Central Florida Short Sales: Should We Submit an "Offer" on A Short Sale Just to Start Negotiations?

Reserved for #237894

I want an inmate number.... :( 

"Why not just price the property right and get a valid offer from a legit buyer?"

Bingo! If you price the home correctly, the offer will take care of itself. 

 

#237895 

I'm sure you know I'm not in a market where this is rampant but I respect your opinion as it is clearly hard won...if you say it, I say it...and common sense has always told me that fair play is the best way to play!

HA!  Whose money is going to be deposited on a phony offer???

Also, who is going to hold the EM??????

What will they think of next.

Price it right and get a real offer. That Ad reeks of a lawsuit waiting to happen to all who participate.

I agree with Cameron - great article and way to point this out in a great way.  Kuddos.

If it smells like garbage, it is!

Hi BB -- This smells like the BP well, spewing toxins waiting suck the life out of any living thing. 

BB,

Had to read this post twice! Sounded like you had the BPO and appraiser on your team. Then noticed you wrote that in italics which just saved me a phone call.

Margaret

Really?? Submitting a phony offer to "get things started"? Even if it weren't a CoE violation it should violate all of our personal code of ethics to play these kind of games. Thanks for posting, wasn't even aware this type of ad was out there!

Hi Bryant!
This is wrong on so many levels. The first one that comes to mind is "acting in good faith". In other words, if you write an offer, you have every intent of negotiating and completing an escrow.  Their system is against DRE law and is referred to as fraud.  I, for one, don't think speeding up the process is worth fines and jail time for me and whoever wrote the offer...just my 2 cents!

Not a good idea and not something we want to be party to. Like Paula said, it's fraud if there is no real intent to purchase the property. It's much more serious than the CofE.

I agree.  The banks don't play fair, or make fair decisions, but I don't feel I need to lower myself to being anything other than truthful.  Some agents call and say "did you get my S.S. package yet" knowing that an offer has not been received.  Then when an offer is received, they ask for it to be escalated.  I don't subscribe to this technique.

I totally agree ( I think with everybody ). That sounds like lawsuit waiting to happen. But......let me ask you this. What would you do if you receive very, very low offer on short sale listing that you have no offer on? What I have been doing, I (with seller and buyer's agent agreement) have been sending offer to bank without making it bilateral jssut so bank orders appraisal and maybe tells me bottom line. Low offer- I don't mean $10,000 under asking price. I have listing listed at $95,000 and it is not unreasonable price and I received offer from investor for $50,000.  Let me know what you think.

Agreed!  Play it straight.  You don't look good in stripes,  It is amazing that there are agents who think this is ok.  I could name several with whom I've had this very discussion.  Can't imagine how they can think it's right.  Of course, in their presentation they had to use their specific title company because other companies were too "unsophisticated" to understand this type of transaction.  A long time ago when I was in health care management, I went into the first day on the job of managing a large group practice and was invited to create a referral arrangement which would have qualified as medicare fraud.  I never regretted the fact that we declined - especially when the whole thing blew up and a number of people were named as  co-conspirators and some spent time in prison.  My life remained routinely dull when their lives were interrupted with attorneys, trials, and prison.  No commission is worth that.

Nope... thank you. I would prefer not to be a party to a fraud in the making! I like colorful clothing and wearing orange (or stripes) all the time would be booooooaring...

Seriously, how can these people blatently advertise that they do this kind of "cr*p" and still be walking around free let alone still be in business? Don't get me up on my soapbox or I may never come down. Hey, I kind of like it up here! I just keep hoping that the crooks get caught so the rest of us law abiding citizens can make an honest living.

What is with comment #16, some kind of idiotic spam?

I agree 100% that we should operate ethically, and I do, however, if an auction is 2 weeks away and it's a tough property to get an offer right away isn't avoiding foreclosure the goal? And with that said an offer can also be a letter of intent which is not binding until all parties agree, however, does give all parties terms to proceed, and there is nothing unethical about that, is there? Making up a fake offer from a fake buyer is a different story but I don't see where that says what they will do.

illegal is as illegal does. I like selling real estate and I would like to continue to do it. If this is what I  need to do to sell real estate then I will find a new career.

BB - The first time I heard about this "plan" my WEASEL ALARM went off in a big way. Didn't smell right then, doesn't smell right now.

Coleen--if that reply is for me, what is wrong with that plan?

I see short sale listings with prices way below market and tell my buyers that they will be the guinea pig for the listing agent to find out just how much the bank will accept.

Homey don't play that.

The Short Sale process is full of games.  Wish it wasn't, but the banks hand us many pieces to a lengthy game. 

Wouldn't it just be nice if the banks would tell us up front, before an offer was made what they would accept?  They need a BPO whether they sell it short , as an REO or at the courthouse steps.

Unfortunately they don't and with some lenders it can take 5-6 months just to find out who your loss mitigator will be.  Most buyers will not wait that long to find out, they keep looking for houses.  Then agents end up writing 10 offers hoping that one will stick...eventually.  In the mean time, our clients are still out there looking, or putting all their hopes in one house that the bank may just let go to foreclosure anyway, just for the heck of it.

If you, as the agent disclose to the seller what you are doing, where is the harm?  You'll have to send in an approval letter or proof of funds any way. 

Do yourself a favor and find an investor that would be willing to buy the house if the bank goes for the offer.  Align yourself with investors.  In this market you need some on your team.

I don't agree with taking a fake offer to the bank. It's just not right.

BB - I agree, that is wrong on so many levels... If the agent would only use all their efforts in getting the property sold, instead of putting together an elaborate scheme, then their goals would be achieved.  I have to ask, isn't working with really buyers and/or real sellers mean you make real money?  I list short sales and haven't lost one yet (knock on wood).

Lenn- They don't put down EM! That is the kicker! We still have these stupid state FAR short sale addendum that says that the buyers Deposit is not even due until they get third party approval of offer! RIDICULOUS! Of course that is why us and our attorneys have our own addendum to short sales! 

Bryant- This is one of the BIGGEST complaints the negotiators at the banks have about short sales. This also adds on to the time that it takes the banks to get you back approvals. 

Not only that, it is so easy to get offers if you price the house right. We get multiple offers on our short sales that are priced according to market values. We don't ever have an issue of getting an offer before the foreclosure date. 

Tell them to stop causing the bottleneck! 

Yeh not ethical at all....or right at all!

Tom

What will some folks think of next. Doing the right thing is the only way to get ahead.

Bryant. most times the short sale negotiations and the foreclosure process are independent and having an offer does not necessarily stop the foreclosure.  As the short sale gets closer to resolution, it may slow or stop the foreclosure.

Phony or extremely low ball offers just won't get approved and won't do anything to help the seller.

It's wrong and i don't think anything else needs to be said!

BB, I read this yesterday and was about to post a comment when the grandson spewed everywhere. Glad it was featured so I remembered to come back!

I was really, honestly shocked when I read this. This is wrong on so many levels. FRAUD. I was surprised that someone even asked the question.

And no, I am not naive, LOL, I swear.

It seems these days that unsuspecting homeowners are not the only one being taking for a ride by unscrupulous investors. . .Realtors are being asked to break the law and I supposed you'll find some of them not have a clue they are breaking the law.

