Sellers should not be bypassed with offers sent directly to a lender

Editor,

My husband and I mainly work with people who are in pre-foreclosure. Of those customers, 75 percent end up being in a short sale situation. One of our biggest concerns has been the way short sale offers are handled by real estate agents.

In a pre-foreclosure situation, the owner of the house is a person – not an entity such as a lender. Therefore, we maintain that all offers must go to the person (seller) who will pick the best one to submit to the lender, and then that offer is signed and becomes a contract. We are then able to mark on our MLS that a contract has been signed on the property.

We do not understand this policy of bypassing the person and submitting all offers to the lender. This seems to go against the way a real estate transaction works. This then allows the lender to sit on those offers for weeks and months until they get an offer they deem “appropriate,” or until the house hits its foreclosure sale date. Even with a short sale addendum that states the lender has 45 days to give an answer, the lenders do not pay attention to any timeframe other than their own. Like any seller, the lender can turn down an offer they don’t like, counteroffer (which is what we hope will happen so that we as real estate agents can market the property more effectively), or they can accept the offer.

This unofficial “mass offer” stance by many listing real estate agents does a disservice to the sellers and the buyers. It also allows the lender to stall the process and not order BPOs or appraisals, which would move the sale along more swiftly.
 
We are not trying to “bilk” the lenders out of their money, but we are trying to get them the most money for the property that we can in the timeframe we have. I have had at least two short sales where I took the lender a good contract for the market and condition of the property only to have them turn the offers down, then sell one property at auction for $50,000 less than our contract price and list the other as a foreclosure for $10,000 less than the best offer we submitted a year earlier – and that property is still on the market.

I struggle every day with the adversarial nature many of the loss mitigators bring to the table during short sale negotiations. If I represent the seller, I also represent the lender as an extension of that seller, and that is not an adversarial relationship. It is a mutually beneficial relationship. I would like the lenders to recognize how a higher contract for them means more money for me.

The media is hyping that lenders want to work with people who are in a bind with their house payments, but the reality is that the majority of lenders do not want to see the person who owns the home as an individual, nor do they want to see the real estate agent as a partner that can be of service to them. This attitude can be seen in the reduction of commissions for short sales. We actually had a mortgage negotiator tell us that the commission on a $40,000 property would be lower split between two Realtors because “they were taking a hit so we needed to take a hit also.” I don’t understand this attitude. We are helping them at our expense and risk to market this property.
 
I think short sales are a very specialized niche that take a lot of time, effort and know-how. Good deals can be had for buyers, but they have to be buyers that are educated about the process.

There are two main purposes of short sales: to get the house sold at a fair market value for the condition of the house and the condition of the market, and to help the seller out of a bad financial situation so they don’t have a foreclosure or deed-in-lieu on their credit reports. The purpose is not to undercut the market by several thousand dollars.

I think short sales are here to stay for a while, but I don’t believe that every real estate agent should be doing short sales. Short selling is a niche market just like REO or condos. Not everybody is meant to be in that niche, and sometimes referring a short sale is the best thing you can do for the customers (both sellers and buyers).

Barbara Mangum
Coral Shores Realty
Jacksonville

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