short sale flipping-I represent buyer

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short sale flipping-I represent buyer

Diane B.
Member since 2010 · 6 posts · 0 votes

I am a new agent in New York and submitted an offer on a short sale on behalf of my client on a listing that was originally listed with an agent. I was then contacted by that agent and was told that she was withdrawing her listing and a "short sale negotiator" was stepping in. This short sale negotiator is an investor who tells me that she is is negotiating with the seller's lender and if accepted, the property will transfer to her and she will then transfer it to my client. I asked her if the bank was aware of the amount of my client's offer and her reply was "the bank is aware that she is an investor and her contract clearly states that she has control over the property and will sell the property for a profit" and that my client's offer is to her - not the lender - and my commission will be paid by her.

Should I be concerned about anything here? I will disclose this to my client and let them make a decision but my broker is not comfortable with me doing the deal. I don't want to walk away if not necessary.

Any suggestions?

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Bill Patterson
Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes
16y

Diane,
Don't give up entirely on this process. Sam & Eric are correct that when done in the proper sequence and full disclosure, this type of transaction with an investor buying and selling the short sale can be of benefit to all parties involved including the lender and the end buyer.

They are also correct....this one smells a little fishy and you are wise to be concerned. Sorry Sam, you've got Bill instead of Jackie....., but there may still be a way for your buyer to get their home, Diane! As a broker, my advice would be to talk to the agent or have your broker talk to her broker. If indeed your offer went to the listing agent before the investor stepped in, they may be interested in the CT case. They may also be interested in dropping the deal with this "investor" and just going with your client's offer. If you do decide to do this, I would have your client's offer accepted and make sure that it is the only offer submitted to the lender. There is no more reason to have the seller accept and submit another offer when your client has a valid contract than if they had a valid contract on a non-short sale property and wanted to accept a higher offer that came in. You have a contract that should be negotiated until the lender or your client cannot come to a meeting of the minds. Short sale negotiation is a specialized field! Is there someone in your office that is experienced and has a good track record of successful outcomes and no or low deficiency judgments?

Good luck,
Bill

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  • Sam M.
    Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes
    16y

    Except for quite a number of agents in my town that "smell a rat" simply because something is out of the ordinary.

    My agent was on the phone for hours with every agent calling wanting to send him info on why our deal was "mortgage fraud" I am sick of the agents in my town who think their **** doesn't stink.....And they cannot close but 13% of their SS's. But they sure know all there is to know.

    An agent was telling my seller that what I was doing was fraud. My seller told me who it was then said she should call him and have him call me. Not 5 minutes later he called and was so concerned about his name being dragged into the deal.....sad.

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  • Bill Patterson
    Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes
    16y
    Originally posted by beckidi:
    the investor stepped in after I made the offer to the seller. That is why I'm not liking this whole thing.
    Originally posted by smitnlit:
    Beck,
    If you didn't have a signed purchase and sale with the sellers, then I don't see anything wrong here and your'e walking away from something that will likely work much quicker than traditional old negotiation.

    If you submitted a contract and the investor submitted a contract the seller has every right to accept the investor's contract. It was likely a cash offer with a skilled negotiator. If your buyers like the property (which I assume they do) do you care who you buy it from? It's the property they are interested in, not the seller.

    Again, I think that FEAR is what's stopping you at this point. This could be a great opportunity.

    You are welcome Sam, but I would have jumped in anyway since I don't want a few bad apples to spoil the bunch of us!

    Diane, Maryann has a good point, but the key is… was your offer accepted before the investor made his offer? I don't know exactly what it is, but I don't quite feel right about this deal. Maybe your fear is catching! At any rate...if your buyers want the house at the price they offered, and you can be convinced that the investor submitted his offer properly, I'd consider re-submitting their offer. Since it is your buyer's time on the line, I don't think that it would be out of line to ask for the investor’s and negotiator's track record and verify it!
    Bill

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  • Maryann L.
    Specialist · MA · Member since 2009 · 858 posts · 306 votes
    16y

    Eric
    "I think she smelled a rat and moved on from this deal. Nothing wrong with that. Plenty of fish in the sea."

    how is there a rat? If she didn't have a signed agreement the seller can pick any offer submitted to them? Maybe the investor had a stronger offer - CASH AND A TRACK RECORD OF GOOD NEGOTIATION.

