Fiduciary obligations of a short sale listing agent
An agent contacted me the other day to ask if the bank would prefer a 10-day closing or a 30-day closing. I understand that agent’s mindset, and you probably do too. He wants to get this short sale through the lender’s system as quickly and efficiently as possible and he will do whatever possible in order to see that happen.
However, the constant tightrope that is walked by short sale listing agents is getting tougher to manage. It can be challenging for short sale agents to strike a balance between the fiduciary obligation that they have to the short sale seller and providing the short sale lender with a transaction that meets their needs.
Short Sale Balancing Act
Here are three situations where short sale listing agents may be struggling to do that balancing act:
- Selecting the highest offer or selecting the best offer. I’ve often said that highest and best are not synonymous in short sale transactions. The highest offer may come from a buyer that wants termite work, a septic tank certification, and a 60-day closing. The lowest offer may come from a cash buyer that may not be around when the short sale approval finally arrives. The key is to select an offer from a well-qualified buyer that is willing to accept it when the bank changes some of the terms and conditions of the purchase.
- Allowing the bank to dictate the sales price without question. Many of the troubles associated with short sales occur when the valuation comes back from the short sale lender. Often the lender states that they want a certain purchase price, based simply on their valuation. This valuation may be wrong. And, if you believe that it is, don’t give up hope. Ask about the guidelines for valuation dispute, and prepare to submit your dispute with the appropriate information.
- Allowing the bank to specify how the home is marketed. There has been a lot of hubbub these days about some lenders requiring properties to be listed on Auction.com Others have stated that the lender wants the property Active on the MLS for a specific number of days, and one lender even specified the language for the MLS. Know that your state association and local MLS have rules. If you believe that the lender will be violating those rules, don’t be shy about using this time as an educational moment.
As far as my call from the agent, I asked him whether the seller would prefer a 10-day closing or a 30-day closing. After all, short sale listing agents represent the seller and not the bank.