If these sellers decided that they didn’t want to wait the 48 hours he gave people to submit their offers, then all he had to do was call back the other contenders so they could participate. But instead, the agent blew off eveybody to make the quick deal, a common event with short sales:
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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Jim,
I don’t know how you can work with realtors on a daily basis. From what I’ve seen they range from the completely inept to the outright corrupt.
Sigh…
From the sounds of it, perhaps Mr Positive’s buyer’s offer was 24 hours, take it or leave it? All’s he would have to do is beat out the current set of offers. I wonder if his seller heard of the other offers coming in? Clearly he wasn’t working in the best interest of his seller.
To get rid of these so-called realtors and to make the system works for everyone, I believe a 3rd independent party should receive the offers and present to the sellers directly within the preset time. From there the sellers can decide which one to accept or counter….
I was in Mr. Positive’s position recently as I am an Agent who actually has done a deal with Jimmay.
I had a listing in Chula Vista, it was a regular sale, priced it well, knew we were going to get offers over asking. It was listed on a Tuesday, it had Tenants who were nice enough to show the home when first listed through Friday, as stipulated in the MLS I did an open house on Sat. and Sun. then said offers will be reviewed on Monday so get them in by 5PM on Monday. We had 15 offers, the owner/investor decided to go with one that was $20K over asking with an FHA loan because we knew if we took the highest which was $50K over asking, we knew it would not appraise. 30 days later, the Escrow closed and we had a happy buyer and seller. Moral to the story if you’re a listing agent with a hot property, PUT YOUR GAMEPLAN IN THE MLS and follow it to the T, if you don’t you’ll lose your creditability not only to the other Agents who are working hard to get their Buyer’s a home but most important, you won’t be labeled a SCUMBAG by Jimmay.
In social situations, I hate to even admit that I am a broker anymore–it is sad! As far as the one hour conversation with someone else’s clients (not that I should be concerned with him) but he ought to be careful–he could have formed a vicarious agency relationship–he is assuming liability of having them rely on anything he might have said, while having no chance to earn a commission–risky IMHO.
Does a short sale commission run at approx. half normal sales commission? If the answer to this question is yes, then the environment suggests incentive for a seller’s agent to be operating in this manner.
While it’s not right, you can hear things like (call it justification) – “it’s almost not even worth my time, effort or the expense to take this on.” And, I’ve heard it (but, I’m not going to say where).
So, under normal conditions comission = X. Under short sale conditions commission = half-X. Seller’s agent is required to split half-X with buyers agent, potential with both now receiving something approximating quarter-X.
The lender pays commission on a short sale. Now let’s say (for the sake of making a simple example here) total commission on an average every day sale is 5% (example purposes only), that would make a short sale total commission 2.5%.
Let’s say a house sells for half a million in a short sale transaction. Seller’s agent represents both parties, and collects total commission of 12.5K.
Now, let’s say a short sale is on the market for a half million, and a buyer’s agent submits an offer for 600K. The seller’s agent collects approx. 7.5K, and the buyer’s agent collects approx. 7.5K. The seller’s agent has now lost 5K on this transaction, even though the final sales price is 100K higher.
Bottom line – the choice to take a 50% pay cut in normal times, in order to make a sale and earn a paycheck is worth it. But, at 75% it’s not. That’s just too lean (lien, if you’re into real estate puns).
“You gave your word…” (JtR)
Geez, Jim, hasn’t “Mr. Positive” heard of this quote: “Say what you mean and mean what you say”.
Strange thing is, I have never seen a listing Agent double end a short sale deal. I have done 5 short sales, and the all of them want an arm’s length transaction, I guess you could always get your best office buddy to represent your Buyer and give your best buddy a half percent for just putting his name on the contract…
8.Strange thing is, I have never seen a listing Agent double end a short sale deal.
So, it’s not a commission thing, it’s a time thing?
I disagree with your assertion that he is a scumbag. He may or may not be a scumbag.
When I sold my condo, my real estate agent came to me and said, “Here are the offers. This offer is a little bit lower but the potential buyer with the lower offer doesn’t have a buyer’s agent. I will split the 3% buyer’s commission with you, and you’ll make more on the sale than any of the other offers.”
In that situation, no one was unethical. The seller got the highest price (net). The idea that a buyer’s agent somehow protects a buyer is 100% wrong. In this situation, the wannabe buyer lost because they had an agent even though they were willing to pay the most! I believe you are seeing this happen every day because the stakes are so high. As my canadian friends just pointed out, 3% commission on a $1 million house is more than most Americans make in a year. If you sell just one $3 million house every few months then you make more than a Harvard educated school teacher. That’s an egregious misallocation of pay. The market is doing it’s magic to correct that. It’s not unethical.