    Just because an offer is submitted doesn't mean a seller has to submit it and there is a rat.

    From what I can see unless she had a signed p&s, this is all completely normal. Now if there WAS a signed p&s, then there is something wrong. The seller has a right to choose whichever offer they want.

    I think she's passing up a great opportunity.

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  • Sam M.
    Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes
    16y

    I agree Maryann. To walk away without knowing the facts is foolish IMO. In a way it is not much different than misrepresenting any other part of the transaction. Especially to tell a buyer something is fraud without knowing the material facts.

    But then most people these days seem to let fear determine their course of action rather than fact, reason or even faith.

    If you read the mortgage fraud blog there are plenty of agents with indictments due to misrepresenting material facts in STANDARD sales. Falsified income statements, tax returns, straw buyer agreements (meant to hide the identity of the buyer) etc. The list goes on.

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  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    16y

    [quote=smitnlit
    how is there a rat? If she didn't have a signed agreement the seller can pick any offer submitted to them? Maybe the investor had a stronger offer - CASH AND A TRACK RECORD OF GOOD NEGOTIATION.

    Just because an offer is submitted doesn't mean a seller has to submit it and there is a rat.

    From what I can see unless she had a signed p&s, this is all completely normal. Now if there WAS a signed p&s, then there is something wrong. The seller has a right to choose whichever offer they want.

    I think she's passing up a great opportunity.

    You guys need to chill a bit and not be so defensive as investors. I know it is frustrating that SS flippers have the rep they do and it is very frustrating that most in RE are uneducated and don't understand what you do.

    But you have to understand that there are bad apples out there and there is some reason for people to be wary. Just keep doing your business correctly and don't worry about what others think.

    You ask, "where was the rat"? I did not say there was a rat. I said she smelled a rat. Maybe there is no rat, who knows? Smelling a rat simply means she was involved in a situation that just did not feel right to her. She was suspicious and uncertain and it is a reasonable reaction to avoid it. I also advised her to cautiously proceed with the deal and learn something new, understanding that it may not turn out well. But she decided against it. It is certainly her right to get out of a situation that doesn't feel right.
    Understand her incentives as a Realtor. Her clients are going to buy a house. Maybe this one or that one. She will collect her commission. Should she work 50 hours over 5 months for this one or 3 hours over 3 weeks for another one? She has no incentive to work this deal once it got complicated.

    We can argue all day about whether this investor/listing agent was ethical or legal. It could go both ways. We just don't know. There are plausible scenarios on both sides.
    So you don't know that this was a "great opportunity" anymore than she knows it was a scam. Could be either. Only she is IN THE SITUATION and only she knows how things went down.
    All I am saying is let's give it a rest. She has made her decision.

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  • Maryann L.
    Specialist · MA · Member since 2009 · 858 posts · 306 votes
    16y

    Yes. We make Agents wary. The reason that IS is because MOST agents haven't worked with a short sale flip investor before. We all have a fear of the unknown and with major mortgage fraud headlines, it's not surprising people think the worst.

    There is OPPORTUNITY here. She came here and asked a simple question. "Should she be worried?" To which my response would be NO. She has already admitted she was a "new agent" and her broker didn't like the situation. My guess is the broker has never worked with an investor that's experienced in negotiating short sales. She thought the bank was supposed to see her offer. Well, not if there is no signed p&s.

    My only goal was to try to understand the challenge she was facing and work through it.

    We can't expect to have good relationships with agents if we can't explain how a process works to them.

    Bottom line: If there was no signed p&s, there was nothing done wrong here.

    Thanks - Off to suck down my chill pills :wink:

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