Barb Van Stensel : Saga of a Short Sale

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Saga of a Short Sale

By: Barb Van Stensel
Sunday, November 04, 2007 11:04 AM

THE STORY OF THE SAGA

In continuation with my previous blog, one of the listing agents has just told me that the bottom price that the lender will take is now increased by $4,000 for the month of November. That the original "bottom price" to this short sale was increased on November 1st and I was given the information on November 1st at 5:00 p.m.! I was told on Friday, November 2nd that the price would increase $100,000 on Monday, November 5th. One of them told me that they had until the 17th to get a deal but now on Sunday, November 4th, one of the listing agents told me that the price will go up $100K on the 17th!???

Where is the ethics here? Where is the fiduciary responsibility that these listing agents should have to the bank and their client? Truth? Would these agents know it if they even saw it?

A. I am thankful that I am reading "The Power of Focus" by Mark Hansen, et al.,

B I have taken all of your wonderful advice and am biting my tongue right now.

However, I feel like I am spinning wheels with this file even though I have a client interested in this property because of the lack of ethics. I have been told of a bottom line - which I am not focusing on - but these agents didn't talk to the bank until Friday morning when they knew that I had someone interested in the file. Cart before the horse?

Worst thing - within my company. How is the bank going to see through the smoke? Am I doing my client a disfavor and possibly referred it out? What will the bank think of with an offer within the same company?

Jana, you are up to bat here - please hit a home run on this one!

