Nationstar and Auction.com Take Advantage of Short Sale Sellers!
Recently we were working a short sale through Nationstar who requested that the Seller sign a document allowing Nationstar’s affiliate, Auction.com, to sell our short sale. Yes, you heard me correctly! We already had a buyer, submitted all the financials to Lender, and had the BPO (Broker Price Opinion) however, they hadn’t countered the buyer yet. The form that my agent and her Seller signed stated that Auction.com was allowed to hold an auction on the property and should my agent be a dual agent on both sides, that she would not get paid more than 3% commission. First off, I want all Brokers to be aware that agents do not have the right to sign away commission unless the Brokers previously allowed this right, nor do they have the right to sign away the Broker’s Exclusive Listing Agreement terms and conditions.
I was furious as Auction.com was advertising this house illegally and unethically to the public. They were advertising as Bank Short Sale Approved! Well, if it was approved, I would have already had the approval letter for my existing buyer that had been waiting during this short sale process. In addition, how can a Seller back out of my Buyer’s contract and enter into a contract with the winning bidder’s contract without having some legal ramifications? The winning bidder was to pay 5% to Auction.com for acting as auctioneer, place a deposit immediately with Auction.com plus all the forms that they had to sign which gave away all their rights for inspection with clauses saying that they would have to pay money to Auction.com for cancelling the contract. The highest bid was $80,000 plus $4,000 over and above to the auctioneer for conducting this auction. They forced the Listing Agent to hold their own open house but then reduced our commission as Listing Agent.
I went through the contract with a fine tooth comb only to find a lot of responsibility given to the Seller such as maintenance of the property, requirement to keep up the expenses associated with the property such as (homeowners association dues, taxes, insurance etc.) without any clear statement that Nationstar would not pursue the Seller for a deficiency judgment should this short sale be approved. The forms such as the Purchase Agreement and other forms stated that the Buyer could back out if they did not receive the following, which were not even provided to the Buyer.
1. Homeowners Association By-laws
2. Sellers Disclosures
Since this was an Auction that was held on Auction.com, you would think that they would have requested this documentation from us before they advertised the property. This was not so. In addition, the pictures they used were not the ones taken by the Listing Agent that were on the MLS. They informed me that the pictures they used were from the Broker Price Opinion that they obtained from Nationstar. Since I was the Broker and the agent had no right to sign any agreement with Auction.com, I did send them a cease and desist letter which they totally ignored and continued with their Auction.
The National Association of Realtors needs to raise their voice on this change. If they don’t, Auction.com will continue to obtain partnerships with other Lenders and start this auction process. They will be lowering the commission of the Realtors and the Sellers will not be protected by the forms that they are using.
The forms that are to be signed between the Seller and the Buyer would be perfect IF the property was already Bank Owned (REO), as the Bank is responsible for maintenance and expenses of the property. Many Sellers are in foreclosure because they don’t have the money to pay their debts. In addition, the forms stated that the Sellers would have to pay one-half of the cost incurred should they decide to back out of the contract.
This is just another way where the Banks are taking advantage of the Sellers. That is why I put the following verbiage in my contract for the protection of the Sellers “This offer is subject to the underlying mortgage companies taking a discount acceptable to the Sellers and the Buyers.” This means if I don’t get the deficiency judgment waived and if there is a cash contribution needed to close by the Sellers or a promissory note signed by the Sellers, they don’t have to agree to the contract.
Nationstar Short Sales
I have several Nationstar short sales that I am working on and my gut is that they are going to advise the Sellers if they do not agree to try Auction.com that they will deny their short sale. I am looking forward to the fight on behalf of the Sellers, as Nationstar is taking away the rights of the Sellers. In other words, do it my way or hit the highway!
Stay tuned to the new changes that are going on in Short Sale Land. I highly recommend that if you are doing short sales and are either an Investor/Buyer, Realtor or Seller, please pay close attention to the Lenders that are holding/servicing your Sellers’ loans. If you are not a Realtor and are able to get paid on the deal, you may not even want to deal with a Seller who has Nationstar as their lender or servicer.
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