Delivery of Clean Property

Dear Peter,
Representing the seller, I recently closed a sale for a one acre site with a house. The house was remodeled and clean, but the grounds were littered with what the buyer is now calling "trash and junk". Prior to closing, the buyers made no mention of the seller cleaning the lot.

Today the buyer's agent called me and said the buyer wants the lot cleaned by my seller, stating, "Per the state GAR contract, the sellers are in breach and we will take further measures if this is not resolved within the next 48 hours."

I'm not exactly sure how to respond to the Buyers Agent. Paragraph 9 of the GAR contracts says, "Seller shall deliver property clean and free of trash and debris at time of possession." However the seller did not clean up the complete acre of ground because there was never any indication from the buyer of cleaning up the grounds.

Since there was no mention of the "junk and trash" anywhere until a day after closing, could there have been any ramifications to the Seller for violating the GAR contract? Was it a violation of the contract?

Sincerely,
Jolted by Junk



Dear Jolted,
"Property" in the GAR means the subject and the subject is real property, which includes all the ground, grass, boulders, driveways, ponds, creeks, paved areas, dirt mounds, gravel pits, fenced areas, tire swings, tree houses, lily pads, drain fields, compost piles and outhouses.

A contract is whatever the parties want it to be, and if these parties agreed to use the 2011 GAR F20, without changes to the pre-printed paragraph about the subject's condition, nor subsequent language to the contrary, then the parties have agreed to deliver and accept the property in clean condition.

If the seller fails to do deliver the condition as agreed, then a tort has been committed, not necessarily a crime. Remedy for the buyer is to (in chronological order, separated by reasonable periods of time):
1) ask the seller to behave as agreed
2) firmly but politely insist a little louder that the seller behave as agreed
3) submit itemized damages to seller
4) firmly but politely insist a little louder that the seller remit payment of itemized damages
5) walk away with display of unmitigated audacity, including simultaneous sneer and a single-digit salute
--or--
5) litigation for damages (this usually depends upon severity of clean-up or irritability level -- when they say, "it's a matter of principle" this means they're gonna sue your keister. avoid this if you can :)

My recommendation to you is this: convince your seller to do as he has agreed and clean up the property. In my experience, best practice is to fully explain the details of an agreement to all principles, mitigating these types of occurrences. When the parties are aware of their obligations regarding an agreement, they are much less likely to abridge these obligations.

If the seller refuses to do as he agreed, then I would relay this information to the buyer's agent and ask that agent to, "Please stop calling me regarding this topic and pursue other remedies. I may be of no further help to you. I understand the buyer is upset and they are calling on you to fix the issue. With respect, you should talk to your broker about it."

Just to be clear about this: Your client agreed to deliver the property in clean condition, whether or not it was verbally discussed.

Binding Agreement Date Question

Dear Peter,
I have a binding contract date of 3/19 at 5pm. If I have a 10-day due diligence period, is the day that I received the contract considered day one?

I need to know,
Bamboozled by Binding Dates



Dear Bamboozled,
Think of it this way:

You begin counting with the day of binding agreement (day zero). If binding agreement is 3/19, then 3/20 at midnight ends day 1 of the due diligence period. In this case, your due diligence will end at midnight on 3/29.

An issue that you did not mention is how the binding agreement date determined.

NOTE: with regard to GAR forms, the binding agreement date is defined within the agreement. The response below is based upon that definition.

When an offeror makes an offer (or counter-offer), and the offeree finally accepts that offer, the offeree signs and return the now contract to the offeror. The binding agreement date is the date that the offeror receives the signed offer (now a contract) back. If you are the offeror and the offeree signs the offer (making a contract) and also fills-in the binding agreement date, then that offeree has made a mistake. Only the offeror can make the binding date.

I mention this because based on your question, I cannot tell if you were the offeror or the offeree. If you were the offeree, and have received back notification of the binding agreement date, then the binding agreement date is the date on the contract. If you were the offeror, then the binding agreement date is the date that you received the signed contract, regardless of what was filled in the blanks on the contract. If this is the case, and you wish to make it an issue, then you need to get a GAR form called "Binding Agreement Notification", fill it out, and add the line, "Binding Agreement Date on the Purchase and Sale Agreement was scribed incorrectly, and this notification acts to notify all parties to actual Binding Agreement Date".