Broker Bryant -

My feeling is that you have given some really bad advice in your statement "Most banks will not stop the foreclosure process and start the short sale process until you have an offer on your home."

The process at the lender has evolved into a two track system. The first track (think a railroad track) is what I call the FORECLOSURE EXPRESS. The lender has come to realize that the loan mod and short sale processes are seldom successful the first time around, are sometimes fraught with ill-intentioned borrowers seeking to drag out the process of losing their homes (or income property), and get tied up in the backlog of the attorney's office and Clerk of Court's office.  Thus they put the foreclosure in process "no matter what".

The parallel track of the process is the short sale or loan mod process. This railroad track has chugging along the "LITTLE ENGINE THAT COULD".  This engine needs all the help of the broker, seller, attorney and closing agent to move this through the process.

The problem is the FORECLOSURE EXPRESS needs to be slowed down. That does NOT happen with the introduction of a short sale!  It is still a race. 

Well, you say - this just is not logical.  LOGIC!?!!!? When was the last time you used logic in a short sale process with the lender - and you were right???????????

The fact is, unless you yell and scream, and maybe not even then, the foreclosure track does not speak to the short sale track.

So, I think it misleading to simply say that when you introduce a short sale to the lender the foreclosure is stopped, is very misleading and frankly, just incorrect advice.

I think you are wonderful anyway..............

Richard, respecfully....because I do respect you. That is not what BB said, he said that was an ad an agent found. He disagreed, as did most of the people commenting so far.

I do too.

Do I see it in Ann Arbor?

You betcha.

A certain Realtor does this ALL The time. They do it to get the approval done, advertise it as an "approved short sale." To get a price the bank will take.

I hate, hate, hate to show his listings....but sometimes the buyers want to see THAT house and we are required to show it.

 

I've heard of others agents doing it.  Me?  Wouldn't touch it with a ten foot pole.  My license is worth a whole lot more to me than the commission on one short sale . . .

The sleaze never seems to end in the real estate "game!" Not only unethical but almost "used car salesman-ish"....

Inmate #237894 Here...

Can anyone help me with this large woman in my cell? She says she wants to marry me. Her name is "Butch" and she's scaring me :)

TLW...ROAR!

Bee Bee

I have seen it done many ways.....all being a nuisance. However, I am reminded that "it is not what you have, but how you came to have it".....that being said......The banks need to come up with a system that doesn't invite shenanigans. Of course agents need to not have shenanigans  to begin with. I love this business....

Thank you for this thought provoking post....

We have a few Realtors and groups in Oklahoma that are of the Jail House Rock school of short sales. They have called me an idiot for not dealing with them and I reply yes I am. And one that breathes free air and has windows without bars.

You think that banks don't know that some unscrupulous agents do this? They do know. That's why they demand all sorts of documentation upfront from the buyer to prove that the buyer is committed to the transaction. I don't know about most short sale agents, but I'd rather not go through the process more than once if I don't have to. I'd like to close with the first reasonable buyer I get.

totally agree with you. Do it right or don't do it!

Amen Joe. I get furious with these agents and silly people putting phony offers to "get things started" - they are in the same rank with the banks on my status chart.

If lenders were a little bit more responsive maybe agents wouldn't feel the need to do this. That being said, the strategy is still dishonest and unethical.

I love the picture. Are ya'll sneaking out for dinner?

I agree with your post. We even have some of the banks that if you change buyers they close the file and start with a new negotiator.

I think that presenting a fake offer to a bank just to get the ball rolling is fraud.  Moreover, if an agent is doing that, they really haven't gone through the agony of replacing a buyer on an already approved short sale.  It's almost easier to start from scratch.

Just one more thing for the public to associate us Realtors with scum.  I say....'Next'!  Good price, legitimate offer and buyer equals happy clients.

Just another case of bad agents giving our industry a black eye. Short sales invite all kinds of people (buyers, sellers, negotiators, lawyers, mortgage brokers, Realtors) wanting to pull the wool over the lenders eyes.

I guess it all boils down to how you want to conduct your self and your business! I will stick to the straight and narrow, Thanks!!!

I say that as usual BB has nit the nail right on the head!

Everyone seems to have missed something here... Nowhere in the ad does it say "we'll write a fake offer on your home".  The agent may very well have every intent of purchasing the property at the offered price... which means the offer is legitimate...no harm no foul.

 

I sat and listened to a webinar recording the other day and this is exactly what the presenters suggested. So yes it is out there. Do I agree, H**l no. What a colossal waste of time!

BB,

I felt dirty and had to take a shower after reading your post!

I completely agree with you.  As an investor, I am bothered by an investor that submits a contract with no intention of closing.  If I submit an offer, I intend to close on the house. 

Hi BB,  This sort of thing doesn't speak so well of some in our industry, does it ?

Should u   In a word...no

Seems like no matter what the subject, there is always someone trying to game the system by taking shortcuts or doing "dirty" deals.

Those jerks can be found in every profession...

There's an agent around here that does that . . . big advertiser, too.  Big on self promotion.  I can't stand this method of operation.  It's just sleazy.  It's too bad that the consumers don't know this is wrong.  I also wonder if the loss mitigators know about this practice.  I think the client is always served best by doing things right in the first place.  Price the thing right.  Put decent pictures in the MLS and make decent flyers.  Put a little effort in for cryin' out loud.  And here's a novel concept--get your client to put in a little effort too, maybe flush the toilets and clean the counters.  Treat the short sale listing like a REAL listing.  Because it is!

I only want to have to deal with the bank once...

Tom

This is rampant in AZ - nothing new.  Almost every listing I've ever had and most that other agents have get "lowball" investor offers at 50 cents on the dollar.  Then, the "agent" has the nerve to get huffy when we advise our sellers to reject the ridiculous offer. 

However, if the banks won't even talk to us until there is a contract on the table, that puts us in a "catch 22" situation - no contract, no talking.  What to do?

Then, there are the agents that put the homes on the market for thousands under the market rate just to get buyers in - one agent told me it was a "blood bath" out there because she received 19 offers in one day.  Sure you did, you listed the house $150,000 under market rate.  How many of those 19 "offers" resulted in investors being angry at YOU, Ms listing agent, when their "offer" wasn't accepted - I'm thinking 19. 

Here's another reason not to do it. The head of B of A's short sale/reo department considers it a straw buyer. If they catch you, he has stated that "you will never do another short sale or reo with Bank of America again."

Still want to risk it?

At RainCamp great stuff...  To answer your question DON'T do it!  If your not gettting offers check your pricing...

Reading and hearing about this type of behavior by fellow real estate agents makes me cringe!  It's amazing to me how far over the line people will cross for a buck. I understand the frustration of dealing with lenders who won't talk without an offer on the table BUT it does not in any way make it ok to behave in such an unethical manner. 

There are some in the industry who need to raise the bar in regard to their business practices. And any broker that would allow a licensee to operate this way needs a good whack too. The fish stinks from the head down. 

Kudos to the many who are just as disgusted with this behavior as I am.

You don't even want to know how many curse words went through my head as I read this post.  Nevermind throwing all ethics out the window; can anyone say fraud?!

