Attn: Short Sale Listing Agents...READ YOUR LENDER APPROVAL LETTERS BEFORE CALLING ME WITH THE "GREAT NEWS"!
I'm representing a Phoenix short sale buyer, and today (45 minutes before our signing appointment at title), I finally received the final HUD via email. Upon examining it, I noticed that that my buyer was being asked to come up with $4,700 more to the closing table than we anticipated. Uh oh!
Upon further examination, I noticed that the 3% seller concession that was asked for in our fully executed contract wasn't on the HUD (which amounts to about $4,700). About 80% of my business is that of a Phoenix short sale listing agent. The other 20% revolves around helping buyers find a home.
As someone who lists and closes a ton of Phoenix short sales, the first thing that came to my mind was "The listing agent didn't read the lender approval letter before excitedly calling me on November 2nd, telling me the short sale was approved. Great!"
Unfortunately, my "hunch" was correct. Upon receiving the lender approval, the agent made a critical mistake... She didn't compare the lender approval to the Preliminary HUD. She assumed that they had approved the short sale offer as it was written. HUGE MISTAKE!
The sad thing is that this particular listing agent has a pretty good track record of listing/closing short sales, and was an absolute joy to work with. Her biggest mistake was hiring a certain law firm to negotiate her short sale. On 4 different occasions, I emailed the agent, asking her for a copy of the approval letter. The law firm, citing "privacy issues for the borrower", refused to give me a copy. So, in essence, the law firm told the listing agent that the short sale was approved, and she believed them. Taking into consideration the fact that the listing agent seemed to have a relatively high level of competence when it comes to short sales, I believed her. My mistake.
So, the listing agent feels horrible about the mistake. My client, a single woman who had plans on having family/friends over for Christmas in her "new" house, is devastated (and I feel terrible for her).
So, the agent had her husband call me today (who is also a licensed Realtor®). Now, mind you, the listing agent is getting a 3.5% commission and I'm getting 2.5%(which I have no problem with, as I know what listing a short sale entails in terms of work). Anyway, he told me that his wife would be willing to give up 1% of her commission, and was wondering if I would contribute. Hell No! Next Question... Would your buyer's lender be willing to contribute. My response, "Hell no, you call him and ask him". So, now he's going to the title company to see if they will "help out".
As it stands now, my buyer is sticking to what she has agreed to (she has already agreed to a counter from the lender that raised the price $3,000). The home was put into escrow in August, and values have dropped since then. My advice to her was, "Why should anyone over-pay for a home in this Phoenix short sale market?"
Obviously, she agreed. She's very distraught and upset (and who could blame her), but she is a woman of principles. You screw up, you pay.
I think this is a valuable lesson for all short sale buyer agents out there... DEMAND A COPY OF THE LENDER APPROVAL LETTER AND A COPY OF THE PRELIMINARY HUD! Even if the listing agent cites "privacy issues", ask them to cross anything out that pertains to confidential information (i.e. account numbers).
Another day in the world of the Wild West Phoenix short sale Realtor®. The only saving grace for us today was getting a foreclosure auction postponed 25 minutes before the auction. :)
Until next time...
Summit Home Consultants
Copyright © By Bob Hertzog 2010 *Attn: Short Sale Listing Agents...READ YOUR LENDER APPROVAL LETTERS BEFORE CALLING ME WITH THE "GREAT NEWS"!*
Designated Broker-Summit Home Consultants