Comments

Member Since '06	Joe Schutt said: Barb, I feel your short sale pain. My seller that applied for the short sale after the home inspection has since lost his buyer because they couldn't wait any longer for the bank to approve it. So, we are back on the market still trying to get approved. It is H***!! November 4, 2007 11:22 AM
Member Since '05	Jana Davis & Virginia Houghton said: Barb the lender's don't play fair and they don't play by our rules of ethics. With a seller we check the market, show them the info in black and white and they tell us what they would like to sell their house for. Hopefully they listened to us and pay attention to the CMA. The lender looks at the amount owed, closing costs and comes up with their own value. If the lender is a total idiot like the one you are dealing with (what market is going up $100K right now?) this property will end up in foreclosure and perhaps you clients can get it then for a lot less. Just tell the agents that is your clients best offer. And good luck. Same office is not bad. Same agent they will cut your commission! As far as playing by the rules... I think it is time to go to the grey. I was showing our buyers other properties while we were waiting for the lender to make up their minds. No one here takes a property off the market until after the lender has approved the offer. Joe next time around don't take the property off the market until the lender tells you it is a go. We do not have our clients execute the contract until that time either. And we do write that into the offer as well. Many of the lenders do not get serious until it is close to the end. So for 6 months they can spin your wheels. Plus they lose money, but try to convince them of that. You can not show a short sale to a buyer who needs to move in 30 days. If the lender accepts your offer they will postpone the "go to auction/sale" date. You just have to make sure that each department knows what the other is doing. One more thing, if approved they may only give you a very short time to close. So be ready to hurry, hurry, hurry! It shouldn't be this hard. But just take a deep breath, count to 10... Jana November 4, 2007 12:51 PM
Member Since '06	Joe Schutt said: Thanks Jana. The only reason it came off the market is because we all thought it was a regular sale. It wasn't until after the offer was accepted and the home inspection was conducted that the seller told us he was applying for the short sale. He now knows to communicate everthing he is thinking immediately so we can go down the right path sooner than later. November 4, 2007 1:04 PM
Member Since '07	Anna Horton said: Oh thank you all for this conversation! Just by lurking, I know that my recent decision to reject a <100K short sale listing was correct. Thanks to my gut and your prior conversations, I politely bowed out before I got sucked into the quicksand. November 4, 2007 2:21 PM
Member Since '06	Barb Van Stensel said: Jana, I'm breathing. I went grey around 11:00 today. The listing agent is telling me that the lender wants a quick close before the end of November?! My buyer will close when requested. I don't believe that the listing agents aren't up on getting the full story first - they had a short sale letter that the seller gave them but didn't talk with the lender until after they spread the word throughout the office. This whole financial thing just really is sad. (If I am allowed to say that). For the life of me, nobody was making friends but making money out there (mortgage brokers/lenders/banks) and nobody was saying "stop" to the consumer spending. I think I saw 102% spending two years ago for the average American, someplace, above the income earning level. Cash out on the equity and making the consumer believe that they still had equity or the consumer didn't care - just as long as the bills were getting paid. Houses in Chicago are 100% financed and need roughly $80K - $140K in repairs (furnaces, structural - (because the homeowner was playing hobbiest), electrical, no hot water tanks, blown up sewer lines in the basement, mold from lack of ejector pump and sump pump in basement, and the list goes on and on. The City of Chicago is where these homeowners are getting caught and they have to apply for permits, some of which require a licensed Illinois architect. The fees add up and fast. Right now, I'm pretty disgusted at the whole thing because the American Dream of owning a home is being lost in the tide of the defaults because of some loose underwriting guidelines or people doing people favors. I've heard it all from - people paying a higher price for a property and then the seller rebating, under the table, $30K - $100K back to the buyer. For instance, five buildings that I have been in over the weekend were purchased $50K to 100K above the market at that time. Who was doing who a favor? My answer: Nobody! Jana, that's probably what is blistering me more than anything right now besides uninformed agents who want to fly by the seat of their pants and really are continually giving us a bad name. Guess you have to have some bad apples in that barrel! November 4, 2007 2:31 PM
Member Since '07	Anna Horton said: Yep Barb, you have summed it up very nicely. Personally, when all the chaff has been winnowed out, I think this will be written down in history as greed. November 4, 2007 5:07 PM
Member Since '05	Jana Davis & Virginia Houghton said: Barb we have seen newspaper stories recently about a few agents, their mortgage brokers, appraisers... who are now sitting in jail for doing just what you described above. The buyers were bogus, never planned on moving into the house. Once they all split that $100K it was off to the next shady deal. The poor sellers are getting slapped for their part in it too. Even though I have no idea how a seller would know there was something this shady about the deal. Their joy of getting full price, no required repairs, and a quick escrow has turned into a nightmare for them. Oh these were mostly 100% loans, so guess who the big loser will be. Yep the 2nd. Can we say lender fraud? That is federal prison isn't it? Jana November 4, 2007 5:55 PM
Member Since '06	Rochelle Walker said: Jana I'm a little confused... What do you mean to not take the house off the market - we have a MLS code that allows us to still show the property (backup). Do you mean not to even put it in backup? Barb, Joe and Jana - I found out the hard way that some states will not allow the lender to stop a foreclosure (Kansas). Therefore some of the lenders want the seller's to enter into a listing forbearance meaning they are making some type of payment for the next 6 months just to stop the foreclosure. I don't know what I would do if I had the buyer. Probably pull what little hair out I have left. November 4, 2007 8:10 PM
Member Since '05	Jana Davis & Virginia Houghton said: Rochelle with our first offer (and it was a very good offer, not a low ball) the seller's accepted it and we sent it to the lender. We put it in the MLS pending with backups. Opened escrow. Etc. We didn't realize at the time that the lender is in total control and not the seller. It does not matter if the seller accepts the offer the lender may not. It took 3 weeks for the lender to get back to us that this offer was not sufficient, and they wanted us to counter $25K more. Well in that 3 week period, the buyers got cold feet and they walked as soon as we countered. You know as well as I do there are a number of agents who do not show homes that have a accepted offer even with backup. Our property was basically off the market for 3 weeks. Do not put in the MLS that you have an accepted offer until the lender and the seller accepts it. Not just the seller. We now send the offers to the lender first for approval. The seller gets the offer of course but they will not sign until the lender does. All contingency periods to start with lender approval. If other offers come in while the lender is pondering the first one, we send these to the lender also. Hope this helped clarified what I said above. Jana November 5, 2007 12:17 PM