Profile picture for glorytog

Investor rejected a short sale offer with Conflict of Interest

Hi,

I am trying to buy a property with Short sale and I made an offer at $1.05 mil and Bank asked to raise the price. So, we did counteroffer at $1.1 and Bank accepted. After a while, I heard from my agent that Investor rejected the offer with Conflict of Interest. 

I never meet the seller and have no relationship with the seller. How can we go through this issue? Anyone has any similar experience? By the way, I am in Los Angeles. 
  • September 14 2012 - Los Angeles
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Answers (12)

Best Answer

There is Arms Length Transaction but there is nothing such as "conflict of interest". This is just bunch of bullshxx. Either your agent is pulling the string on you or the listing agent. Either the listing agent is lying or your agent is lying.

If you really really want this deal. You sign an agency fee agreement for 1.50% of the transaction to your agent and you dump your agent and go with Listing Agent on making the offer on the house.

I am sure you will close. This is the only way, since listing agent is a greedy prick and will do everything he can in his power to get you the house and you pay your agent 1.5% fee. That is the only way to get the deal done. Unless, you are buying for the benefit of the Seller and/or have the same last name of the Seller and tell your buyer's agent $15,000 of something is better than nothing comes Christmas time.

Oh by the way ask the listing agent how many short sale he/she has done and close as "listing agent of record" of the short-sale so far this year. If it is more than $3 mil so far then you are ok, anything less...don't bother, you are wasting your time.
  • September 14 2012
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GloryTog,

The "Arms length" does not necessarily need to be of no relation between buyer and seller. It can also mean relations between buyers, and agents and sellers and agents.  Sometimes investors will also see as a "Dual Agency" as a Conflict of Interest.

You see, the bank is trying to mitigate their losses. They want to get the most money back and minimize the losses. This is usually done by a obtain a reasonable offer in a fair and open market.

 If the same Agency is representing the buyer and seller, it can sometimes be assumed that the Listing agent pushed "Their buyer" rather than the  "Best Offer".

So the investor may see dual agency as a conflict of interest and not at TRUE arm's length transaction.

Please note: If the seller is represented by Jack and you are being represented by Jill, but they both work for the same brokerage - it is still dual agency.

Hope this helps.

Nikki Aguirre
Residential Broker
Short Sale Specialist
  • September 20 2012
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glorytog, If your agent has represented both sides from the get-go, then Fliutrustee's assumption that the listing agent is greedy is off the mark. In any industry there are a few "bad apples" but in the instance it appears that the agent has run into a legitimate issue and is simply trying to guide both sides to a successful conclusion. Hopefully your new tactic will get the deal closed. If that doesn't work and you are not satisfied with the answers your agent is providing, you could call his broker and ask for further clarification. Best of luck.
  • September 18 2012
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Doesn't your agent have an answer?

Could it be that you work for a company that has shared ownership with the bank?

They must have a reason and no reason to hide it.
  • September 15 2012
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Profile picture for glorytog
Thanks much for your response. As  Fliutrustee  indicated, it was rejected for "Arms Length Transaction" (after We talked more with Agent). How we can overcome this? Is there any known route to resolve this issue?  

We just put a new offer on the same house with the previous package + a letter declaring we are not related to the seller. Our agent represents both sides.
  • September 15 2012
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Were you purchasing the property as an individual or as an LLC or Corporation?
  • September 14 2012
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You should speak with your realtor, we have never heard of anything like this. There is little recourse however. Best of luck in these unusual circumstances.
  • September 14 2012
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Interesting that the investor rejected the offer because of a conflict of interest, rather than the lender. The problem you may run up against here is that you rarely find out who the investor is, even though they always have the final say in a short sale approval. Possibly the listing agent can find out more but once the offer is rejected, they are unlikely to change their mind. I would move on to the next one.
  • September 14 2012
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Profile picture for Ofe Polack
I have never heard of anything like  this before, but it is possible, since short sales have to be at arms length.  I suggest that you ask your buyer agent to request proof from the lender through the listing agent of the type of relationship that constitutes a conflict of interet in this particular transaction.  .  Maybe the company you work with or own has a relationship with the bank, it does not have to be just a relationship with the seller.
  • September 14 2012
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Profile picture for Matt Hiatt
I have not heard of anything like that. You mentioned 'investor", is the investor the seller? Most short sales are between the seller (owner of property) and the bank.
  • September 14 2012
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I would hope your agent can elaborate in more detail, and if not ~ ask your agent to get the specifics.  Perhaps there is a relationship with the brokerage and the bank?
  • September 14 2012
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I have never heard of this..find out from your realtor why they are calling it a conflict of interest.
  • September 14 2012
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