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Why should the buyers agent get screwed? Hi Ho Silver, AWAY!

Why should the buyers agent get screwed? Hi Ho Silver, AWAY!

Wearing a white cowboy hatA few months back I wrote about "contract purchasers" with short sales. In other words, the short sale negotiator enters into an agreement with the lender to purchase the short sale at one price, the home continues to be marketed at a higher price. If and when an offer comes in the negotiator purchases the home at the lower price, then the same day or following day closes with the end buyer at a higher price. The offer to purchase is signed by the negotiator, all negotiations are done by the negotiator who does not yet own the house. He/she signs and negotiates as the "contract purchaser".

Many of you agreed with me, those that didn't agree with me certainly let me know how naive and foolish I was, why shouldn't the negotiator make this type of money? 20,000, 30,000, I have even seen 200,000 recently on one sale posted in the paper. Wow! That was a great day for someone.

A recent post by Lenn Harley brought this up again with me, so I just had to put on that lousy white hat of mine and race in to start another blood bath for myself I am sure. I think I was accused of wearing a white hat and being a do-gooder, but not in a nice way based on my comment. Although I think someone got my name wrong... or maybe they weren't talking about me.

When working as a buyers agent it is my job to get my buyers a home at the best possible price... hmmm. Let me explain that one to my buyers.

I have one last question on the matter. The offer of compensation that is out on the MLS is based on the listing contract the listing agent had with the owner of the home, not the contract purchaser. I have seen buyers agents walk away with $700 on a $250,000 purchase. Yes they could have gotten the balance from their buyers. I am playing that scenario in my head....

If the theory is... why should the negotiator and listing agent miss out on this fantastic opportunity to make really good money in the short sale game....

screwmanWhy should the buyers agent get screwed? After all, without the buyer there would be no fat profit for these people.

And where is the protection for my piddling minuscule commission I will end up with? As far as I can see the offer for compensation might be worthless as my buyers won't be buying from the person who signed the listing contract in the first place. Or should we just write up something before we submit an offer that demands full commission at the closing, because sure as shootin' the short sale negotiator and listing agent are making money on these deals! And on the backs of our end buyers I might add. You expect me to get money from my buyer after they just overpaid on the home based on what the lender agreed to take?

Hi Ho Silver Away, I would really like to have this explained to me.

Andrea Swiedler, Realtor, Southern Litchfield County Real Estate

2017 President, Greater New Milford Board of Realtors

2017 Connecticut Magazine 5 Star Realtor

 

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© Andrea Swiedler 2009 - 2017

 Always do right. This will gratify some people and astonish the rest. - Mark Twain

Comment balloon 15 commentsAndrea Swiedler • July 18 2010 09:18AM

Comments

Good post and fair warning to home buyers and their agents. Fraud and deception is appearing in every aspect of real estate transactions.

 Blooming for home buyers this summer.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) about 8 years ago

Whoa, wow!  We haven't seen these yet, emphasis on YET.  There is no way that you would ever have your buyer overpay and then ask them for the balance of the commission.  What a gross new scheme they have going.  Ughhhh

Posted by Krista Lombardi (Prudential Calfornia Realty) about 8 years ago

Good morning Andrea,

This post will be a good one to see all the comments you will get! Glad to see you have your while hat on and ready for action. Unfortunately Roy is right fraud and deception is appearing and it will come back to haunt us!

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) about 8 years ago

Roy, thank you. Fraid and deception is everywhere, and it sickens me. And I love the blooming thing!

Krista, just wait! I am sure you will.

Dorie, I made this one public. Last time I wrote about this it was a blood bath, LOL, and I changed it to members only. Not this time. I am curious to see the comments myself.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 8 years ago

Oh, Andrea!  Reading this makes me want to hang onto my (short sale) virginity just a wee bit longer.  Yikes.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) about 8 years ago

Pat, come on... rofl... go for it. You are Crusader Rabbit, just like me. You will relish the thought of getting the bad guys, all the way around. In for a penny, in for a pound I say.