Actually I use a variation of this process to sell short sales here in Texas.  I think the difference is my offers are not phony.  My investors puts in an offer package with our own BPO and it is a legitimate cash offer.  Based on a loop hole in the law, anyone who has an equitable stake in a property may list the property for sale.  i.e. A divorced couple where one of the ex spouses is still on the note.  In this case the owner is giving authority for the investor to sell the house based on the equity position.  All of this is disclosed in contracts and ABSOLUTELY GOES THROUGH A LEGIT REAL ESTATE ATTORNEY.  The investor then begins the negotiation process and lists the home simultaneously.  Remember the home has to be listed to negotiate a short sale.  Once the end buyer is secured, and the bank has given approval, the transactions close and the short sale is completeed successfully.  Let me remind you as well that the bank is made fully aware of the intentions of the investors.  As long as the buyers (investor) closes the banks treat it like a typical short sale. 

NOW to answer the question above... ABSOLUTELY NOT.  Even if you do submit a phony offer... once you secure an end buyer, the bank WILL NOT allow you to assign the contract to them.  You will have to start ALL over and you just wasted your time and your buyers.  Then you will look like a total fool to your sellers.  If you are an agent in Texas or California and want to know more about my program let me know.  I work with agents all over these states. 

Sitting behind bars is not part of my retirement plan.  We have an agent in our area that is doing this exact thing.  I'm sure before long we won't have to worry about her.

I personally would not submit an offer to "get the ball" rolling with a bank if I did not have one. I don't think it is ethical. I agree with you, price it right, market it and you will get your offer.

When I take a short sale listing, I do have my seller authorize me to speak to their lender. I like to let them know I am working with the borrower to pursue a short sale. Most sellers have already spoken with their lender and have started the process that way. I believe a steps like this helps, not always, but can help with the short sale process.

Before we starting doing our own short sales, we used a company who had the "investor" on staff (if you will).  Since then, we partnered with an attorney to advise clients and started processing our own shorts.  We price them correctly, submit, add a healthy dose of persistence, and go on to close a very healthy percentage of our shorts - all without the need for "the investor".  Shorts have enough if/ands/buts without adding another one.

I am refreshed to see that the majority agree with you BB that the ethics don't allow for such shady tactics.

Ok Devils Advocate.... what if that Real Estate Company was actually able to purchase homes they listed in this method. In the event no other offer came in, they would buy the home at a low ball price. 

These Short Sale and Forclosure banks love to play games, make it hard on us Realtors, then place all the blame on us as well.  The banks need us more then we need them to clean up this crap.  I say, let them suffer DO NOT TAKE SHORT SALE or FORCLOSURE listings until the banks learn to play by the same rules as us!!!!

If we as Reator's boycotted bank own properties, they will soon change their tune.

I think this is a dishonest way to do business & agree with you about pricing the property right. Another issue would be the banks that make you start over from square one when you receive a new offer. You are then gumming up the process even more by submitting invalid offers & delaying the process for those with valid offers.  There are enough short sale offers in the works without adding invalid offers.

That would be totally unethical and would not reflect the actual status of the property. And if i was to find our you are doing this on a listing on my MLS, I would report you in.

Now here's to the idea about banding together about short sale practices with the banks...

Unbelievable. I guess that's why we have to have laws and prisons.

The majority of Realtors who commented in this thread are the same ones who 3 years ago were saying 'BUY NOW OR GET PRICED OUT FOREVER!'

Now they're on the 'holier than thou' kick.  Sadly, in both instances, they lack education and looking beyond what their peers are saying.

If the investor buyer can actually buy the home, then submitting the offer is better than having the property foreclosed, no ?

Bryant, you're right on and it's very simple to me. Either you have an offer or you don't. You are either an ethical person or not; knowing the difference between right and wrong.  Go ahead and flirt with submitting fake offers and don't be surprised when it catches up to you. There is always somebody trying to find a so-called easy way to do something seeing $ signs flashing before their eyes...it's all about greed. Greed will get you every time, eventually.

Following the correct procedure is always best!

Yes, as the nickname say, I do work with short sales, but it is more the trademark Hawiian shirts shorts and Crocs (even in the Denver winters) that is a trademark.

I have been in the backyard, installing a dryer, and seveal other dirty tasks, just prior to sitting at the computer. The collected dirt on me was so revulsed that I am clean again, after it ran... shrieking from the house, never to be seen again.

Can anyone say LOAN FRAUD!?? this practice violates RESPA, on the mortgage side, will end up costing the appraiser on board a license, and will land everyone in front of the IRS,DOJ, and God knows who else. It is not just the Code of Ethics, the practice is immoral. In other words it is WRONG... It is also deceptive, as once you have an offer, most real estate boards require the property to be listed as "UNDER CONTRACT," which is usually a signal to the real estate professionals out there to pass, unless they have  buyer willing to go into a backup position.

The other problem with this is that you are representing both the Seller, and the lender. By faking an offer, you have defrauded both, because you are creating a condition that, if the listing is properly noted (and which you have to send to the lender, who will go online and see if the ilsting is active or under contract. Yes, Virginia, they do actually check up on this) will have to be disclosed to the Seller and the Lender. Lenders don't want to look at every offer there is, but prefer to see only the highest and best offer.

Bryant, you are right. This is a vile, and repulsive act,a nd I take strides to report it as fraud wherever I can.

As for withheld for legal reasons... grow a backbone. Speech is protected under Article I, including inflammatory speech, as long as it does not provoke a riot, or infringe on the rights of another to enjoy free speech. 

And now, i am going to roll in the dirt for a while, so I can feel clean again, after reading that repugnant ad.

 

Lou 

 

Um, no to a straw man buyer. I like having my license.

Hey Joe Pesci, Vinnie the Chin called and they want to have you made in the basement.  

This blog as well as most of the posts are the most irresponsible things i have read in a long time. This is why most of you are probably unsuccessful hypocrites.... Read it again. It said nothing about not putting in a legal, legitimate offer. And even if you put in an offer to get the ball rolling and don't intend on buying the property, if it is low enough, get hard money and buy it if they accept it!! This makes it completely legitimate. You flip it for profit, and everyone with paralysis by analysis can keep bitching about a BAD economy, while those of us who chose NOT to participate in bad, will be successful.... 

This is a common situation here in Northern VA and even some lender's are going along with it!  I know of a firm that issues an approval letter to accompany such an offer even though it's bogus.  When I questioned the loan officer she told me "to get on board with the times and that every listing agent is doing this."  NOT THIS LISTING AGENT!

This is borderline fraud.  Misrepresenting information to the bank can only result in a compromising situation, eventually. Once caught, trust is destroyed!

Another practice in my market is to list a property at a rediculously low sales price with absolutely no intention of accepting an offer at that price!  Theidea is to create an "auction effect" whereas potential buyers will bid-up the offers.

    5 letter word - starts with an F ends with a D

   Period - Amen

"Um, no to a straw man buyer." - J. Philip Ferranda

Hey J. Philip Ferranda,

Where in my post or the 'ad' did you see straw man? 

Read my post again and re-comment intelligently this time.

Lou-last time I checked we never sign an agreement showing we represent the bank.

This post shows how sad our community is. Out of almost 100 posts less than a handful actually read the post and saw that there is nothing said about placing an illegal offer. I commend those who commented on it and once again shows why we have a such a bad rap in the industry.

