why not be just truthful!!!

Question

I looked at a property that is a bank forclosure asking price $116k. I wanted to make an offer   full price with financing . I was told by my agent,that" the property has muliple cash offers, the selling bank was going to look at the cash offers  on only, on Monday". so I passed .
A week later the property is still listed as available. I called my agent again , she said " They ( the bank) are looking for higher offers than the asking price. 
My question is , Isnt the selling agreeement a contract to sell with a Broker  at a set price agreed by the seller? and if the agent brings in a ready , willing and able buyer,and the meeting of the minds have been met , therefore the agent has earned a commission?.What ever happend to Specific Performance?
It seems to me the banks are using agents to auction the properties to the highest bidder and disregard the contracted asking price, which to me is unethical . 
Why hasnt the Real Estate Commissioner stepped in to stop this type of behavior?

Jon Holdman · Answer

C'mon, exactly the same thing was happening five years ago.  Only it was regular folks and developers selling properties for "highest and best" offers.  The listing price was just a starting point for the bidding.

The listing contract is strictly between the seller and the listing agent.  It says nothing more than if there is a buyer willing to pay the listing price, the agent has earned their commission.   There's no obligation in that contract that obligates the seller to accept ANY contract, regardless of the terms or price.  If the bank rejects all offers, and there was at least one over the listing price, the agent gets a commission, nothing more.

The banks appear to have adopted exactly the same strategy every seller was using during the boom.  Exactly the same strategy any of us would use if it would work for us.  But for them its unethical?  I can't believe I'm defending the banks, but I see nothing wrong with what they're doing.

This is a numbers game.  If you want to buy ONE SPECIFIC house, don't even try to buy a REO.  You'll have nothing but pain.  If you want to buy a REO, make 20 offers.  That should give you a reasonable chance of buying one.

Mike McKinzie · Answer

Because the Real Estate Commissioner is not going to take on Fannie Mae, Freddie Mac, Bank of America, Chase, Wells Fargo, etc...

Welcome to today's market.  Banks have not been ethical for decades, centuries.  They sure aren't going to start now.  Also, if they get more than one full price, all cash offers, both dropped off at the same time, how do they decide?  The only way is to deny all offers, raise the list price, and go at it again.  As investors, we LOVE this, it means prices are starting to stabilize and even slightly rise in some markets.

All the successful investors here on BP have lost out making offers on REO's.  I lost one last week.  But so what, I found another one to make an offer on.  As investors, we learn to never get attached to a house.  We aren't buying bricks, mortar, lumber or an address, we are buying Cash Flow.  We have to throw a lot of lines into the water before we catch the big one, and we even throw some back.  But we just keep on fishing!

Stephen McKee · Answer

There are a lot of situations where I "feel" I earned my money and wasn't paid. It's just how the business is. I get paid when I successfully close a transaction between a buyer and seller. It is my job, as out lined by the code of ethics, that I must look out for my clients fiduciary well being.

Recently my job became very frustrating because I have to put in about 25 investor offers to get one yes. A home owners rate of success varies from your first offer in some price ranges to beating your head against the wall with low ball VA no no loans.

1. Don't get attached if you are buying and REO unless you have cash and are willing to go WAY over ask price.
2. Pay all your own closing costs.
3. Make your escrow as short as possible.
4. Make your deposit as high as possible
5. Make a decent offer. The bank already know the doors are falling off and the paint is peeling. That's why it's listed below retail value.

Good Luck

Bill Gulley · Answer

All well and good, but yes, the agent performed but it would be the broker and agent to demand the commision earned from the bank. Now they are entitled to it, but if they ask for it that will be the last listing they ever get from that bank and probably some others too! You don't bite the hand that feeds you, even if that hand slaps you around! ! !

Jon Holdman · Answer

Not an agent, but I don't think there's any "feelings" involved.  The listing contract would specifically address when the agent has earned the commission.  On every listing agreement I've ever signed, if there is a willing buyer at the listing price or higher, the commission is earned.

That said, banks often list most of their properties through a few agents.  There's most likely an understanding in a situation like this where the agent doesn't get paid until there's an actual sale.  The agent agrees to this because there are many more listings.  Again, not an agent, so just my speculation.

As they buyer, why do you care?

Stephen McKee · Answer

Answer made simple: The only transaction that makes it to escrow and closes is one with a willing buyer and willing seller. Both parties can do pretty much what ever they want prior to a fully executed binding contract.

Worst case scenario the seller is responsible for paying the listing agent a commission.

Also, banks don't  fall under most DRE regulations.

Mark Brian · Answer

Most of the addendums to the listing contract the AM/banks that I have worked with state that commission is only paid upon successful closing.

Mike Hummer · Answer

Thanks Jon , I just wanted to find out how agents felt out of my own fustration to get an offer in then not even considered.
I will from now on take yours and others advise to put out many offer and not get attached to one home.

Mike Hummer · Answer

Thank for everyones imput!  I was trying to get feedback from  R.E. agents point of veiw in this type of situation. Would you as an agent feel you deserve a commision when you brought the seller and the buyer together in agreement  per the listing agreement then the seller  changes the listing price?
Thanks .

Account Closed · Answer

I agree with Mike.  When I am looking for an investment it can take awhile and I put out a number of offers. At the end of the day, all that matters is that I hook a deal that makes sense.

why not be just truthful!!!

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