Realtor Short Sales Training and Resources
How many of you are getting pressured to let buyers in before escrow closes?
I am sure this is not just happening here but many areas where the buyers are pushing to take occupancy prior to close of escrow.....While I can understand their frustration and dilemma, this is not a practice nor situation as a listing agent that I would allow.
Besides the insurance liability if something were to happen, the fact that we have had so many short sales fall out at the end for various reasons across the nation presents another whole issue as to tenant rights when needing to put the home back on the market and the cost of eviction proceedings on those buyers whose escrow fell out.
Then another question came up ," Well what is wrong to allow someone to come in if it is scheduled to foreclose? " reasoning is the house would have someone it to prevent damage etc to the home.
I would let the bank make that decision....
The bottom line is if you as an agent gave access to someone to habitat a property that is clearly not in your name you are holding yourself open for possible litigation in the banks recouping their loss in eviction.....and/or your brokerage if there is an injury on the property.....NOW if you have spoken with the bank, the seller and they both agreed to allow someone to come in that would better protect the asset I suppose it might be a prudent thing......JUST DON"T forget about the INSURANCE liability if something were to go awry...who would be responsible?
You better think twice before putting yourself and /or your brokerage at risk.......
Replies to This Discussion
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Permalink Reply by Mike Linkenauger on
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We have many times. We don't do anything without the seller consent 100%, and suggest against this type of stuff usually. While I agree it is a HUGE liability for brokerages and sellers, it can also be a HUGE negotiating tool for lenders...
It says to them "We've already moved out, the new buyers have already moved in and signed a long term lease, and unless you want to pay the buyer $3,000 in a cash for keys program after foreclosure, you MAY want to consider this short sale offer..."
We always suggest to the parties to get a release signed by everybody in these cases either way to protect everybody.
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Permalink Reply by Terry L. Osburn, SFR on
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In California with the tenant protection laws you are opening yourself up to more complications etc. and more expense and delays in being able to sell the property.
My sellers have always been apprised of the situation and makes the final decision....
That release would have to be also acknowledged by the bank in writing....just seen too much.....
Since there was NO NOD yet and knowing the home would immediately bring in other offers why complicate?
There actually may be some areas that have been hit so hard and vandalism and theft so great where a bank may very well encourage a tenant to give more protection to the property......so there may be valid occasions for such.
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You're right. We've also had it happen twice to where a seller lets a buyer in the property early against our suggestion, only to have the buyer not be able to get financing! BOTH times it didn't work out. We almost always suggest against it, if given the choice we would much rather work with a vacant property.
Its always up to the seller, but there is no liability on our part if we are discouraging it...
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Permalink Reply by Joseph C. Alfe on
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Having an attorney generated pre occupancy agreement is not uncommon. We use them if we are reasonably sure we can get an approval, but the the buyers need to move.
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Permalink Reply by Ernie Dill on
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I frequently offer pre-settlement occupancy as a way of cementing the buyer into the deal, and as Mike stated, it's a powerful negotiating tool with the lender.
We inform the lender that the buyer has taken occupancy under a pre-settlement occupancy agreement and that it is understood by the buyers that in the event of any indication of likelihood of a substitution of trustees and initiation of foreclosure proceedings, that the sellers intend to offer the buyers a long-term lease.
Public Law 111-22 May 2009 (Foreclosure Tenants Rights Act - Google it) indicates that bona fide tenants 1. must be given a minimum of 90 days to vacate or 2. that the terms of their lease apply in as it relates to a successor owner acquiring the property through foreclosure.
I'm sure that an attorney in a lawsuit could eventually break all these agreements, in some instances. However, it is extremely unlikely that one our erstwhile banking institutions could competently communicate this internally, manage it externally, or that it would be worth it in the event they could.
Cash for keys Mr. Buyer of a failed short sale? Yes, thank you Mr. Asset Manager - or perchance would you like to just sell me the house at a reduced REO value?
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That may be fine for a property destined for foreclosure.....However for a property that has not had a NOD and/or is not near the end towards Trustee sale will cause a myriad of problems for the seller in the event the property needs to be put back on the market to obtain another buyer.
That buyer whose bid to purchase the property is now a tenant and falls under tenant rights...to remove them in order to properly remarket the property and /or to gain access for showing will be a nightmare.
We are seeing buyers fall out of escrow at the end due to loss of job, income, certain conditions by underwriter could not be met and a host of other issues.
There is insurance issues that need to be addressed as well.
We have been able to postpone trustee sales several times in order to obtain another buyer. Lots to think about.
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