These comment make no sense. My concern is that you do make comments that have no bearing in the market place or about the market place. In some other comment you say your friends were out bid by $30K.

You spent a lot of time attacking me which I’m used to, but you should have some working knowledge to go along with that.

I have no doubt you made millions of dollars as a big time builder developer, but your comments here make no sense.

Sorry.

“The listing agent owes no duty or allegiance to the bank, whatsoever. The listing agent must represent the sellers best interest.”

Listing agent must be honest and deal fairly with all parties including the bank. Listing agent must also not violate any state or federal laws that may favor a bank but may not favor a seller.

I’m not arguing whether or not legal “mutual acceptance” has occurred. I just think it makes sense to change the status to Pending when the lender consent is delivered to the buyer, since that is when everything else in the contract begins.

Sorry.

The house that I looked at today has had an offer with the bank since last November and showed as active. You can submit as many offers as you would like hoping one would get the attention of the bank.

The offer to the bank is for $750K for a property they have lent over a million on.

The change makes all signed arounds go pending which is a friviolous action in the market place. As your next comment attests banks are slow to respond.

What I was referring to is that this is nothing new and contracts accepted pending a short sale approval have always been PENDING at the least ACTIVE-STI upon mutual acceptance. Any real estate agent can attest to that.

So all the SS boiler plate language that the NWMLS wants to throw at banks will do nothing to cover the aspects of agents who should know better at this point.

What’s the sales pitch on short sales? It’s cheap.

They are anything but cheap. They are only cheap by yesterdays standards. The future will make these short sales another load of over priced carp.

Heck, it could be in the seller’s interest to drag it out as long as possible to live rent free and payment free in the dwelling if you think about it.

I was writing in the context of the representative of the seller in #32.

The listing agent owes no duty or allegiance to the bank, whatsoever. The listing agent must represent the sellers best interest.

To me, this means first making sure the seller confers with an attorney skilled in foreclosures and bankruptcy. I am not skilled enough in the law and personal financial matters to determine my client’s best interest around the short sale issue.

Perhaps bankruptcy is a better option for the seller.

Edit: I wonder whether this would be a good shareholder derivative action suit?

In the bankruptcy world, where sales are subject to court approval, new offers get submitted to the trustee and the trustee brings them to the attention of the court.

Finally, as to the ethical duties of an agent, they are required to submit new offers to the seller even after acceptance. The problem is that the seller can’t accept them without breaching the contract, which is hardly ever a viable option.

RE: Kary L. Krismer @ 31 –

Kary, I’ve had banks instruct me to submit only one offer. Your second paragraph being why.

Is that any different from any other type of sale? I would hope that as a buyer’s agent you are only submit one offer per property, how would you otherwise not violate the interrests of one of the buyers? If you already have submitted for one buyer you can impossibly not be influenced by that offer if you guide another buyer to write an offer. Seems at least like an ethical violation?

Kary, I’ve had banks instruct me to submit only one offer. Your second paragraph being why.

The problem is that submitting a new offer would probably slow them down, so the agent doesn’t want to do it. So again this is another area where the banks being incompetent handling short sales harms their own interests.

I understand. Short sales are cumbersome. The bottom line here is that if we were to introduce more offers to the banks from “potential” buyers, it would screw the system up more than it is now. Heck, we can hardly get a response for the one offer on the table.

The banks don’t want it, the principal has little to gain, and the listing agent for sure doesn’t want to handle several offers with a bank on a short sale.

When a principal agrees to terms, it’s mutually accepted, and subject to (lien holder approval). Just like subject to — a suitable inspection.

This is why short sales are considered “distressed properties” and sell for less than an arms length transaction.

If an agent doesn’t update the status to pending after mutual acceptance, he/she does so at their peril. I know I get really cranky when I waste my good buyer’s time and my time showing properties that are not available because an agent is playing games. I don’t think I’m alone on this.

I’m not sure that the legalities of whether it is “mutually accepted” or not are really the question here. The problem is that there is a wave of properties now marked as pending that have limited chance of actually closing because they are a short sale. I think it does a disservice to agents and the market to pump up how great the “pending sales” are if the statistics are distorted by the short sale mess we are in.

Also, if short sales have a limited chance of being approved, wouldn’t it be prudent for the seller’s sake to continue to market the properties in hopes of a better offer? By marking it pending, you’ve seriously comprimised the ability to attract more buyers.

No wonder, the way the sales increase and absorbing inventory has been paraded this year. Now, if you look at The Tim’s invenotry tracker you can see that today is the first and only month this year where the inventory has stayed above $10k after the first of the month purge of expired listings etc. Coincidence? Who knows but a re-enforcement of this rule could definately lend “artificial?” support to the idea of absorbing inventory and increasing sales.

Going forward the only measure of interest for pendings to me is what the percentage of short sales are, unfortunately that number is secret to the public…right?

