What is the closest to a foreclosure you've heard of a bank postponing the sale?

Question

There's a foreclosure sale happening in my area in two weeks.  A few of these properties look distressed from the outside and based on what is owed and the likely BPO, I feel they're excellent candidates for a short sale.  What are the chances a bank postpones the sale this close?

Another question I have is I am a licensed realtor and an investor.  Are the banks going to have any problems with me being the listing agent AND the buyer?  Do you think I would get the 6% if so?

Bill Gulley · Answer

A brand new agent I'm guessing, how do you list it and then make an offer? Who are you representing with your listing? Suggesting a listing price and then making an offer, do you see a conflict of interest there?

No, you won't have a bank agree to pay you a full commission on a property you listed with an owner and then be the buyer while asking the bank to take a hit on the loan.

As a Trustee, I have postponed a sale at the courthouse steps just prior to opening the sale with an attorney handing me certified funds sufficient to payoff the loan plus all costs, that doesn't happen very often.

Pre-foreclosure can be stopped by paying the amounts due or getting very close, you can also buy the note in some situations, but that isn't a short sale. :)

Ron S. · Answer

Many banks/lenders/servicers will not let you be the agent on the deal and the buyer at the same time if you are expecting a commission. That's not to say that they can't, just that most won't. They also are not required to postpone or consider any short sale within 36 days of sale (Per CFPB). Outside of 36 days, a short sale MUST be considered (Reviewed). Doesn't mean they have to accept a short sale, just that they have to review and consider, and during that process must not continue with any foreclosure event (Dual Tracking prohibition against "Furthuring the foreclosure process"). Inside of 5 days, the owner has no rights other than to pay it off. I've postponed a sale the day of the sale before but, I had a full payoff with proof of funds. No lender worth anything would consider postponing without a full package (Executed contract, perfect transaction in every way and ready to close) .

Account Closed · Answer

That is different.When you do a short sale you propose the terms to the bank and they will approve the commission rates. Then it would be a normal sale if you sell both sides you get the whole fee if not  then the split. I did one last year and was able to split a 6% fee. I did find out some agents add a processing fee of say $1500 and it comes out of the selling agents side.

Account Closed · Answer

a foreclosure sale is when the trustee auctions the property to the highest bidder sometimes called a sheriffs sale They are postponed frequently but not for short sales A reo is when the bank acquires the property thru the foreclosure process and uses a broker to sell and list the property. How are you the listing agent? If you buy the reo thru your broker as an agent it would be up to your brokers policy if he pays you a commission Once you acquire the property you can list it and sell it and collect both sides of the sale,again according to your brokers policy

Kris Fox · Answer

@K. Marie Poe  Thanks for the response.

So, what if I had a screening process for short sale candidates?  (i.e."Do you have any tax liens?""Do you have a second?" Would you not work with anybody who had a second?

I was listening to a webinar on NAR and a few of the webinar hosts said that a second is not an automatic deal breaker as the long as the second doesn't demand too much and they've even heard of the first giving the second up to a few thousand dollars or possibly forcing the seller to contribute to the second for a couple of thousand.

My ultimate goal was to get some experience and develop systems so I could have an assistant take care of all of this for me.  Is this even remotely possible?

Account Closed · Answer

That's the "beauty" of short sale listing for agents. If you can call a high paperwork/low close rate transaction beautiful. Typically the agents are the only ones getting paid (besides closing agents and title companies) in a short sale.  The lender will require a listing on the open market and they do allow a certain amount for commission.  They the put restrictions on the terms of the sale and who will get paid.  For example, they won't pay the HOA, they won't pay the seller/borrower's tax liens, they won't allow any funds to go to a jr. lien holder or they put a cap on the amount, they won't allow the seller to benefit from the sale, etc.  However, lenders do pay agent fees, even with negative equity properties.

Steve Vaughan · Answer

Oh, you mean negative equity listings?  Sure. Short sale listings happen all the time.  I thought you meant houses only worth what is owed- no equity.  Thanks for the clarification @Kris Fox

Kris Fox · Answer

Oh man. It's quite apparent when it comes to short sales, I don't know what I don't know.  Is there a resource I can read that discusses what will make or break a decent short sale listing.  I've read pretty much every post in the Short Sale subforum over the past year and I have a lot more reading to do.  I'm just trying to see if there's an angle to take my garbage marketing for flipping leads and turn them into a commission.

@Steve Vaughan  I'm not understanding something.  It sounds like you're saying that banks will only pay commissions on listings that have equity.  I thought that, by definition, short sale listings do not have equity.  Why would a realtor every list a short sale if that were the case?

Steve Vaughan · Answer

@Kris Fox, without equity I don't see where the commission would come from.  To your original ? of cure date, here the standard is 11 days before the sale but as others have mentioned, it can occur much later if the bank receives the funds to cure or an offer they short sale approve.  Too bad they mostly only teach  how to farm listings when they 'train' new agents.  This is big stuff your are dabbling in!

Bill Gulley · Answer

Take your leads to a short sale specialist Realtor, agree to a split commission, learn the SS deals as you work with them. You might ask your broker to hook you up with someone who knows that side of the business. Good luck :)

What is the closest to a foreclosure you've heard of a bank postponing the sale?

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