Dramatic House Price Drop? (sale, HOA, condo)

[Captain Bill]

What is happening now is some realtors are requiring a non-refundable deposit to be submitted with the offer on short sales.

The reason is that some buyers are making offers on several short sales, hoping that one will come through. Let's say a buyer makes an offer on 5 short sales. Now 5 realtors are negotiating this short sale with the banks.

One of the offers is accepted by the bank, and the buyer fails to notify the other 4 that they are now backing away. The time of 4 realtors have been wasted.

I can see both sides of this situation.

• From the buyers side, they don't want to sit for two or three months waiting for a bank to respond, with no guarantee that the bank will even negotiate an acceptable offer. So they naturally decide to make several offers and accept one if the price is negotiated to their satisfaction.
• On the Realtors side; they are caught in the middle. They cannot control the banks response time, nor can they control the actions of the buyer. So they are attempting to control a situation that will not waste their time.
  
  If they have 10 short sale listings, and each one of them has an offer from a buyer who has multiple offers out there on other properties, then there is the chance that the realtor will be negotiating 10 offers and when they're finally accepted by the bank, they find that 10 buyers have bailed. That is a tremendous amount of wasted work.

It is the banks who have caused this problem that hurts both the buyers and the realtors. So the banks need to correct it; although I doubt they will.

While I sympathize with the realtors who may be caught in this position, I have to say that is part of the cost of doing short sale business; and they have to accept that risk, or not do short sales. But shey should not place the burden on the buyers.

I have advised my buyer clients to never place a non-refundble deposit on a short sale because it is not to their advantage to tie up their money for months.

A compromise may be to offer to make $500 of the earnest money go hard (non-refundable) after the bank signs a contract, and after accepting the home inspection report and signing the BINSR. That leaves only the financing, and the buyer should be comfortable with the financing up front.

[gregandvicky]

This has happened here in the valley to a friend.

The listing agent has his/her own buyer and wants to “double pop”, or collect both commissions. If the listing agent’s own buyer does not have the highest offer, s/he moves their buyer to the top of the pile by not transmitting all the offers. The bank doesn’t know, and the other buyers and their agents don’t know either. They’re just told their own offer was rejected. Only after escrow closes, when they see that the selling (buyer’s) agent was also the listing agent, and the sale price was lower, do they realize what happened.

[Rick Lee]

Originally Posted by gregandvicky

This has happened here in the valley to a friend.

The listing agent has his/her own buyer and wants to “double pop”, or collect both commissions. If the listing agent’s own buyer does not have the highest offer, s/he moves their buyer to the top of the pile by not transmitting all the offers. The bank doesn’t know, and the other buyers and their agents don’t know either. They’re just told their own offer was rejected. Only after escrow closes, when they see that the selling (buyer’s) agent was also the listing agent, and the sale price was lower, do they realize what happened.

This happened to us too. But our realtor was wise to it and played hardball with the listing agent, threatened sanctions and the listing agent came to his senses, admitted our offer was the highest one, asked our agent how solid our financing was and then we got the seller-acceptance.

But it's a short sale with two mortgages on it. Thank God, both of those notes are held by the same bank, so it should be easier (in theory) to get that bank acceptance. We're expecting to hear something next week and this started in late June.

We have a seller acceptance on another offer because of how long this is all taking and the high risk of it all falling apart. But that listing agent is a total bum and has been dragging his feet for about a month. We don't feel good about this one working out, but it's the nicest house I've seen anywhere and their asking price was 50% what the place last sold for in 2005 and that was before the $50k pool they put in. If either one of these houses gets a bank acceptance, we're ready to get moving on it right away and drop the other like a hot potato.

[Captain Bill]

The bank does not have to accept the "highest" bid. They can accept any bid they want. They may elect to only negotiate with the first offer that comes in, and tell the agent to just hold other offers as backups.

They may elect to accept the "highest and best", in which case they will rate the types of offers, such as "cash", conventional with 20% down, conventional with less than 20% down, FHA. A cash offer of less than the other offers may be selected because they know there is no problem getting a mortgage.

So, seeing a lower sale price on the plano after the listing is changed to sold, does not mean that the agent played games with the offers.

[Captain Bill]

Originally Posted by Rick Lee

This happened to us too. But our realtor was wise to it and played hardball with the listing agent, threatened sanctions and the listing agent came to his senses, admitted our offer was the highest one, asked our agent how solid our financing was and then we got the seller-acceptance.