Well, its all about servicing the customers needs and it always will be. If a Buyer wants a short sale, and they have been educated about the process, I say its ridiculous if an Agent doesn’t write it up. 3% for less then 15 minutes of paper work. I mean come on.

Although I support Red Fin I do NOT support their recent decisons in their price adjustments, office minimums, only offering 15% less then asking process maximum, and non-representing clients in short sales. They will revisit these again in the future. Bank on it!.

Financially speaking, I know why they do it, but their financial constraints have shifted their focus on “survival” more then the consumer.

And in the recent poll on where the market was headed, my answer was actually pretty close to Sniglet’s, but just not as detailed, and I wasn’t making a prediction. But the reasons for a possible downturn were relatively similar.

Getting back to the topic, if I were to make a prediction I’d predict there will be a number of offices, if not entire brand names, that refuse to take short sale listings in the future. Too much potential liability, even without the distressed property law.

RE: Ray Pepper @ 13 – What’s 3% of nothing?

How often are we going to see Kary Krismer and Redfin agree on anything?
Redfin doesn’t handle short sales, because, to paraphrase them ” Ain’t nothin in it for us.”

http://www.youtube.com/watch?v=G_DV54ddNHE

Please explain Kary 3% of “nothing”?

Thanks The Tim, that is consistent with my impression of this site, I.e that it aims to filter through the noise and focus mostly on relevant and reliable data to better guide the consumers than any other local real estate blog. Good move.

RE: mukoh @ 6 – Is the offer signed around without lienholder approval? I would contend that it is not.

Sure it is, Kevin. In my mind it could be no other way. Only the principal can sign the contract to sell the property. You have mutually accepted contracted, but subject to a lien holder’s approval.

The only flaw in the system is that we could not see the distressed properties, which is why they added the new fields.

I don’t think we’ll see a rise in pendings because agents don’t understand the rules and didn’t do their job correctly. The fines for not reporting correctly (updating the pending sale) are stiff, and agents who end up showing properties that show active and are in reality pending have no sense of humor and generally report infractions to the NWMLS.

Far from Dead David. Only on 1st base in/re to short sale activity this decade. It will become as “fashionable” as granite counter tops was. It will be the topic of discussion much like EXDS, INSP,MSFT,FFIV,RNWK, and CMTN was here in the 2000 Seattle tech boom.

People are not stupid and they do not and WILL NOT have the cash to bring to close this decade. The process will be stream lined and it will be much more efficient in 2010.

I think the fact remains, however, that until the banks get their act in gear, most buyers will have little interest in either.

Why would an Agent put a seller through that? Well, hmmmmmmmmmmmmmm…Can 3% have something to do with it? With a possibility of 6%.

Far from dead David. We haven’t even started yet on a mass scale. Short sale “lingo” will be as popular as MSTR,FFIV, CSCO,EXDS, and INSP was back in 2000.

http://www.reuters.com/article/marketsNews/idINN2939895320090529?rpc=44

1 giant headfake ..They shall pick up again………BANK on it! SRS target 7.77

Why would an agent put a buyer through that while in the mean time prices are coming down across the board?

Give the bank their days and get that LISTING AGENT to mark it STI/Pending so the bank will get limited other offers to protect your client. It will save us Agents more work and the “deck” will remain in the hands of the Buyers not the Banks.

On form 22SS Short Sale Addendum #3 strike the box that states Seller MAY NOT accept offers from other Buyers. 70% of my offers the listing agent lets this slide through and as far as I know the Listing Agent is NOT accepting other offers. DEMAND that STI status or PENDING status if they are waiving their inspection……………………or waive the inspection (to make it more appealing to the banks) but check the neighborhood review option…oh I could go on and on with this on how to protect your Buyers interests…………..

BTW earnest money on short sale offers? Are you kidding me? I hope you Agents are writing up the offers and not having your clients tie up their cash in earnest. On form 22D check #11 then add. Earnest money to be deposited after Mutual Acceptance of terms from Buyer, Seller, and Lender………….etc. I have an entire format I follow, provided by our counsel, that keeps the $$ in the pockets of our Buyers, inhibits other offers when ours is accepted from seller, and is supposed to have a much higher success rate with these short sales.

Again, agents………don’t tie up your Buyers earnest money deposits until the short sale market gets cleaned up. However, with my PREDICTION of unrelenting shorts sales over this decade I suspect the madness to continue.

BTW, totally unscientific but WOW…Agents with their Buyers touring homes everywhere this weekend. I was showing properties in Clyde Hill, Redmond, and Issaquah today and all I can say is the Sun is bringing them out. I know its not the 8k for this set of Buyers I scheduled today.

Kevin, a whole new category IS coming. Bank on it!…………………………

This has been around forever, any signed around offer is either STI or Pending. Now it is Pending. This is nothing new.

No, but what is new is the huge number of short sales, so this alters the equation of how many pendings will eventually close. Before there were a lot of short sales, you could reasonably predict that most of the pendings would eventually close. Now it’s much more of a wild card. I like Kevin’s idea of a whole new category called “pending lender approval.”