Some perspective:
The purpose of the binding agreement date is to simply calculate dates within the agreement.
Example: If you make an offer on the first day of the month, with a due diligence period ended on the 14th of the month, but the buyer and seller do not come to agreement until the 12th of the month, then the buyer only has two days of due diligence time remaining.

Short Sale Question

Dear Peter,
Short sale--The bank has rejected my buyer's offer of $73K and said they wanted $90K based on the BPO results. The listing agent says there is no way she can get $90K for the property, and she has sent them her comps again. The bank disagrees with her. Meanwhile, they have NOT changed the list price of $79.9K. Therefore, we have countered at $80K, which is $100 ABOVE list price. Is a bank obligated to accept an offer that meets the list price?

Please help,
Stymied by Short Sales



Dear Stymied,
Don't think of it as a Short sale. Think of all home sales like this:

An owner/seller may sell their house for any price to anyone at anytime. The house belongs to the owner, and no one (not even their lender) can stop them from selling it at any price. If a seller has a loan outstanding, then that seller must "settle-up" with the lender at the closing table, so that the lender will release the security deed on the house (the security deed is what a seller gives a lender to 'show the world' that the lender has an interest in the property. If the security deed is not released, a seller may not convey a warranty deed because the title chain would be clouded and a buyer's lender would not go for that - but a cash buyer might).

When a seller owes more money on a house than the value of that house, they may sell that house at any price (just as any seller may), however, to get their lender to release the security deed, the upside-down seller has two options: 1) bring cash to the table for the difference owed and the amount collected in the sale or 2) have the lender "approve" the lesser payoff.

Most sellers opt for option 2). When this is the case, a purchase agreement between the buyer and seller is a binding, enforceable agreement with a 'lender price approval contingency'.

This contingency is not different than any other contingency.

In your case, the seller (having two options, and choosing option 2), has an agreement with the buyer to sell at a certain price, but the lender does not approve of that price and will not agree to a lesser payoff. Therefore, the lender price approval contingency will be exercised by the seller and the agreement will die on the closing date of the contract, unless one of two things happen: 1) the buyer and seller amend the agreement in a way that allows the seller to meet their contingency or 2) the seller brings the difference between payoff and sales price to the closing table.

The seller has an obligation to sell to your buyer at the price agreed upon, so long as the contingency is met, but it does not look as though the seller can meet that contingency. The lender is not part of the agreement between your buyer and the seller. This is why the lender does not have to "take your price".

The listing agent put a low price on the house to attract a buyer (and it obviously worked). Once an agreement between the buyer and seller is made, the seller goes to the lender to try and meet the contingency. If the seller is successful, the sale is made. If not (and the buyer does not wish to amend the agreement to the lender's price), the seller is back to the two options.

In a nutshell:
*The lender does not have the power to force a borrower/seller to sell at a particular price.
*The lender is not part of the negotiation between a buyer and seller.
*The lender is the lender. The seller is the seller. Always has been, always will be.
*The buyer has nothing to do with the seller's lender.
*The buyer and the seller have a contract.
*The seller and their lender have a contract.
*The buyer and the lender have no relationship at all.

In a long-winded way, my point is this:
The lender has no duty to your buyer and is not obligated to "take your price" because the offer price was offered by the seller, not their lender. Your buyer and the seller have an agreement with an unmet contingency. If your buyer does not like the price and/or terms the seller is now offering, then attempt to renegotiate or walk away.

NOTE: if the buyer and seller do not care about having the existing security deed released, then there is no need for lender approval.

Three Things You Should Know About Brokerage Agreements

We engage in brokerage agreements everyday, however many Agents do not fully understand the functionality of such contracts. This post will shed some light on your otherwise dark brokerage engagements.

Before we begin, a shocking fact: many agents have not read the listing and/or buyer agreements. If this is you (or it has been several years since you last read it), then go print a copy and read through it! I am flabergasted at the number of Agents that do not know their tools. A conscientious agent reads all contract forms at least once per year!

1) Your client cannot just "fire" you. Yes, a client may refuse your representation as an agent, and they may engage, through written agreement, another agent to represent them, but they may not just dissolve the brokerage contract with you because they want another agent.

I have heard many, many Agents say, "My broker requires that you sign this buyer agreement, but don't worry, you can cancel it with me at anytime if you want to, without penalty."

WHAT!!??!! -- Then why have them sign the agreement to start with?

