The reason why Realtors handling short sales should not let a short sale investor take over negotiations with a lender may not be fairly obvious.
If you are a Realtor who works short sales or are thinking about doing them here is where you really need to pay attention. Without a doubt we live in a very litigious society today. There are undoubtedly going to be lawsuits that come out of many of the short sale transactions that are taking place or should I say don’t take place.
When you sign a listing contract to represent a seller they are YOUR client. YOU are THEIR trusted adviser and advocate. You need to be thinking about doing everything possible that benefits THEM. To put it more bluntly a Realtor owes a seller undivided loyalty, reasonable care, disclosure, confidentiality, accountability and obedience to lawful instruction.
The same holds true when it is a short sale transaction. The rules of the game don’t change!
I have found through reading various Real Estate forums that investors don’t understand that we are held to different legal standards than they are.
What do you mean by that Bill? Simple…when a person needs to short sell their home and they hire me they can expect that I am going to do everything that I normally do for every other seller. My goal is to get my client the best terms and conditions.
Once I get a good offer from a buyer that has a strong probability of closing, an attorney, who is part of my team, takes over the negotiations with the lender. The attorney I use is very good at what he does. This is part of the reason why a seller would hire me to complete their short sale. Most Massachusetts home owners in need of short selling their property have done their research and selected me because of my track record with closing short sales.
When an investor approaches you about making an offer they will undoubtedly want to negotiate the deal for the seller. Well guess what the seller didn’t hire an investor to get them out of the financial mess they are in… they hired YOU!
If you go along with this arrangement and the transaction goes sour for any reason causing the seller to be foreclosed on guess where the fingers are going to be pointed. Do you have a mirror handy? This is akin to letting a buyer’s agent negotiate for the seller!
I can already hear the seller’s attorney in court:
The Realtor said this was a good idea and told you should let the investor take over the short
sale negotiations Mrs. Jones”. Is this correct? Yes sir it is.
“Didn’t you hire this Realtor and his team to help you with the short sale mam”? Yes sir I did.
“Did the Realtor advise you to work with this investor mam”? Yes sir they did.
“Do you know this short sale investor Mr. Gassett?” No sir I do not.
“Mr. Gassett do you think the investor was working on behalf of the interests of your client”
Well Um Err they told me they were going to do everything in the best interests of Mrs. Jones.
NO THANKS! I certainly don’t want to find myself in court and neither should you. Do yourself a favor and don’t end up looking like the dude below.
If you are a consumer and thinking about doing a short sale and have NOT listed your home with a Real Estate agent I want to make something perfectly clear…There are lots of very good short sale investors that know what they are doing and can accomplish the same thing a qualified Realtor or attorney can in getting a short sale approved.
Like any other financial decision you make in life you should be doing your due diligence when deciding whether or not to work with an investor and their company. Checking out their track record and getting a list of references probably would be a very good idea.
If something sounds fishy or too good to be true it probably is. You want to be careful you do not get caught in short sale fraud. There have been cases recently where both investors and Realtors have been caught in shady deals that are both illegal and immoral.
An investor of course is going to be looking to buy your home as cheaply as possible as their goal will be to turn around and re-sell it for a profit. While getting the best price for an investor is going to be key for them moving forward, a reputable one should also be looking out for getting the best deal for YOU which includes negotiating the lowest deficiency possible.
In many short sales today the lender is going to ask you to pay back something. It will more than likely be pennies on the dollar but the chances of a seller walking away Scott free have grown slimmer.
If you hire a short sale investor to negotiate your deal the debt removal part of the transaction becomes essential. Short sale debt removal becomes critical because the last thing you want is a someone chasing you down years later for a deficiency. A number of lenders are selling unpaid mortgages to collection agencies which in some states have years to come after you for a collection of this unpaid debt!
There are some differences in working with a short sale investor vs a short sale Realtor. A Realtor is going to be far more concerned about getting an offer that makes financial sense to a lender. In other words is the offer presented to the lender going to be accepted because it is close enough to market value. As previously mentioned, an investor is going to want to buy the home as cheaply as possible.
One of the biggest reasons why many short sales never reach the closing table is because the seller accepts an offer that is too far under market value and the lender rejects the contract denying the short sale.
Most short sale investors are not going to make their 1st offer to the lender the best one. They are going to be looking to negotiate for the best deal for themselves.
As a seller you need to be confident in the fact that an investor will raise their offer to a point that the lender will accept it.
Despite what all investors claim there is a greater chance when a profit margin is involved that a lender will not accept their offer. Do you think lenders like leaving money on the table?
Realtors should also be doing the same. If the seller accepts a low ball offer and submits it to the lender for approval and the buyer is not willing to come up you have wasted a lot of time and possible condemned the seller to a foreclosure.
Just because an investor tells you they will increase their offer if necessary does not mean they will come to an agreement with the lender. After all they are looking to make a profit which creates a gap between the market value and where they are trying to purchase the property at.
I guess you really need to ask yourself if you want a buyer negotiating for you? My advice of course would be to work a qualified Realtor or attorney when doing a Massachusetts short sale.
If you are needing to complete a short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale, Medway, Mendon, Milford, Hopkinton, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, Worcester, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.
I am successfully completing short sales through out the Metrowest Massachusetts area. So far over the last three years, knock on wood, I have a 100% success rate for short sale approval! I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done!
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About the author: The above Real Estate information on Realtors should not let short sale investors negotiate with lenders was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Medway, Franklin, Framingham, Grafton, Hopedale, Mendon, Upton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, Worcester and Douglas.
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