Realtor requests discount price to sell to herself as an investor
Hey BP,
I'm just curious about a transaction that seemed odd between a realtor and a person selling her house. This is a retail/market price attempt at a sale by the home owner. Within 7 hours of the listing 2 offers come in. 1 cash and one conventional financing. The cash offer buyer states he will use the property for a rental property. The conventional buyers are a family. The seller states he specifically would like to sell it to the family because (1) they are offering more ($20K more) and (2) the thought of a long-term family next to her neighbors of 15 years was her goal. The agent acknowledges the seller's goal. During the process of financing, the family ran into 'credit' problems and could not close with 3 days to go to closing. The seller is now in a tight position as she has been working with a builder for house that is ready to go, papers signed, and closing scheduled not-contingent on this sale. The builder and seller were able to work out a 1 month extension. At this time the realtor suggests to the seller to sell her the house at a discount ($22K below recently appraised value), and shows him on paper how, selling it to her at a discount would "Net" her the same amount as if she were to sell to a buyer at retail (commissions, closings, so forth), saving her that amount and walking away with the same amount of money. Her father, will be moving in with her, asbancelled his lease with the retirement facility for the next month. Therefore, the seller opted to take the realtor's now 'investor' price. The realtor made it not contingent on inspection, no closing costs, very attractive. She disclosed it was a 'private' sale and she would not be collecting commissions. The realtor's buyer was her husband. Now, 2 months after meeting, the realtor and the seller are 24 hours away from closing. Contracts signed and only waiting for tomorrow. The seller then gets a call from the mortgage company reveling a 2nd mortgage. This was a 2nd mortgage taken out approximately 2-3 years earlier that the seller had forgotten about. This added just shy of $10K in extra costs associated with the closing of the seller's new house. Seller calls realtor, realtor claims to have never run a title search or any inquires furi month journey to her acquisition of the property. Again, seller is forced into an unexpected financial situation. The seller pleas with the realtor (now investor?), whose selling to her husband, to negotiate on the price of the house ($22K under ARV) to alleviate some of his financial distress. The realtor (even though not the buyer?) states it would not make financial sense for her to come up on her price. Now, approximately 12 hours before closing, the seller is forced to deplete his savings in order to make the transaction happen, so that the realtor didn't take a hit and lose money. Seller expresses clear disappointment with the treatment of him and of the deal, the realtor/buyer/buyer-representative/investor - person, acknowledges this dissatisfaction while closing on her new investment property.
Fact: Net sheet presented between realtor and seller never accounted for the missing $10K
Fact: Realtor never did a title scoop
Question: What's your opinion of this transaction? How often do you seen realtors changing relationship status from client relations to investor-seller relations? Does that role change as fast as this example? Or was the house listed for more that 4 days?
Please ask if any questions, thanks.
Angelo