If you are in default of the agreement, then yes, your client can dissolve the agreement due to your default and the agreement may be deemed unenforceable. But, if you are doing what is required by the agreement and the client simply decides that they don't like you, or they want another agent, then your client may hire another agent, but that client may still owe you commissions based upon your agreement (listing and buyer agreements).

2) You can write special stipulations into your brokerage agreements. The following are some examples:

Listing Agreements:

-All parties agree that if no offers are accepted, the price of this listing will be reduced every thirty days.

-If Seller requests this listing to be removed or transferred from MLSs during term of this agreement, then Seller will pay Broker $_____ prior to removal or transfer.

Sometimes FSBOs have special requests:

-If Joe Blow or Sally Slander make accepted offer to purchase during term of this agreement, then commission charged to Seller shall be $______.

Buyer Agreements:

-If Buyer contracts to purchase a property within the first thirty days of this agreement, then at the closing, Agent agrees to provide a home warranty by Great Home Warranty, Inc. (not to exceed $345) and reimburse Buyer up to $300 of home inspection costs if Buyer contracts Billy Bob Home Inspector.

-If Buyer contracts to purchase a property after viewing ten or fewer listings, then Agent agrees to provide a home warranty by Great Home Warranty, Inc. (not to exceed $345) and reimburse Buyer up to $300 of home inspection costs if Buyer contracts Billy Bob Home Inspector.

You get the idea. Remember, brokerage agreements are contracts, just like all other contracts. And just like all contracts, brokerage agreements may be written in any way the parties agree.

3) Your brokerage agreement may be entered into now, but not take effect for several weeks (or months). This means that if you and a seller agree to list a property for sale, but the property needs repairs prior to going on the market, you may sign an agreement that begins in the future.

Many agents do not practice this way, and run the risk of the seller meeting another agent between now and the listing date; thereby losing the listing.

This method is a great way to secure the listing, without breaking the law (remember, once the listing period begins, you must hold it out for sale). Plus, the MLSs will penalize an agent with fines for not inputing data within time limits set by the listing agreement.

To do so, simply date the agreement for today (date agreement is made), and date the listing term (date the listing goes into effect) for the dates you and the seller agree to. If the seller needs three weeks to repair the property, then your listing is secure.

The same method may be used in Buyer Agreements. Sometimes a buyer wants to buy a home, but is going on vacation first. Secure the agreement prior to her leaving town, and when she returns, you still have a client.

Don't forget to make those agreements enforceable!

Do You Have a Plan? Really. Do You?

It's the New Year again, and you are thinking this year has got to be better than last. Right!?! You may have given yourself an exit from the business ultimatum, or perhaps you've already taken "a real job" to make the ends meet.

If this is you, there is a secret that you should know. Agents that are not just surviving, but thriving in this market all share one common aspect (and if you sigh and mutter, "yeah, they're all REO agents and they get all the listings easy," then you are extremely jaded and probably should go get a regular job because that attitude sucks raw eggs).

The secret is this: You need a business plan!!!

Imagine a ship that sets sail with cargo and crew, but no charter. Where will they end up? When will they arrive? I can promise you this: the ship will dock somewhere and at some point in time, but without a charter and map, there is no telling when and where they will arrive.

Think of a treasure seeker with shovel in hand, but no map by which to dig. Will he find what he's looking for? He will find something, that's for sure, but without a drawn-out map, he must settle with what he gets.

Wishing upon a star rarely makes reality happen. You need a plan, a dreaded business plan, with numbers and written words, and all that dry, boring stuff.

Your plan needs to encompass:

-Gross Commission Income

-Net Income

-Cost of Sales (expenses)

-how you are to make sales (number of sellers closed, buyers closed)

-average sales price

-average commission earned

-lead-generation model (methods and time spent)

-lead and client conversion ratios

Break everything into smaller pieces (annual numbers into monthly numbers by dividing by twelve, and monthly numbers into weekly numbers by dividing the monthly numbers by four - easy). Then make daily and weekly activity tracking charts and track all your numbers.

You can find sample business plans for real estate agents here and here.

I teach a business planning workshop, where agents complete their plan in class. If you wish to attend the next session, email me.

Real Estate Honey

Did your mother ever tell you that you catch more flies with honey than vinegar? She was right, and when it comes to real estate sales, agents are best served by following mother's advice.