WRONG, WRONG, WRONG... How can we live with ourselves with that lie? Aside from CoE violation, do we not want the public to trust us to do what is right? Do we want to be branded as unscrupulous? What does it matter even if it is an approved Short Sale? If it does not settle within a certain time, they will close the file and restart the process again when a new offer is submitted ( in most cases ). So why not work right from the start....Price it right and prepare the listing as you would a regular sale by telling the sellers to declutter. and keep the house clean.This will help in getting the house under contract and the process rolling. Most of all, work with INTEGRITY and everything will fall in place.

This is great! The only ones who can submit fake offers are people w/o licences. Now if the property is indeed priced right, an offer will come along. A real one. Nice post as usual BB! I need to sign up for some of your shortsale classess!

Broker Bryant,

Thanks for putting this out there.  I could never have gotten this kind of response ow my own and I really appreciate your help & advice on this practice.

I think this little bit of "advertising" should go far in helping me set myself apart from the less scrupulous short sale agents.

Thanks again!  A bunch!
Jenna

Should you submit an offer on your Short Sale? Should you cheat on your taxes? Should you run a red light when no one is around?

Do the right thing!  List at the right price, contact agents that work locally, promote the property and get a legitimate offer within 3 days!  Be the professional here!

Tony Lewis RE/MAX of Valencia, Ca. www.TonyLewis.com tonyglewis@yahoo.com 661-702-7972

I am convinced that more than half the people who have commented in this thread have never worked a short sale from beginning to end on their own and with few exceptions the other half are simply parroting what their peers are saying.

Give me a break. The ‘ad' didn't say the buyer making the offer was a phony, fake, straw, sham, fraud, or any of the other colorful euphemisms that most of you have so self-righteously bandied about in a purposefully self-serving albeit misguided way in this thread.

I am a buyer who has cash.  I have closed more than 50 short sales.  I have also seen my share of homeowner/sellers foreclosed upon. 

I agree with doing what is right, ethical, and best for the homeowner.  This means, get a buyer who can buy the home and start the process.  Submit to bank, have BPO/appraisal completed, counter buyer, if buyer buys the GREAT, and if not then the short sale is ready for the next buyer to step up with no waiting.  Duh!

And sorry to state the obvious, but there is one other thing those of you who haven't a clue in this thread need to know - there is no FIDUCIARY relationship between the LENDER and the LISTING agent.  The lender is SUING your client, THE SELLER.

Some lender's are actually wising up to that scam, and scam it is if not down right fraud. The lender is actually starting to want to see the social security numbers of the buyer's to make sure, that yes, they are actually warm and breathing.

George William, I'm with you. To much rightious indignation and lack of real comprehension. Too many flinging about push button words, knowing you are never aware of the 'real facts' behind these transactions, only your emotional perception of them.

Short sales are the wild wild west of real estate. The banks created the problem, sustain the problem and grow the problem to levels of unrealistic frustration. Some even thought being black balled by Bank of America actually amounts to something. You real estate people need to get a grip on reality. The banks delt the cards and many are playing smartly the cards they are holding. The rest of you should just stay out of the short sale kitchen.

I agree.  While you do need an offer to begin the process many times, a fake offer isn't the way to go.

Cheers.

Lou "That Realtor Guy in Shorts" Farris

Lou, dont tell me about growing a backbone or about "Speech is protected under Article I..." as any GOOD agent knows to boycot aginest something like that is against RESPA

I love the investors that come on these forums that like to rip Realtors for doing the right thing. It totally pisses them off when they come across a Realtor that has the balls to say NO not on my dime buddy...go make your millions elsewhere.

I have been successful at many Short Sales for years and all I can say is be ethical and don't miss lead anyone with anything.

In my previous life I worked in an industry that skirted the law and miss lead and deceived..........when the government came in later and changed the rules or made new rules because the "consumer" got hurt many of my colleagues went to jail for miss leading.

If you think you are lucky go ahead and role the dice................

Ethics... it's all about ethics

If my real estate business is built on repeats, this would end my business in short order.  While it may work for the first buyer, the practice is not sustainable, and therefore a bad idea.  All this - beside the fact that it must be illegal, certainly not moral and will not in the end shorten the process of a short sale.

WOW...there are so many dog and pony shows out there who are always willing to take advantage of folks in a desperate situation and of course try and cut out a licensed real estate agent at the same time. All the while encouraging unethical and possibly illegal actions at the same time...Despicable behavior all the way around!

Might as well make it 101 because this just get my goat and again, it's no wonder the public does not trust us when so many are willing to rip the same public off by pointing an accusing finger at Realtors! OK, I'm done...

We've actually ceased doing business with agents who do this.  If we find out an agent we're working with is submitting "fake" contracts, we kick them to the curb.  It does not "shorten" the process, it drags it out.  Lenders qualify buyers, so everytime you get a new "buyer" the process starts over. 

People want to bitch and complain that lenders take too long...and the real fact is...if people submitted TRUE, quality purchase contracts and short sale files, the lenders would not be swamped with negotiating files that will never go anywhere!!

Dear Bryant:  Is there any way to make a copy of all these responses and email them to the ad maker showing a CC to Bill McCollum?  I'm not a lawyer either and I think it would be great if the legal beagles took a look at this practice.  I've been involved in the business of real estate in one form or another since the early 70s and well remember the straw buyer issues that almost took FHA down at that time.  We don't need a repeat.

Sally Rackey, Re/Max Platinum Realty, Sarasota FL

Wow! Lots of comments.

Not sure why posts like this always bring out the nasties but so be it. This article is just my opinion and of course everyone is entitled to theirs. 

Anyway my question remains the same for anyone that feels we NEED to submit fake or even very low offers.

Why not just price the property right and get a valid offer from a legit buyer? Then get the deal approved and closed.

If as representatives for the seller we can find a legit buyer at a good price in a reasonanble amount of time then isn't that a better way to go? Convince me differently. I bet you can't.

If anything lenders are getting more difficult to deal with on price. They want as close to market value as they can get. And they get it because in the hardest hit areas inventory is very low right now. Things have changed, It's not 2008 any more. Buyers are a dime a dozen. My sellers don't need your low offer.

Ok I'm off today so will check in tomorrow afternoon.

Please no name calling.

Bryant - I agree "Why not just price the property right and get a valid offer from a legit buyer?" It isn't rocket science - just know your market. Short sales can close if done properly.

We use to do it all the time.  I find NO fault with the concept.

The problem was that Bank of America would eventually APPROVE that short-sale,

but would cancel the short-sale if you tried to change the name of THAT buyer, with another.

 

When you think about it, it makes NO SENSE AT ALL.

The property value is the exact same, whether Bill buys it or Bob buys it.

BPO's do not change with certain buyers.  (Or do they?)

OMG, I just figured out the banks angle... MORE predatory practices based on WHO the buyer is.

If you like wasting time, why not?  time is money.  why anybody would "play" with a non-negotiated/pre-set price on a short sale is beyond logic.  Try and remember which end is the tail versus the head (the bank).

I hear things all the time about how so and so has found this great ways to beat the system.  Almost always smells.

Why not play straight up?  Or do some find it too boring and love the excitement or whatever it is???

I don't play the games and never will. 

I read that ad with horror. That's all we need: another way for real estate agents to get a bad name.

They do loans, too. Great.