And, I JUST WANT ANSWERS! I bet I won't like some of them though....

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 8 years ago

Andrea, as the reo/short sale mess progresses, or better yet continues it's tawdry movement, I am never surprised at the assorted ways some figure to line their pockets while stiffing others along the way!

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) about 8 years ago

This "process" is unfair for the original mortgage holder which was "persuaded" by the negotiator that the property was only worth the lower price.

Unfair to the homeowner/seller because it increases the shortfall to the original mortgage holder.

Unfair to the end buyer who pays more than what the original mortgage holder and the seller is willing to accept.

I had one transaction like this and I HATED it.  Just made sure that my buyer and their lender were FULLY aware of what was happening.  My clients wanted the house for the price they were willing to pay.  The property appraised out and the lender was satisfied that the 90 day waiting period for a flip was no longer in effect.

Interesting that the negotiator did in fact come up with the purchase monies for the few days.  Apparently there are companies that "loan" the monies for incredible fees.  The only other beneficiaries are the state and town - conveyance taxes are collected for both transactions.

This is just so wrong.  And doesn't the listing agent have a duty to obtain the best price for his/her customer - and not for the negotiator?  It is a round world, and these scavangers should ge their due!

There is nothing wrong with "normal" short sales where the brokers are "allowed" anywhere from  4% to 6% from the proceeds, depending on the lender's practices.

Posted by Attorney Ann E. Fisher, New Milford CT about 8 years ago

I am so with you on this one Andrea. The sellers agent should be the one negotiating with the bank on what they should be paid. Not the buyer's agent who brought a qualified client, presented an offer that was accepted, and through no fault of their own are now being shafted by the greedy bank. I have another offer in on a short sale and am holding my breath to see how it goes.

Posted by Craig Rutman, Raleigh, Cary, Apex area Realtor (Helping people in transition) about 8 years ago

Try filing an ethics violation against the listing agent for listing a home at "X" commission to the selling agent, then changing the commission after the contract is accepted.  I think if everyone involved in these scams were to do that we might see some changes.  I realize this is the banks that are screwing with us, but Short Sale 'experts' might be more cautious about how they advertise their "hot deals" if they had something at risk.  -Steve

Posted by Sara Woolford & Steve Golson, ALHS (iTexas Realty Co.) about 8 years ago

Well our MLS states clearly that the commision owing is what is stated in the MLS offering. Unless the buyers agent agrees to something else (somebody twists their arm) than the broker is on the hook.  I've been on both sides and getting to the 'number' they'll accept is *************. Don't ask!  The people who dream up more ways to fraudulently receive funds - that is going to come back and bite in the future.  I heard of a couple of fraud cases coming up real soon about this very thing here in phx.

 

Posted by Anna Banana Kruchten CRB, CRS 602-380-4886, Arizona's Top Banana! (Phoenix Property Shoppe) about 8 years ago

As long as there are people, there will always be people trying to make money quick and easy. As long as there are desperate people, the job of those trying to make quick money will be made easier.

Posted by JL Boney, III, Columbia, SC Real Estate (Coldwell Banker) about 8 years ago

Russel, and this mess has a long way to go before the ship rights. We will see more ways to make money off this one for sure.

Atty Fisher, you said it all. No one has even talked about the shortfall the homeowner has taken on the original mortgage, that is just so wrong. When people feel trapped and desperate and the savior comes to the rescue, all sounds wonderful! Reality can be quite a different story many times. Thank you for the comment!

iTexas Realty, the thing is, the comments state that the commission might change. But what bothers me is that the contract with the seller that caused the MLS listing is void because the buyers are buying from a different person!

Anna Banana, as I just said above, when the listing states the listing contract is with seller A, but seller B sells to buyer A, ... how can that be real?

JL, it is sad that desperate times can bring out the worst in people.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 8 years ago

Andrea, I would make a comment on this, but Ann Fisher said it all.  It is amazing what is going on out there.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 8 years ago

Andrea Ann did sum this up well. When I get a call from an investor on one of my short sales the conversation is usually pretty short.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 8 years ago

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