Rick, an agent cannot legally "sanction" another agent. I'm guessing that what you mean by sanctions is that your agent would not show any of the other agents properties. That would be a violation of ethics.

A realtor must show any property to their buyer that the buyer wants to see. And the realtor must make his client aware of any properties that he is aware of that will fit his client needs. To not do that is a violation of the fiduciary duties to his client.

I'm thinking that you may just be using the wrong word.

So, I would be interested in knowing exactly what your agent said, since he would not have "threatened sanctions" because the other agent could file a complaint with the ethics committee about your agent if he did that.

[Rick Lee]

I meant that my agent hinted he would be going to some ethics committee to report the listing agent. This particular house had around 15 offers in the first two days it was listed. The seller got tired of having a stack of cars always parked out front, waiting to see the house. so he told his listing agent to just select the best offer and be done with it.

I'm sure there were several cash offers lower than ours and we need to go FHA. But my agent told the listing agent we were rock solid and there'd be no problem with our getting the loan. So they took our offer. I know the bank doesn't have to take it. But if they started the process all over again, it'd take plenty longer to close the highest cash offer than to just finish the deal with ours. And the bank would net more $$ with our offer.

The other place we have a seller accept on is really dragging. That listing agent has been MIA in Mexico for a while. My agent has had to resort to calling the sellers directly. I think there's some shenanigans going on with this one, like the sellers aren't in a real rush to leave. But it's such an awesome house and for a killer price. So we'll hold onto that one until the the first house deal gets moving or dies.

[Boompa]

How will the new Bankruptcy Law effect this??

I've been looking in Avondale/Goodyear to buy cash.

[Boompa]

Originally Posted by Captain Bill

What is happening now is some realtors are requiring a non-refundable deposit to be submitted with the offer on short sales.

The reason is that some buyers are making offers on several short sales, hoping that one will come through. Let's say a buyer makes an offer on 5 short sales. Now 5 realtors are negotiating this short sale with the banks.

One of the offers is accepted by the bank, and the buyer fails to notify the other 4 that they are now backing away. The time of 4 realtors have been wasted.

I can see both sides of this situation.

• From the buyers side, they don't want to sit for two or three months waiting for a bank to respond, with no guarantee that the bank will even negotiate an acceptable offer. So they naturally decide to make several offers and accept one if the price is negotiated to their satisfaction.
• On the Realtors side; they are caught in the middle. They cannot control the banks response time, nor can they control the actions of the buyer. So they are attempting to control a situation that will not waste their time.
  
  If they have 10 short sale listings, and each one of them has an offer from a buyer who has multiple offers out there on other properties, then there is the chance that the realtor will be negotiating 10 offers and when they're finally accepted by the bank, they find that 10 buyers have bailed. That is a tremendous amount of wasted work.

It is the banks who have caused this problem that hurts both the buyers and the realtors. So the banks need to correct it; although I doubt they will.

While I sympathize with the realtors who may be caught in this position, I have to say that is part of the cost of doing short sale business; and they have to accept that risk, or not do short sales. But shey should not place the burden on the buyers.

I have advised my buyer clients to never place a non-refundble deposit on a short sale because it is not to their advantage to tie up their money for months.

A compromise may be to offer to make $500 of the earnest money go hard (non-refundable) after the bank signs a contract, and after accepting the home inspection report and signing the BINSR. That leaves only the financing, and the buyer should be comfortable with the financing up front.

What if I put a 30 day limit on my offer

[roosevelt]

If banks take advantage of the new foreclosure law in that the home owner is liable for the balance owed, what is to keep the banks and lenders from dumping the houses even cheaper because they can go after the home owner now personally. I think you will see an incredible number of bankruptcies which will hurt many businesses that are owed money by buyers and get stiffed in a forced bankruptcy.

[Boompa]

Originally Posted by roosevelt

If banks take advantage of the new foreclosure law in that the home owner is liable for the balance owed, what is to keep the banks and lenders from dumping the houses even cheaper because they can go after the home owner now personally. I think you will see an incredible number of bankruptcies which will hurt many businesses that are owed money by buyers and get stiffed in a forced bankruptcy.

my thoughts too, I see a further collapse of housing prices in the West Valley, where I have been looking. I can see many of the Short Sales they have been Low Balling to start bidding wars being reconsidered. I was looking to buy one for cash but may decide to sit it out a while. I caan see the small speculator with 3-10 houses facing enormous liability.