Just had someone in Colorado tell me they do this except they have a real investor who is really making an offer.  It either gets sold to them or it gets the ball rolling for another quicker sale next time around- sounds like a win-win.  Though if you are faking it, shame on you.

I have to say, it these banks didn't put so many hurdles in the way of a closing, people wouldn't feel the need to get creative in making the process efficient.

George William wrote "This blog as well as most of the posts are the most irresponsible things i have read in a long time. This is why most of you are probably unsuccessful hypocrites.... Read it again. It said nothing about not putting in a legal, legitimate offer. And even if you put in an offer to get the ball rolling and don't intend on buying the property, if it is low enough, get hard money and buy it if they accept it!! This makes it completely legitimate. You flip it for profit, and everyone with paralysis by analysis can keep bitching about a BAD economy, while those of us who chose NOT to participate in bad, will be successful.... "

 

George, you're conflating several ideas and your comments indicate you're not smart enough to pull this off without committing fraud.

  - There is nothing wrong with writing an offer with you as the Listing Agent, the Buying Agent and the Principal as long as you disclose it all.

  - "even if..." is gonna get you busted. Just exactly how does one submit an illegitimate offer and not be, ah, illegitimate.  It's either legal or it's not. There's no gray area. 

  - You darn well better be prepared to document, in detail necessary for litigation defense, best efforts at marketing the property regardless of what price you pay.

   - Regardless if the property is purchased by an LLC, Sub-S or an individual you do not want any straw buyers. You must disclose.  

  - It's accurate to say that in some markets asset managers will take any all cash offer, 7 day close, no matter how ridiculous.  There's actually an easy arbitrage model for this, but again, market & disclose!

  - Anticipate that in the not too distant future some smart software geek, a hungry attorney and an investor will notice a pattern.  They're write a simple AJAX app that compares recent sales to past sales of shorts, and then calculates the arbitrage. Heck, they could do it with an Excel macro if they don't mind clicking a button. Like any arb they'll analyze where the profit was derived. They'll start to see matches and those matches will show you as the listing agent. Hmmm

First the team will try to replicate your process and perhaps birddog all your listings.  The second thing they'll do is find a way to talk to the VP of the asset management firm to get a direct feed and save the bank the agent commissions.  The third thing they'll do is make a deal with the asset management firm to file contingency civil lawsuits against you for any possible fraud.  This has several favorable outcomes for them.  1) they no longer have to worry about you bidding against them for cheap shorts because you'll be too busy in depositions.  2) They may actually win a few for the asset management firm and make some money, in which case you may soon get a visit from the D.A. for criminal fraud and, 3) they'll step into your shoes and get all the deal flow. 

- As i noted above, you can do just fine by legitimate offers.  But you darn well better get some professionals on your side BEFORE you start.

Thanks for addressing this. Yes it is wrong on so many levels.  I do think "short" "sales" are a very interesting term.. never "short" and oftentime never sold. Uggh.. i wonder when real reforms will occur in the foreclosure/short sale process... how about let's list a property based on BPOs and the lender won't tell the listing agent how much they will take nor give a guarantee on response time performance.  I call short sales/foreclosure brain damage and dangerous to  a realtor's financial health.. uggh.

Very well said Bryant. I have to wonder where the money is coming from for these fake offers? To me a Realtor who practices this method is just asking to get popped for fraud.

Doing what the ad suggests is FRAUD period. Anyone who does something like this deserves what they get.

I can't see how it's good in any way shape or form to submit a fake offer.  Not worth my career.

Price the property right from the start and the rest will take care of itself! on short sales we price property 15-20% below market and the whole Real Estate world knows that's a great deal. The word gets around and a sale occurs. Now, getting to the closing table is another story, with the lenders being overwhelmed with pre-foreclosures, short sales and regular sales. So, do the right thing and PRICE IT RIGHT! Remember the TV program "The Price Is Right" and you'll never go wrong!

I believe you would be a violation of the realtors ethics code and subject to some sort of sanctions or perhaps a lawsuit by the seller.  Why not have a valid offer done with current CMA practices on the home.  I will say this - the seller is the one to whom all offers must be submitted to, and when unsigned by the seller definately NOT TO THE LENDER.  A real estate agents fiduciary responsibility is to the seller, not the lender.  If the seller accepts the offer and signs it (ratified contract) then it is forwarded to the lenders LOAN MITIGATION OFFICER, only then and not before.  The lenders loan mitigation officer can do nothing with an offer that is not ratified.  It is another piece of paper he files along with the sellers SSP hopefully complete and if not it goes into the large uncompleted SSP stack on his desk to be looked at in a committee meeting (maybe once per month - 2 to 3 hrs) and that uncompleted SSP stack doesnt decrease much per committee meeting.  It is no wonder that it can take up to a year or more to complete some short sales, but if done right, it can take as little as +/- 3 months.

Perfectly said. If we do the right things, the right things will happen, right?

P.S. Love the picture!

No wonder real estate agents are ranked by consumers right next to used car salesmen.  Play it straight and do the work!

Response to post #104, etc. Bryant said,"If anything lenders are getting more difficult to deal with on price. They want as close to market value as they can get. And they get it because in the hardest hit areas inventory is very low right now... Buyers are a dime a dozen. My sellers don't need your low offer."

Man, your statement could not be farther from the truth in our market. Inventories are high, short sales are a huge chunk of the market and Buyer's agents are so frustrated trying to get Short's approved that by the time they tell any new Buyer's the horror story of the last one they tried to get done, that Buyer won't even look at one. 

I don't think we are the only area of the country with high inventory and few Buyers. To your simplistic answer, "Why not just price the property right and get a valid offer from a legit buyer? Then get the deal approved and closed." I Can only respond... because my client doesn't want their home to go through foreclosure. You act like "pricing the property right" is a simple formula that you just look up and that does it.

Once again, the "GROUP THINK" that so often pervades these threads makes me sick. Open your minds. Bryant plugged in the words "offer that may not be real". Also, there they are not "substituting" a real contract, later.  If the original offer is not accepted by the bank, but countered (presumably at a much higher price), then that Buyer (Investor) backs out (as with any other counter not to a Buyer's liking) but at that point the listing agent has at least some bearing on what would be an attractive offer to the Lender and can price it accordingly, to then attempt to attract someone that may like that price. 

But that's OK, you guys just wallow in your contempt, and keep trying to guess what the 3rd party might accept, and tell yourself you did the right thing, as you withdraw the listing after the foreclosure.

Troy Silvester, Prin Broker

This is crazy, but I do understand the deep seeded logic of trying to get an answer from the bank. But do it right, or don't do it at all.

BB - I've been taught that I need my first offer to get the process started. I have done that. However, what I will not do it to invite a phony offer. My short sales received not-so-great first offers, but it got the ball rolling. I also learnt that many first buyers do not hang in there long enough to get an answer. My backup contract offers usually win.

I do nothing illegal although I do believe it is important to get the traction/ process on the house. My short sales get offers within the 1st 2 weeks and backups after that. I invite and want 2-3 backups.

WOW.  I think this may have completely gone in the wrong direction here fellow Agents.

I haven't looked into this particular company, but I don't think it is a "fake offer" being made in attempts of trickery or unethical activity.