First off I disagree he was working with the sellers. The sellers were the US taxpayers and I doubt he had much conversation with Fannie and Freddie. This whole system is ridiculous and until the processor chooses the Realtor this will continue. The occupant walks away with nothing so they know and likely do not care about the final price. They may actually be getting money from the realtor to do both ends of the deal. In that case he is protecting the interests of the person who hired him.
chris g,
You are hastily jumping to the wrong conclusion.
My complaint isn’t about money – it’s that every buyer deserves to have their offer heard. The agent knew their were other offers, and prevented them from being presented to sellers.
An opportunity is all I want.
Sooner or later the lawyers will get organized and start suing every other agent in town.
An opportunity is all I want.
EXACTLY!
That pos should be in jail.It seems like everday jim is pointing out the shady stuff going on in real estate.Why arent people prosecuted?No wonder no one trusts realtors.
Ok, so it’s not about money. I guess I don’t understand real estate because I still don’t see the problem with what he did. In many market transactions you don’t get to see what other people are offering. Getting to put in the last offer, after your privy to all the other offers, is quite an advantage. Why would he give away that advantage?
Why do you keep twisting it? You are begging to be deleted.
Chris G,
Assuming your particular situation was a short sale. If it was, it’s actually unethical what your listing Agent did and it’s also a breach of contract because all short sale approvals specifically state the Seller will not receive any monies stemming from a short sale. I think it’s cool what your Agent did even though she/he only gave you 1.5% of the total sale and not the full Buyer’s Agent commission. I guess it’s better than a poke in the eye, but it’s still unethical and if your note holder ever found out, technically, they could bring a lawsuit against you, but they won’t because they’re too busy processing short sales.
If it was not a short sale, then what’s difference in reducing the Agent’s commission to net you more money for she/he double ending the deal?
BTW, Jim was not privvy to the amount of the other offers, he was just looking for an opportunity to make his offer. I am too in a situation right now whereas my client has to make her highest and best by next Wednesday at 5PM, I won’t submit her offer until 3PM that day because I don’t want it to be used to drive up the price with other Buyer’s who are there, then again, I could run into the same type of scumbag like Mr. Positive and not get the opportunity to make my client’s offer.
Jim;
Thanks again, you do more good than I expect you get credit for.
Perhaps the concept of fiduciary duty will be enforced through the courts. If it was my offer that was ignored by the seller despite agent represenation that all valid offers would be presented, I would seek judicial review.
Jim, perhaps in the future you or the Real Estate Commsion may wish to simply have an obligatory cover letter atteched to all offers (including on the short sale) that have a reciept note that is executed by the buyers that states “Acknowledged and Recieved and reviewed on ____ of May, 2010.” You could also send what we lawyers call an estoppel letter;
“Attached please find our offer to purchase. This offer also memorializes our reliance on your commitment to submit the same to your client so that all valid offers are considerd prior to sellers formal acceptance of any outstanding offers from May 18th through May 20th.”
This would at least create a paper trail and give the buyer recourse if there is inequitable conduct.
Being an attorney and a “so so” real estate investor, (I win a few, lose a few) I have had to resort to reminding the players of their ethical code. This has worked on similar episodes on my deals, but I do this directly as the BAD COP buyer, (“..ie: sellers agent: gee, your buyer is a real jerk…buyers agent: I know, I know..I apologize, dude, but he thinks code of ethics means we have to play by the rules, I will try to calm this guy down!?!) and shelter my GOOD COP agent from local realtor politics so he can still function in the jungle.
I expect that eventually this type of misconduct is going to motivate the right seller to take judicial action if that seller feels that he is being abused enough.
Keep up the great work, Jim,
Larry
As a buyer, I was on the end of trying to get a fair shot at a short sale. The seller wanted money on the side for so called “architectural plans”. We are talking $100,000 for plans we never viewed. Otherwise, our offer was never going to be presented to the bank. It was frustrating and illegal so we chose to walk, with thoughts that someone with no conscience was going to get the house we loved. The irony of the story is that we were able to buy that same house one year later as an REO and we did so with a best/highest and fair offer that was significantly less than what the “scumbags” were trying to get for the original short sale.
Yes, everyone deserves a fair shot. Was this karma? Heck no… we just got lucky b/c we drove by, saw the sign the day it went on the lawn and made an offer ASAP. To her credit, the listing agent gave us a fair shot and that’s all we were asking. The deal was clean, we closed in 12 days and everyone was happy! Except maybe the “scumbags” : )