard to make it happen, very quickly, the client senses that you don't have their best interests at heart. You can't fake sincerity. Maybe for a minute, but the proof is always in the pudding.

They say the deal of the century happens every 2 1/2 weeks. I applaud your common sense attitude and resistance to being pushed into a deal. Incentives are just that - designed to make you jump where reasonable action isn't necessarily, always warranted. It's the rare house that one simply cannot live without. But this underlines a good point: First, start, proactively with an agent who has a demonstrated track record of good reviews and a history of putting his/her client first. You'll get'em next time!
1 vote
Ricky Beach, Agent, Reno, NV
Mon Nov 29, 2010
You need to contact the broker of the company that your agent worked for. Explain the situation and he might have another agent take over the deal.
Web Reference:  http://www.renownhomes.com
1 vote
Wayne Capurro, Agent, Reno, NV
Mon Nov 29, 2010
If you signed a Buyer's Brokerage Agreement with the first Agent, you need to contact that agents Broker and get a release from that contract. It's not a bad idea to get that release even if you didn't sign such an agreement. The Broker should have no problem releasing you once you explain to him/her the circumstances surrounding the first Agents abandonment. The issue you and the first Agent locked horns over was created partially by Fannie Mae, and partially by the first Agents inexperience with Fannie Mae. They (FNMA) offer this incentive without effectively educating the real estate community, and then raise the red flag by withdrawing it in their first counter offer. The listing Agent may have (should have) advertised it in their MLS posting in which case the first Agent is remiss for not bringing it to your attention.
1 vote
Isabel Willi…, Agent, Port Saint Lucie, FL
Wed Dec 1, 2010
Hi Just Asking,

I'm sorry to hear about you ordeal. What it sounds like to me is that the agent didn't request the 3.5% incentive in the original offer. That is one of the clauses that FANNIE MAE has in order for you to receive the incentive you must ask for it. So if you didn't ask for the incentive FANNIE MAE is just repeating what your offer states "that you don't want the incentive because you never asked for it." aka waving the incentive. If you have a great deal on your hands I would highly suggest that you try to salvage the deal if you can, but if not then maybe starting looking for another GREAT DEAL with another GREAT AGENT. But to answer your original question unless you go through your original Agent you may have to start from the beginning again. However if you do higher another agent, PLEASE get the first agent to sign a release to protect yourself.

Good luck,

Isabel Williams
Your Best Friend in Real Estate.

"The more you know the better choices you will make."

Whether Selling or Buying a home in Palm Beach, Martin or St Lucie County, you will want to put a professional on your team. As your dedicated Tri County Realtor, Short Sale Specialist, and Foreclosure Prevention Expert, I’m ready to work hard for you.
I'm looking forward to hearing from you soon.
Call me at 772-245-0810 or email me at: info@SoldBuyIsabel.com
It would be my pleasure to help you!
0 votes
John Walin, Agent, Libertyville, IL
Wed Dec 1, 2010
Just,
Thanks for the expanded question and explanation. FNMA will want to know what you are doing with your current house next to the one you are buying. If you are a tenant, that is OK. If you own it you would need to sell or rent your current home and change your residency to be compliant with the owner occupancy requirement. Even then they might look at you working the system if you are planning on renting out your current house to get the 3.5% credit and classify you as an investor and not primary occupant. Also that 3.5% isn't like cash credit but expense credit so you have to come up with 3.5% of purchase price in expenses to get the money. Coming up with 3.5% expenses on a cash deal is hard to do. If you can afford the cash to purchase, and have a good credit score and job history, I would recommend putting down 20% financing 80% and buying down your interest rate to eat up that 3.5% credit. You cannot walkaway with any overage from closing on money you don't spend of the credit. So that 3.5% credit becomes a 2.87% credit if you don't have the offsetting expenses.

Hope this helps! If you like my answer, please mark "best answer".
0 votes
James Wehner, Agent, Scottsdale, AZ
Mon Nov 29, 2010
If you are purchasing this home for cash, then 3.5% of the purchase price towards closing costs wouldn't even come into play, or if any it would be such a small portion. Typically on a cash sale, the buyer would just reduce the purchase price amount to account for the normal closing cost assistance. REO lenders will only care about the net amount to them anyway.

I'm not sure how this factors into your equation, but that is how it typically works.

Best of luck!
Web Reference:  http://www.jameswehner.com
0 votes
Just-asking, Home Buyer, Reno, NV
Mon Nov 29, 2010
I am the person who asked the above question. Since I was limited to 1000 characters, I could not ask all I wanted to ask. Out of the 9 answers so far, they all were in line with what I felt I need to do -- get a written release from my previous agent/ broker. And I thank you for the answers.

The second part of the question was with Fannie Mae buyer incentive. I have no prior experience with REO transactions and protocol.

As for getting a screaming deal?.. Not really. There are three cookie cutter homes in this 10 home cul-de-sac of similar homes up for sale -- all with listing price within $15,000 of each other. The home received five offers in August in the first go around, but mine was rejected.

But somehow that deal fell through 2 1/2 weeks ago, and the home was back on the market. The other two homes are still up for sale. As a point of reference, my offer sits $3,000 higher than one home listing and $7,000 lower than the other home.

