08-19-2010 01:26 PM - edited 08-19-2010 01:31 PM
I put in an offer for a short sale townhouse in VA. I offered full listing price, but after weeks and weeks, the seller's bank counteroffered with $10k more than our offer. Market prices for that subdivision went down during those months. I think the bank needs to be aware that two townhouses in the same street settled within two weeks, both for at least 10% less than what we put in the offer at. Another townhouse with an extra bedroom and 250 more sq ft, which I would have preferred, settled for bascially the same price as what we'll be paying.
After those new settlements, I got a new appraisal done, and it came out $10k less than what we offered. I told my realtor that I want the seller's bank to know this, and to send them our new appraisal, and that they can check for themselves if they want to, do another BPO that I would gladly pay for. The realtor tried to dissuade me from doing this, saying that regardless of what market price is, the bank wants x amount, and that I needed to go above my sales price to get the bank to agree.
I told my realtor that I want to negotiate directly with the bank employee about sales, at least inform that person that while they were reviewing our offer, two townhouses in the same street settled, both for at least 10% less than what we put in the offer at. Basically, I want the bank to know the market prices for that subdivision are going down, and that they are lucky to have our offer on hand.
But my realtor said she would talk to the bank person but dissuaded me from sending the employee the new appraisal and the new comps. She even said it was was ILLEGAL/UNETHICAL for her to give me the bank employee's email.
Is this true??? The kicker is that she is a DUAL AGENT, she represents both the seller and the buyer(me). I had no agent and just asked her to be our agent (bad call!!). I have a feeling that she is more partial to the sellers and not advocating my needs and preferences.
Meantime, due to my husband wanting finality, I said ok to raising it $5k to the realtor. (Actually, a mere two hours after I said to raise it, I told her about the new comps I had learned about and told her to retract the counteroffer, to give me some time. She claimed she already put it in the Equator system (Bank of America) and that her hands were tied. She also refused to email her bank contact. Ha! Is it true her hands were tied? Why couldn't she change it in the system after a mere two hours (assuming the bank hadn't seen the counteroffer yet) and why couldn't see have sent a follow up email?
Anyhow. It's all after the fact, we got the bank approval letter saying ok to our counteroffer, but I'm so annoyed to be paying 10% over the other townhouses. I've seen the pics of those other two, and one was totally renovated (new kitchen etc) and the other was in a similar states as ours (this one I went inside).
Were my rights and interests fully represented by that realtor?
08-20-2010 04:49 PM
Anytime a Realtor represents both sides of the transaction there is a conflict of interest, in my professional opinion.
However, to answer your question about it being legal/unethical, that's a shady area, because I don't know what your exact conversations were or what paperwork you've signed.
When you're dealing with a short sale, the seller is the only person who has the authority to deal with the bank. They sign an authorization after listing the property that allows the Realtor to discuss the short sale with the bank representative. The Realtor could have given you the bank employee's contact information, however, they wouldn't have discussed the sale with you, because you don't have authorization on the account.
Since the Realtor was representing both sides, this causes a conflict of interest. They are trying to get the highest price for the seller. If they're representing you, the buyer, they should be trying to get you the lowest price. How does a Realtor do that ethically?
This blog post gives a great explanation on dual representation in VA:
If you want to get out of the contract I'd contact a real estate attorney to discuss your options. I don't know how far along you are in the process, but having an attorney may be a good idea anyway.
Lindsay Dreyer, Realtor
09-21-2010 05:54 PM
I can give you some insight on how short sales work with the banks and investors. I am an experienced short sale agent with over 30 short sale approvals. The appraisal issue is the first obstacle when negotiating a short sale.
The seller's lender may be answering to investors who own the loan or a mortgage insurance company, who sets the guidlelines. For example BOA maybe the seller's lender, but BOA has sold the loan and has retain servicing rights of the investor. When BOA talks to the investor about the short sale, they will tell BOA to get an independent appraisal done. After this number is established, the investor knows how much they will get at closing and how much may be re-cooped by file a loss against the mortgage insurance policy they were given when they bought the loan from BOA.
In this situation BOA can only do what is written out in their guidelines from the investor( the one who actually approves the short sale). If the appraisal for the investor comes in high, it will be used as the true number to determine the workout. The appraisal can only be challenged under two scenarios. 1. 3-4 months past during negotiating and home values have changed. 2. If the buyer's appraisal comes in lower after short sale approval.
Before then the short sale lender is not influenced by comps from the buyer, comps from the buyer's agent or comps from the selling agent. ( unless you can prove the appraisal is not valid.)
Since appraisals are subjective- read the fine print- you will get different values from 2 competent appraisers. If the value differences are more then 10-15% on a 300k home then you have some concern.
In the equator system it will state, "here is the counter -offer based on our findings. It gives us a deadline to counter- usually 5 days or the file is closed.
The short sale bank employees are protected by BOA- Agents have to email them and they respond by email so their is a paper evidence trail. Some of the better negotiators may even call us from time to time with BOA.. In no circumstance can I give to a buyer the contact information of the seller's lender. Without authorization they can not talk to you about the file or an appraisal in which not yours.
Your agent could have only sent them an email with your request about value and the information you discovered.
She should have done this for you as your agent.
The fact is , as the buyer, you only need to concern yourself with your LENDER's appraisal. It does not matter if the short sale lender appraisal says 400k. If your lender says 375k, you can not proceed until the sales price is lowered.
If you raise your initial offer to buy the home you want and your lender appraisal matched that offer, then did you really pay too much? Until the short sale approval is completed you were free to look at other homes or withdraw your offer.
Also remember the short sale lender in many case are taking losses on the books from 75k or more. They have no problem holding out for 10k more when they are writing off losses of 100k.
Sorry about rambling on an on. There are so many variables with short sales it really takes an experience agent to tell you all of the possible scenarios when you make an offer. Under a dual representation it is a delicate balancing act of being informative and yet not telling you confidential information. Any information she receives only because she represents the seller as well, she can not disclose to you. Any information she would have receive as a buyer agent only that is the extent she can disclose to you.
Hope this helps and I hope you are enjoying the home.
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10-04-2010 06:57 PM
Ha! I think seller's have a tough time getting this info. There's been a lot of turnover in the bank negotiation depts, most likely your seller will have several negotiators before an approval (if they are lucky) comes through. You getting into the mix won't help the situation move any faster. If anything the bank would love to wriggle you for a little more cash. I wouldn't get involved with that but keep shopping. If they know you really want the house, they will ask you for more money.