I'm sure the offer is completely real and fully prepared to close, upon the banks acceptance.  The company is probably more than happy to close on the price they are offering.  The obvious here, would be that the offer is simply far more beneficial to the buyer/company than it is to the bank.  In fact, the offer price is probably one that most any investors would also committ to as well.

There lies the process.  The company is cash heavy, and simply makes an offer that they are willing to pay.  Easy, fair enough, right?

Then, the bank says - "well, let's see the BPO and Appraisal so we can begin entertaining the idea of a short sale.  And, let's see the listing paperwork so we can determine what price this home has been on the market for, and just how long the home has been on the market for at it's particular list price."

At that point, the process will simply begin, probably like this:

Bank says "No, this offer is too low.  The BPO and Appraisal are set way up here and this property has only been on the market for 15 days.... Let's simply turn down this low-ball offer, and have the listing Agent accommodate more of a market-value list price for a couple weeks (by dropping the price of course to a more realistic price point for this home given its circumstances)".  

At that point, the short sale process has begun with the bank. 

Most of you mentioned to simply list the home priced to sell and you won't have to worry about these efforts of submitting an offer to the bank, and I'm sure the players on this business know the process by now, that they must have the home on the market for a certain period of time before the banks will consider anything.  Therefore, the home is no doubt already listed at or near what seems like market value, and for the required time-frame. 

In conclusion, I think this is simply a company that offers a service.  A service of which requires them to have cash on hand in order to back up any and all offers made to the banks.  Anybody can do this who has cash.  It's not really complex.  I just don't think it violates any laws, or COE. 

I just think the process was misunderstood here in this post.

(I don't know this company or support it in any way.  It's not worth my time to look into it, I'm simply posting my insight here!

What a Hot Potato!  Looks like you stirred up some interest.  Honest and ethical should be our guide.

Thanks for stirring the pot.

Bryant: You are all over it on this one -- absolutely major violations of rules and laws. Jsil time is possible. Not worth the effort anyway, since you will get offers if priced aggressively.

Wondering if anyone else see's these guideline's with SS or FC listings. With this attachment I will not show any of these homes. I have had nothing but rejects or higher offers with this individual.  Is this what the banks have come to or????

THE BELOW GUIDELINES ARE STRICKLEY ENFORCED.
Calendar Days 0-7: No offers will be considered for the first 7 calendar days a home is listed.
· Calendar Days 8-12: We will consider offers on the property ONLY from NSP buyers, municipalities, non-profit organizations and owner-occupants.
· Calendar Days 13+: We will consider offers from all buyers, investors,etc.

If it's necessary to ask the question,,,,,,,,,,,, enough said.

We had an agent around here that two days before tax credit expired they sent out a bunch of low ball offers on area homes with a letter attached saying not to be offended by the low ball offer but if the client was in financial trouble that he had a great system to help.  SO here we are to days before the tax credit expired trying to track down our seller to reject this ridiculous offer.  I had to juggle three buyers and deal with this hair brain idea. If that agent spent more time laying it straight they probably would have been to busy with their own clients to do something that stupid.

I do short sales and I say play it straight!! No one wins when games are being played.

I just don't understand how anyone who is in this buisness can do some of these things. It is what gives the rest of us a bad name.

Thanks for sharing.

Lisa

I want a number too, haha

I recieved a very low ball offer on one of my short sale listings fomr an investor...  An offer that I didn't think would get approved....  Myclient and I discussed it and decided not to accept the offer.  The other agent tghen came at me with the " but you could get abottom number and most likely my investor would buy it.  I explained to ehr that if we did that - we would lose valuable time on the summer market to get ta real buyer...  why would we tie up a property that we didn't think would ever be accepted just to find out at teh end of the summer that it would never happen...  Bank of America just to back that info up... 

BB--I have to agree that IF you read between the lines, this ad is wrong on more levels than just COE--it's fraudulent.  There are many buyers out there and multiple offers on these properties are commonplace these days.  No need to wind up being a number when you can do these things 100% ethically.

Tim--You need to speak with Miriam Baer, lead counsel with the NC Real Estate Commission if you're teaching agents to present all Offers to the bank.  That is misguided information that is exactly what is causing the sellers to go into foreclosure.  The BANK is not our client, the SELLER is our client and Miriam will tell you that you must present ALL Offers to the SELLER in NC, ratify the best Offer, thus making it a CONTRACT and present that single ratified CONTRACT to the bank.  Future Offers presented to the Seller shall be HELD as BACK-UP Offers, and only presented to the bank should the working contract fall through.

How do I know this?  I was recently representing the buyers on a short sale; the listing agent did not know how to do short sales and after multiple requests for a signed Contract from the LA, to no avail, my buyers, at my advisement, withdrew their Offer.  The LA continued to work the short sale and the bank approved.  The SELLER reported ME to the Commission for not depositing EMD and presented the UNSIGNED Offer to the Commission as proof that I had the check but, had not deposited it.  The seller also complained that I had advised my client (which I had written in the email withdrawal of the Offer) to withdraw their Offer 'just when the bank approved the short sale.'  The Commissions ruling--There was never a Contract, therefore EMD did not need to be submitted. The Commission further explained that her LA should have only submitted ONE, single, ratified Contract to the bank for short sale approval.  That was not done.  Yes, I was "free and clear" but, the seller had been sent into foreclosure by their agent who had no idea how to manage a short sale.

I recently completed my SFR course and the instructor told us the same thing that you just stated.  The attorney who was presenting a portion of that class was asked by several attendees if this was correct and he said absolutely NOT.  Immediately following that class, my BIC pressed the Commission once again for an answer to be 100% certain that agents in our firm were properly handling the Offers/Contracts for short sales.  The NCREC attorneys, once again, stated that we are only to submit ratified Contracts to the bank--and, obviously we can submit only ONE, since ratified Contracts are to be signed by both parties, the buyer and the seller!  Agents in NC are confused by #6 on the Short Sale Addendum which states that the back-up Offers "may be...
forwarded to the Lienholders for review."  I'm sure the Commission is tired of receiving the multitude of calls regarding this clause and hopefully, will change the language during the next forms revision session they have!

When do you submit multiple Offers to the BANK?  When the BANK is your SELLER!  A short sale client is the homeowner, not the bank.

I can't tell you how many agents in our area advise their clients to stay away from short sales because listing agents are taking this kind of advice from instructors or hearing how foreclosures are handled and think that's the way to do short sales as well.  The loss mitigation departments at the bank get ahold of these multiple Offers and sit... and wait... for a ratified Contract.  Meanwhile, the home is foreclosed upon and the LA is putting him/herself out there for liability in a large way.

Thanks, BB, for letting me ramble!  I'm just tired of seeing this behavior in our area and watching the banks foreclose on these unknowing sellers. 

I had an agent in one of my old office go around and do this "fake offer" on several of the other agents short sales. He was hoping that after they got an approved amount the listing agent would share the listing with him. Last I heard he was out of business and looking for work, WHAT A SHAME! LOL

Hey BB..I'm late to the party but here nonetheless. I don't know the people who employ this practice but as always, it's the Investor who gets maligned. It's an old and tired story.

However, you have hit upon something very dear and near to my heart. Getting the price right is the main thing. As I have said over and over again...low ball offers don't exist. It's an offer someone is willing to pay at a given time.