Other agents are your best friends in real estate sales, but for some reason, many agents either forget this fact or never seem to grasp the concept. Being nice to everyone is the way to get what you want (within reason).

When a co-oping agent does not understand your point of view, or asks to negotiate the commission split (not a reason for you to be upset, by the way), or presents a low-ball offer, or becomes upset, or sends you a nasty email, or threatens to tell her broker on you, or says your listing is over-priced, or insists their client keeps the earnest money, or "steals" your client, or does not follow proper protocol, or well... you get the idea, DO NOT LOSE YOUR COOL.

These are not reasons to throw stones in their general direction (or directly at them). These are opportunities to win that agent over, and get your way.

To do so:

1) Take a deep breath.

2) Take a ten-minute break to your "happy place".

3) Seek counsel to ensure that you are not in the wrong. If you are, then apologize and be nice.

4) Create a response that is not inflammatory. Diffuse the situation; do not exasperate it.

5) Communicate your position with poise, clarity, and calmness.

When you act calm and rational, it is difficult for the other party to remain upset. So long as you do not become obsequious, or condescending.

Then again, some people are just difficult to deal with. Try your best to be nice (it's always the best policy), but do not let anyone take advantage of you, your client, or the situation. Never become a push-over, but remain nice!

Get Addicted to Prospecting

ad-dic-tion (ə-dĭk'shən) n. The condition of being habitually or compulsively occupied with or involved in something.

pros-pect (prŏs'pěkt') v. To search for or explore a region for possibilities.

Habits are formed by repetition. Money comes from possibilities. Therefore, to become addicted to prospecting a person must first begin to develop such habit. When you prospect, you get many options and possibilities naturally unfold from this. The more you prospect, the more possibilities you get. The more possibilities you get, the more likely you are to earn money.

Start your habit small, with two hours each day. Start by going to your favorite places and engaging in real estate discussion and ask for referrals. Start by calling the people in your cell phone and always ask for referrals.

I've heard experienced agents claim that their business is nothing but referrals from people they know. When I ask if they called upon those people and ask for referrals, they usually answer, "No." This is not "working" a sphere of influence (not spear of influence, as I sometimes hear it called). This is simply the benefit of years of being in the business and knowing lots of people. These agents would have money falling outta their ears if they were proactive with prospecting to this vast well of contacts!

I know an agent that was brand-spanking new to real estate and got 18 listings his first month in the business because he prospected for six or more hours each day!!! That agent went on to sell 52 houses that year! He tells me that if he does not prospect for at least four hours each day, that he feels naked, and that he's failing his family.


Get good at prospecting. Practice scripts. Spend time thinking of new scripts to develop. When the market changes, see it as an opportunity to develop new scripts. When interest rates drop/go up, see it as an opportunity to develop new scripts. When national home sales numbers are released, see it as an opportunity to develop new scripts. When... anything real estate-related happens ...see it as an opportunity to develop new scripts. That's a BIG part of your job!

Prospect in many different places, and do it whenever you are not either sleeping or working with a client. If all your time is spent with clients, leaving very little time to prospect, then it is time to hire an assistant and/or a buyer's agent.

Learn statistics and keep abreast of current events that affect real estate. Use these statistics and knowledge of current events to steer discussions. Knowing that today's average 30-year fixed rate of 4.78% is the lowest-ever in recorded history (data began in 1971), then sharing this info with everyone you meet during the next two weeks, will surely develop dozens of leads.

Even if this process yields more referral leads to refinance loans than leads for your business, you will benefit in several ways by: 1) strengthening your relationship with your go-to mortgage gal 2) helping lots of people save money or avoid foreclosure 3) creating lots o' goodwill 4) strengthening your habit to prospect.

Simply speaking about real estate with everyone you meet will lead to possibilities, and we know where possibilities lead...

Places to prospect:
-college campus - carry a clipboard and ask passersby to participate in a "survey". Question 1) Do you own or rent a home? Question 2) What is your perception of the current real estate market? Question 3) Who do you know that is currently looking to buy or sell real estate?

-on the phone/internet - Call on likely buyers and sellers. Call on friends/acquaintances. Post ads on craigslist. Send monthly newsletters via email.

-anywhere you currently are - Talk to the guy on the train. Talk to the cashier. Talk to the dentist and her assistant. Talk to your pet groomer. Talk to your bookie.

