What is the closest to a foreclosure you've heard of a bank postponing the sale?

16 Replies

There's a foreclosure sale happening in my area in two weeks.  A few of these properties look distressed from the outside and based on what is owed and the likely BPO, I feel they're excellent candidates for a short sale.  What are the chances a bank postpones the sale this close?

Another question I have is I am a licensed realtor and an investor.  Are the banks going to have any problems with me being the listing agent AND the buyer?  Do you think I would get the 6% if so?  

a foreclosure sale is when the trustee auctions the property to the highest bidder sometimes called a sheriffs sale They are postponed frequently but not for short sales A reo is when the bank acquires the property thru the foreclosure process and uses a broker to sell and list the property. How are you the listing agent? If you buy the reo thru your broker as an agent it would be up to your brokers policy if he pays you a commission Once you acquire the property you can list it and sell it and collect both sides of the sale,again according to your brokers policy

These were theoretical questions.   I have read a few times that people that are going through the foreclosure process have had the foreclosure postponed once they've had it under contract and listed the home for sale. Is this not true? I was just trying to figure out how close to the sale people have had success with getting a postponement on the foreclosure.

I would be the listing agent and the buyer in the following scenario:

1) I do some marketing and find a seller wanting to do a short sale
2) I get a listing agreement and put the home on MLS
3) I ALSO put an offer in on the property and get it under contract with the seller

Thanks for the reply.

That is different.When you do a short sale you propose the terms to the bank and they will approve the commission rates. Then it would be a normal sale if you sell both sides you get the whole fee if not  then the split. I did one last year and was able to split a 6% fee. I did find out some agents add a processing fee of say $1500 and it comes out of the selling agents side.

Many banks/lenders/servicers will not let you be the agent on the deal and the buyer at the same time if you are expecting a commission. That's not to say that they can't, just that most won't. They also are not required to postpone or consider any short sale within 36 days of sale (Per CFPB). Outside of 36 days, a short sale MUST be considered (Reviewed). Doesn't mean they have to accept a short sale, just that they have to review and consider, and during that process must not continue with any foreclosure event (Dual Tracking prohibition against "Furthuring the foreclosure process"). Inside of 5 days, the owner has no rights other than to pay it off. I've postponed a sale the day of the sale before but, I had a full payoff with proof of funds. No lender worth anything would consider postponing without a full package (Executed contract, perfect transaction in every way and ready to close) .

A brand new agent I'm guessing, how do you list it and then make an offer? Who are you representing with your listing? Suggesting a listing price and then making an offer, do you see a conflict of interest there?

 No, you won't have a bank agree to pay you a full commission on a property you listed with an owner and then be the buyer while asking the bank to take a hit on the loan.

As a Trustee, I have postponed a sale at the courthouse steps just prior to opening the sale with an attorney handing me certified funds sufficient to payoff the loan plus all costs, that doesn't happen very often.

Pre-foreclosure can be stopped by paying the amounts due or getting very close, you can also buy the note in some situations, but that isn't a short sale. :)  

I have seen 1 hour before the day of the sale. The FC department called the attorney and told them to take the property off the list.

Lot's of variables state by state. Here in GA it's non-judicial for the most part ( some really old mortgages might still need judicial process or if title issues need to be cleared through the courts etc.). So if they stop the sale it is relatively cheap and quick to re-file and foreclose again. Some states the judicial process is very long so unless the lender foreclosing has a cash buyer with no contingencies they may not want to stop the sale due to a long and expensive refiling process.

For short sales, a few weeks, although it's usually got to be more. For other reasons, sometimes reasons that I can't even figure out, an hour before or thereabout. 

@Ron S. Thank you for such a thorough response. It's what I was looking for.

@Bill G.  Thanks for the response. I'm not a new realtor. I've just been throwing away a lot of underwater leads from my marketing and I figured I'd try turning it into a listing and see where it got me.  I wanted to have an idea as to when it's too late to talk to them or continue with marketing to them. 

For my purposes it seems like I shouldn't bother talking to underwater leads once they're within 3-4 weeks of the sale.

Unless you can actually buy, as in a cash sale or know darn good and well you can get cold cash, you should avoid anyone who has received notice of foreclosure as that is when new federal laws kick in as to "helping" owners or interfering with banking operations. As a Realtor, you can certainly list a property, going in as a buyer takes on a different risk. Sorry about my assumption but it wasn't clear with the muddy arrears around foreclosure, pre-foreclosure, short sale, listings and representations, my reading of it all. Good luck :)

No, I was just going to try to convert all of the leads that didn't have any equity into listings for commissions.  I've read about short sale-related mortgage fraud and it seems like I wouldn't be able to list and buy.  Should I refer the properties that I DO want to buy to another realtor?  Is there a way to increase the chances that I'm able to get it under contract?

Take your leads to a short sale specialist Realtor, agree to a split commission, learn the SS deals as you work with them. You might ask your broker to hook you up with someone who knows that side of the business. Good luck :)

@Kris Fox , without equity I don't see where the commission would come from.  To your original ? of cure date, here the standard is 11 days before the sale but as others have mentioned, it can occur much later if the bank receives the funds to cure or an offer they short sale approve.  Too bad they mostly only teach  how to farm listings when they 'train' new agents.  This is big stuff your are dabbling in!

Oh man. It's quite apparent when it comes to short sales, I don't know what I don't know.  Is there a resource I can read that discusses what will make or break a decent short sale listing.  I've read pretty much every post in the Short Sale subforum over the past year and I have a lot more reading to do.  I'm just trying to see if there's an angle to take my garbage marketing for flipping leads and turn them into a commission.

@Steve Vaughan   I'm not understanding something.  It sounds like you're saying that banks will only pay commissions on listings that have equity.  I thought that, by definition, short sale listings do not have equity.  Why would a realtor every list a short sale if that were the case?  

Oh, you mean negative equity listings?  Sure. Short sale listings happen all the time.  I thought you meant houses only worth what is owed- no equity.  Thanks for the clarification @Kris Fox

Originally posted by @Steve Vaughan :

@Kris Fox , without equity I don't see where the commission would come from.  To your original ? of cure date, here the standard is 11 days before the sale but as others have mentioned, it can occur much later if the bank receives the funds to cure or an offer they short sale approve.  Too bad they mostly only teach  how to farm listings when they 'train' new agents.  This is big stuff your are dabbling in!

That's the "beauty" of short sale listing for agents. If you can call a high paperwork/low close rate transaction beautiful. Typically the agents are the only ones getting paid (besides closing agents and title companies) in a short sale. The lender will require a listing on the open market and they do allow a certain amount for commission. They the put restrictions on the terms of the sale and who will get paid. For example, they won't pay the HOA, they won't pay the seller/borrower's tax liens, they won't allow any funds to go to a jr. lien holder or they put a cap on the amount, they won't allow the seller to benefit from the sale, etc. However, lenders do pay agent fees, even with negative equity properties.

@Account Closed   Thanks for the response.

So, what if I had a screening process for short sale candidates?  (i.e.

"Do you have any tax liens?"
"Do you have a second?" Would you not work with anybody who had a second?

I was listening to a webinar on NAR and a few of the webinar hosts said that a second is not an automatic deal breaker as the long as the second doesn't demand too much and they've even heard of the first giving the second up to a few thousand dollars or possibly forcing the seller to contribute to the second for a couple of thousand.

My ultimate goal was to get some experience and develop systems so I could have an assistant take care of all of this for me.  Is this even remotely possible?

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