The tables are turned and I am on my condo association and now have the ability to approve a short sale. Would love your feedback. The current owner owes over $20,000 to the condo assocaition and the bank is going to give the condo associaiton $3000. Turns out the buyer is the listing agent and is getting $2000 from the bank toward closing costs. Feedback please!!!
The banks are requiring "Arms Length" transactions. This is not an arms length transaction. Arms length means not your family, not your friends, not you. I am sure the bank is unaware that the listing agent is the buyer, and not only will he be helped with closing costs, he will be earning a commission. Not only it is not ethical, it is not moral. Being you are aware of this, I would do one of two things. Vote no, or excuese yourself from it. But, this brings up all kinds of other issues as well.
I agree, I just closed one where the selling agent was also the buyer. It was disclosed and the lender approved the short sale and allowed the selling agent to keep the commission. If it is disclosed and the lender approves it, it is not unethical nor illeagal.
As a regular buyer how can you outbid the listing agent if they see your offer and can out do something to better their offer. This is not unethical you say. There could be alot explaining to do if the regular buyer was to find out he/she was out bidded by the listing agent.
Sounds like a conflict of interest to me. Is he the broker or an agent working under a broker? The E&O insurance will not cover any issues that come up if he is the listing agent and the buyer so I would talk to the broker or agent and let them know there is big liability to the association if there were a lawsuit from the seller.
You could also approve the short sale on condition the buyer pays more $$$ to association for back dues. I haven't seen more than 25% to associations for dues owed when they go over $2000.
Doesn't the condo association have a lien on the property, preventing this transaction from closing if the full lien isn't satisfied? We always strongly suggest to the Sellers to keep their HOA dues current so this doesn't happen.
The bank probably didn't pay attention to the agent disclosing that he's an agent or maybe they just didn't care. This doesn't feel like an 'arms length' transaction to me either, but banks do what they want to do. How does the bank not have to pay the $20000 to the association? Wasn't a lien placed on the property? Was that negotiated down to $3000?
Do you think that the amount being offered to the condo association would be treated any differently if the buyer was different? The reality is that the $3000 is probably all that the 1st lienholder will allow for any junior lien, whether it's a second, an HOA, or medical lien. You guys can try to negotiate for more or all of the outstanding dues, but you might run the risk of receiving nothing if the property forecloses and the seller files for bankruptcy.
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