I welcomed the second chance.. but this time knowing that the buyer had a 3.5% incentive and seller had a $1500 bonus if the deal was to closed by 12/31/2010 owner occupied.

If no incentives were offered, I wanted the settlement date sometimes in mid / late January 2011. The later the better.

Because of the short 2010 deadline, my offer was 100% cash -- owner occupied with $5,000 penalty if I falsely represent the owner occupant certification

BTW.. this is my neighbors home (which he lost to foreclosure) that I am interested in buying. For my purposes, I mentally priced in a $5,000 premium just because the home is just NEXT DOOR. As a result, I thought my offer was FAIR under the circumstances.

As for the advice.. Don't lose on a good deal all because of a principle? Really?

I wonder what Rosa Parks was thinking when she didn't want to surrender her seat on a bus for a white person. Without Rosa Parks standing up for principle, the civil rights laws in this country would be set back some 20 years.

Sound principle has no expiration date. Good deals come and go. In this environment, better deals are common and just around the corner.
0 votes
John Walin, Agent, Libertyville, IL
Mon Nov 29, 2010
I have represented buyers and sellers on the 3.5% FNMA buyer credit, but you have to understand that Fannie Mae offers the credit to help with closing costs and offers it only for owner occupied homes. That 3.5% comes out of your top line price, so if you really need that money for closing costs, gross up your offer price to include the 3.5% credit. If you got a great deal without the 3.5% discount that is like double counting it if you add it after the fact when they accepted the offer without it. In a competitive situation FNMA only looks at their net price and does not welcome adding in the 3.5% credit or adding the 2 year home warranty, (that also is a program offered) after initial offer. it seems to me you are trying to modify your accepted offer price by 3.5% and your position reflects buyer remorse. If this is a 2nd home you are not eligible for the credit. This credit is to help someone putting down 5-10% on primary residence. Plus, FNMA has a neighborhood stabilization agenda so their preference is for homeowners. I had a deal with a deed restriction where the seller has to agree not to sell within 6 months at more than 120% of purchase price in order to weed out flippers.
0 votes
Mark Fleysher, Agent, Las Vegas, NV
Mon Nov 29, 2010
Contact your previous agent's Broker... that is who your agreement is with, if you have one, which you likely do.

I can help you with your transaction, and I'll be here from start to post-transaction.


--

Sincerely,

Mark D Fleysher, MBA, Broker, REALTOR
The Jack Conley Realty Group
C. 702-291-8186 F. 702-946-0843
0 votes
Eric Hansen, Agent, Reno, NV
Mon Nov 29, 2010
If you signed a brokerage agreement with your agent, you may be responsible for paying the commission. However, your lack of knowledge re: the Home Path requirement to sign up for it, or lose it, is something that needs to be discussed with your agent and his/her broker.

With respect to the transaction itself, at the Home Path end, they are looking for the best possible net. It could be that your offer was the best because of foregoing the 3.5%. Could be that if you insist on the 3.5% contribution, you might fall out of first place.

The question then becomes, how bad do you want this property? Is it still a good deal without the benefit of the 3.5% contribution?
0 votes
Dallas Texas, Agent, Dallas, TN
Mon Nov 29, 2010
1) All bank foreclosures have amendments if you don't sign amendment which are non negotiable in almost 100% of time... deal is dead, bank have cover all liability issues on their end.

2) If it is a great deal what is your objection?

3) If you were obtain another agent is based on buyers rep agreement you signed with other agent.

4) Yes a Realtor can fire their client at anytime due many issues HOWEVER main one is unreasonable expectations.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes
John Brassner, Agent, Las Vegas, NV
Mon Nov 29, 2010
There is a lot to comment on but I'll just touch on the most important thing: The superior agency (relationship) is with the Brokerage company that the agent represents not the individual agent. Please call up his office and ask for the broker. Explain to the broker what happened and that you would like a different agent to represent you.

Good luck!
0 votes
Jeri Creson, Agent, Studio City, CA
Mon Nov 29, 2010
My question - first, is, were you aware of the 3.5% incentive - and did you actively assume the contract you offered included that...were you counting on it as part of your deal? If the answer is yes, then, I would guess that your agent didn't understand how to present this detail in the offer, and assumed it was a given as advertised. Which would not, necessarily, be unusual. It depends on how the offer was presented in the MLS, and/or other disclosures advertised. There is a possibility that Fannie Mae might agree to include it if you present your position that it was unclear that the 3.5% was a given as advertised - this part is negotiation, you submit a counter offer asking for that 3.5% credit. The worst that can happen is they say no. Most likely, you will be given the opportunity to evaluate the deal without the 3.5% credit and accept their counter. But do keep the lines of communication open, not just assume it's a dead deal.


Why don't you talk to his broker and see if there is a way to salvage this. A transaction belongs to the broker, not the agent. The broker may see fit to step in, offer assistance him/herself, and/or substitute the agent with someone willing to move forward with you more cooperatively. Barring that, the broker is the one who can release you from any legal obligation on this property to the brokerage. And if it turns out that the highest and best offer they received is equivalent to yours, only not including the credit - then that's where the chips lie - only you can determine if it's an acceptable bargain - not your agent.
0 votes
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