The problem with Short Sales is most agents do not know how to properly price a property. I'm sure to get pitchforks thrown at me but it's the truth. I have yet to find one single property listed as a short sale that is listed at the right price. I have openly challenged Realtors and they simply do not know how to value properties correctly. Therein lies your problem.

We regularly see Realtors trying to operate like it's 2005. Those days are gone forever. I have also said this is the best real estate market EVER because we get multiple bids routinely and our deals close FAST. Why? Because they are priced right.

It's really that simple. We have been making a killing with short sales and flipping them out LEGALLY. There is no reason for anyone to be playing games. It's too easy to make a great profit...if you know what you're doing. Problem is, most agents don't have a clue and as such, they still lament over stuff like this instead of closing deals.

But hey, it means there's so much more meat on the carcasses left for us...so by all means..please carry on!

argh - I so dislike thie behavior.  This "tactic" happens frequently in our neighborhood.

I believe in KARMA, they are making their own beds and will ulimately have to lie in them

We as REALTORS completely understand why this is inappropriate to offer a psuedo offer, with a buyer who has no intention of buying the property.  However our Buyers and Sellers do not know understand.  That is why we need to "EDUCATE - EDUCATE- EDUCATE!"

(As a side note, if they banks would DO thier BPO's the moment they know of the short sale, whether there is an offer or not, give us a NET price, SALE price, etc wouldn't that put an end to this behaviour?)

One thing that has not been mentioned is the possibility of a deficiency judgment.

If the seller is hit with a higher deficiency judgment because a "friendly investor" put an offer on the property before a "real market value" buyer did, the LA has not exercised their fiduciary duty to the seller to get the "highest & best" price for his client...the seller..

There are many attorneys that are advertising for sellers of Short Sales with deficiency judgment.  They are also advertising for sellers who tried to Short Sale and were not successful.  Many of those attorneys are making really good money. 

Suggestion to LA's, document your whole marketing process so you can prove that you tried to get market value for the property.

It's difficult trying to follow some of these responses with so many misspelled words. Typing is not texting.

Hi Troy. Notice I prefaced my comment with "In the areas hardest hit". In FL, CA and NV we don't high inventory any more. Properties priced poroperly will fly off the shleves with multiple offers in a matter of days.

I do however understand this is not the in all areas. BUT pricing right will still get aproperty sold. An agent should know what that price is. It it's 20% below market value then so be it.

I think the folks that do short sales for a living mostly know what a lender will accept. The price has to be justifiable. Submitting any contract to the lender where the price can't be justified is a waste of time in my opinioin.

Now of course there are exceptions to this. If the seller has a foreclosure date looming right around the corner then getting an offer on the table will go along way to being able to get this postponed. I have investors lined up who will go under contrcat if needed. But even then it's a justifiable price. 

Great comment Debe!!

To All: Ok it's church day. I'll be back later with some more thoughts.

 

This is being done by some Realtors. However, banks are also being robbed every day. Neither one is legal or ethical.

Great topic. Our association spoke out on this several months ago.  Apparently agents were manufacturing buyers and submitting offers to start the process. It is illegal here. There is still one huge place to be unethical with the short sales and that is to convince the bank of an oh so low price and then scoop up the bargain or give it to a family member or client. I am not sure how that problem will be resolved but there is plenty of room for fraud in the short sale process. 

oh by the way.  You two look adorable in those prison uniforms. :) 

Why go phoney?  It's hard enough to deal with these guys with a real offer.

Agreed to you all.  What is up..well, people just trying to scam the system and make a buck.  I price my Shorts according to the Lenders involved and the state of delinquency.  I very carefully THINK about my pricing because I KNOW that I will get an offer at a particular price for a particular development.  It's really not that hard.  Shame on these Realtors of whomever that don't want to do the work.  Good grief..get another job!

Hey BB,

Lets just call it what it is. FRAUD!

I have never liked the idea of coming in with a straw buyer.  It just strikes me as wrong.

Always someone trying to get over and under the system in place. 

All this negative effort can be turned into positive with an authentic offer, priced at market value, submitted with a BPO and no matter who....we all have to wait until the negoitator is assigned to the file.

Never never would I even suggest anyone ever entertain this practice.  Illegal, bank fraud.  Price according to fair market and you will receive many offers within a few days.  There is a shortage of properties and an abundance of buyers.  do it right, have ethics and make our industry PROUD!!

This is so frightening!   To think that there are agents out there that think nothing of this blatant act of fraud.  Wowee!!!

Come on, read between the lines.  This has nothing to do with serving the client, it has everything to do with advertising.  This company os trying to attract clients by performing an unethical act.  Plain and simple.  This agent should not have a license. 

Another way to look at this.  You are working for a client, the seller, who you have a legal binding contract.  Now you are suggesting it is alright to openly deceive your client.  Ya, that's a real good way to build trust with a client, lie to them.  More power to you!!!!!  How many days have you been an agent?  What did you sell before you got into real estate?

 

 

Plain and simple fraud! Yes, the banks are slow to respond, but that does not justify behaving unethically to get things moving. I personally, don't care for short sales and feel most of them are not the bargain buyers think they are. Now REOs all day.

Not that you need this, but agreed!

Any such fake offer presented on a short sale would of course violate the REALTORS^® Code of Ethics 2010, which states: 

"Article 1:  When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS^® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS^® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS^® remain obligated to treat all parties honestly. (Amended 1/01)"

That sums up the obligation of all REALTORS^® to be truthful and honest with all parties.

Fake offers = FRAUD offers!  If there isn't a legitmate BUYER in the wings, I wouldn't risk my license on any of this "garbage"!

True statement. Being a Realtor demands following the code of ethics. Also I can see agents trying to get a way around the long waiting periods that a short sale demands, even so, that practice is illegal and both agents and sellers must understand the nature of the process, there are no short cuts. 

Falsifying an offer sure sounds illegal to me; not to mention unethical.  What are these folks supposed to get out of this action?  Who pays them?  That's another can of worms...

Just sell.  Don't think.  Take the offers presented and send it to the bank.  That is all.  Agents do not get paid to think.  This is way out of most agents leage.  Take the offer and let the bank responed.

Seems like there is a lot of legal liability with a short sale already without doing something like this. 

The listing agent has the duty to get the best price for his/her client, the seller. By attenpting to get the best price for the seller, then the amount of debt forgiven should be less, therefore, reducing the possibility that the bank will come after the seller for some out of pocket money in order to close.

Pricing and waiting for a legit offer is the best course of action. (Ethics 101)

My opinion is the other represents a fraudulent act. (unethical).

This seems alot like fraud to me. Fake offers??? Really??? How / when is that in the best interest of your client?

Price it correctly & wait for legitimate offers from Real Buyers.

There is no reason to do anything that can be perceived as illegal or unethical. We as agents are held to a high standard of honesty and integrity and we must do everything we can to ensure that those things are not jeopardized. There are far too many legitimate ways to conduct business than to do anything that is questionable. Value that that you have earned {Your Real Estate Liscense} and let's not do anything that may cause you to loose it. "If in doubt, throw it out" 

Sounds like a sure way to get bars on your windows to me

I agree...kind of...submitting a total BS offer is never a good idea, BUT, submitting any offer, even if it is a low one from an investor is a GREAT thing to do, and here's why:

1)  Should a forecloosure date pop up -- stopping a foreclosure WITHOUT a contract in hand is EXTREMELY difficult, even for us and we know people at the banks.  Most ivnestors will not even consider same without an offer in hand....and we ALL know who teh homeowner will blame if they lose their home to foreclosure......

2)  Working with an investor may be the ONLY way to get the deal done -- investors can and often will pay cash to cover monetary issues that arise between first and second liens, any of you working on Indy Mac first liens with Greentree seconds know EXACTLY what I am talking about.

3)  BIGGEST benefit - if you do find a retail, after pricing the home accordingly, with an offer already at the bank, be it for 2 days, 2 weeks or 2 months, will reduce the time the retail Buyer must wait for approval.....again, anyone here who has worked on short sales know on eof the main reasons deals fall apart is b/c of the time frames, anything you can do to reduce Buyer wait time is always a good idea.

SHort sales are certainly case by case, but, my 2 cents, SUBMIT ANY OFFER YOU CAN GET ASAP....it has many benefits as noted above.

Sincerely,

Ben Benita, Authoer and Chief Short Sale Negotiator

 

 

 

I didn't read all the comments, but it looks like most agents feel the same.... that is just unethical and fraud. Like many, I agree, if you price the property correctly, you'll get multiple offers especially in the IE where I am. We have an agent that does that and he ends up getting tons of offers, because the property is sitting for two months while they work on the "phony" one he submitted prior. In the meantime, buyers all want his homes (which are always priced 20% or so under market value) and he doesn't even have the decency to return calls, etc. He takes a ton of listings that very way and I'm surprised Seller's haven't caught on by now. Needless to say, he double ends all his listings as well. I KNOW this will come back to bite him in the butt sooner or later. Oh well, to each his own. :-)

OK, first, I dislike people who think in these terms,as in, let's work the system, circumvent the law, play around the fringes of the legal system.  It's because of them we have a 3-inch stack of papers to sign when we go to a closing.

That being said, let me play devils advocate for a minute.  Why is this offering different from several major franchise operations that tell the public:  "List your home with us, if we can't sell it, we'll buy it!" when the franchisor knows 1. They rarely, if ever buy a home because 2. They offer the homeseller 70-80% of the homes value based on an appraisal DONE BY THE COMPANY!  Both offerings are deceptive at best and downright dishonest at their core. 

In Montana false contracting is fraud.  You will be fitted with an orange jumpsuit if caught.  No one will weep.

Great post!......We Realtors try to be careful with our wording on listings so we don't offend or break any discrimination laws, and here is an ad blantantly advertising fraud?! Wait -  What's that sound? I can hear the sirens in the distance....

It is obvious from every ones comments that most of them were made without reading all the comments.  This short sale stuff is a mess.  We have a duty to do what is in the best interest of our clients.  Get it sold as quick as possible and eliminate a deficiency judgment whenever possible.  Fake offers are illegal.  But, if I can get an investor to make an offer right away, that will speed up the process.  If he can buy it at a price that is acceptable to him, then great.  If not, then the next buyer should be able to close in a normal time frame.  Either way my seller wins.

Great comments from all.

I guess the point of this post is to make sure we are doing things above board. if you do have investors who are willing to close on the transaction then so be it. Just make sure the offer is justifiable.

Most of the short sales i deal with are investor owned. Price matters because they have to deal with a possible deficiency judgment and tax consquences. The more money we can get for the lender the less liablity to my sellers. It's simple.

That's just drips of grease and screams run baby run

Have an real investor handy that does make the offer.  86% of the deals that are handled by a regular "non-experienced" 20+ closings in the past 6 months are not qualified.  Letting it go into foreclosure has more risk than being agressive.  Keep it real and have a real investor in you stable.  Tellng you are expert because you took a class on the weekend is what i see is really the issue. If you are not positioned with real investors.  DO NOT TAKE THE LISTING....  DO NOT WAIT AND HOPE... at the Sellers expense.

I'm Back!

This is no different than pricng a short sale listing way below market value in order to produce an offer designed to get the lender to respond with a counter offer.  This add was probably placed by a company that lists short sales with a title status of "Equitable Interest" which we are beginning to see more and more as the number of short sales skyrockets.  It would be interesting to see this tested in a court of law.  Here is an article that discusses "Listing Homes You Have Under Contract / Equitable Interest" .  I represented a buyer in this type of transaction and everything went quite smoothly.  The lien holder had already agreed to accept an offer (presumably less than what my buyer had agreed to) so things went quickly.  I think this process is similar to an option contract which to my knowledge is perfectly legal.  Who is the victim here?  Did the seller get his home sold and avoid foreclosure?  Did the buyer get to close on a home he wants to buy?  Did the bank avoid the expense and hassle of foreclosing?  Did the neighborhood where the home is located avoid having another abandoned foreclosure drag down surrounding property values?

As a community we REALTOR's are always quick to badmouth anyone who takes a creative approach to solving problems.  Personally I think that anything that can be legally done to reduce foreclosures is good for our business and the nations economy.  Let's try to be a little more open minded.

If I have to ask myself, is this honest, illlegal, or ethical then I assume it is something I should not be doing. 

Lucien...well said.

I had to read 175 responses to finally get to one that made sense.

Those individuals selling short don't care what the price in the end actually is (except for investors)they still get nothing. They want their home sold, with no deficiency judgement and have it showing "as agreed" on their credit report. The listing agents should be doing all in their power, legally, to make that happen.

I would hate to be the listing agent that suggested that the seller turn down an offer only to have no more offers and the seller being foreclosed upon. It would be very hard for most anyone to prove (or defend) they knew what the "market price" was and advised their clients accordingly. All an attorney needs to show is the listing agent tried to get an extra $10,000 for the Bank rather than working in his clients best interest. All the good intentions of a "good price" goes out he window when you are on the stand trying to explain how you knew, more than an investor, what the property was worth.

Having been a banker for over 35 years I can tell you bankers would rather deal with a professional investor at a lower price than a retail buyer at a higher price.

Additionally, banks don't like dealing with agents that don't really know what they are doing. Almost All agents should use a third party to help in the process in dealing with the lender(s). Yes, you may have to give up 25% or so in the transaction but your close rate will go up, you will make more money and have few legal concerns.

As an investor and buyer of short sale properties, even asking the question would eliminate my doing business with these folks.  We only deal with agents and associates that are interested in 1.) Working towards a solution that gets the owners home purchased, 2.) Getting to a number that the bank will accept and 3.) Arriving at a number that will allow us to make a profit on the resale of the property in a non-short sale environment. 

Submitting an offer from someone that is not in a position to close the transaction takes the lenders time, effort, and energy away from deals that should close.  Clogging up the system with bogus offers on contracts that may or may not be concluded does not service anyone.  Especially an agent that get's paid for performance.

If they are this ethically challenged, perhaps a living where they do not have a fiduciary responsibility would be more appropriate.

Lifeboat Investment Group

"Because we're all in this together."

Well stated Dwight. I work with investors every day. But only ones that close on transactions. Wasting everybodies time with fake offers is well......a waste.

I agree. The Equator system makes you close a file for one buyer and the process starts over with a new buyer. Equator is being used by Bank of America now and will be used by Wells Fargo in the near future. We only work with legitimate offers.

Sherry Davidson, President

Apex Foreclosure Solutions....they're coming to your town!