Through repetition comes perfection. Imagine two people are challenged with the task of building a perfect clay pot. One is allowed to build hundreds of pots, over and over again throughout the month, while the other is required to work on only one pot, the guy that built many pots is much more likely to build a perfect pot, while the other guy will have an ugly ashtray for mom.


Prospecting has a negative connotation, but it does not have to.

Simple ways to feel good about prospecting:

-Let's face it, real estate is a sexy subject. Most of the wealthiest people made their money in real estate doing something or another. Everyone knows that. People also have a compulsive urge to watch a train wreck. Put the two together and it's an easy subject to discuss.

-Have discussions about real estate. Learn to initiate and steer discussions about real estate with natural ease.

-It's a contact sport. Communicate with as many people as possible. Say the right things and the possibility of earning money increases exponentially!

If you get addicted to prospecting, money will become plentiful! I promise.

Careful Cleavers are my Favorite Agents

I have noticed that many agents do not stop and carefully consider all issues when conducting their business. They get into a hurry. They do not slowly review all documents. They fail to include certain disclosures. They fail to prepare a contingency plan when negotiating repairs. Etc, etc.

This post is intended to help you from falling prey to simple mistakes.

I love my work, but the worst part of my job is, upon requested help, having to tell an agent that they have not properly represented their client. Worse yet is that now, that agent must go and tell their client that due to improper representation, the client's choices are bad and worse.

The following are a few examples of how getting into a hurry can hurt you and your client (each a real life example. Names and some details have been changed to better illustrate the example):

1) Failing to put a date on the Seller's Disclosure Statement:

Agent Amy is representing a seller. The day before closing, the buyer calls and declares they will not close and demands their earnest money to be returned immediately. The buyer says that material facts have been discovered that change the value of the house to be purchased. The buyer further cites that relying upon the seller's disclosure statement has been to the buyer's detriment, claiming that the seller either lied or misrepresented facts that would harm the buyer.

On the Seller's Disclosure Statement, the question was asked: Are there any encroachments, unrecorded easements, or boundary line disputes with respect to the property? to which the seller checked, "No."

As it turns out, there was a boundary dispute with a neighbor, but the seller was unaware of this dispute. The buyer is now claiming that even if the seller was unaware, the seller should not have checked "No" unless the seller knew for certain that there was no boundary dispute. Because the seller checked "No", then the seller was warranting such and since the buyer relied upon that disclosure, the seller has defaulted on the agreement. Sure, the buyer has to perform their own due diligence, but it now appears as though the seller has misrepresented material facts.

Another fact is that at the time the seller filled-out the disclosure statement, the seller was being truthful. The neighbor had not begun the boundary dispute proceeding until six months after the seller had completed the disclosure statement, however there was no date on the disclosure statement.

Agent Amy has always told her sellers to leave the date blank on disclosure statements, because if a date is added, then the buyer and his agent can tell how long the listing has been for sale. This is a really silly reason to leave the date off, and in this case Agent Amy has cost her client more than $5000 in earnest money (and the property did not close).

2) Waiting to negotiate repairs with only one day remaining in contingency period:

Agent Andy and his buyer have ten days to complete their due diligence and determine whether or not to proceed to closing. The pair wait until the ninth day to submit a list of repairs to the seller. The next day, they still have not heard back from the seller.

Agent Andy calls the listing agent and asks for an update. The listing agent says that the seller is still thinking about it and "don't worry, all repairs should be made. We will give back word soon." They don't hear anything more that day, but the following morning, they receive word that the seller will make no repairs because the seller is flat broke; no money. The buyer does not like that idea and decides to look for another house. Agent Andy fills out a unilateral termination and submits notice to the seller.

One problem: Agent Andy and his buyer submit this form on day eleven of the contract; they are a day late.

What should Agent Andy have done differently? He should have had the unilateral termination form filled out and ready to send to the listing agent on day ten. Once Agent Andy had not heard from the seller, he should have sent the termination. Even if he sent the termination and the seller was willing to make the repairs, the parties could have re-entered into an agreement to purchase the very next day.

As a result, Agent Andy's buyer lost $1000 of earnest money.

Note: anytime you send notice, especially unilateral termination notice, always get confirmation evidence or proof with time and date, and be certain to send that notice through the channels delineated in the agreement.

3) Failing to submit notice through the proper channels:

Agent Anna is in the same position as Agent Andy, only Agent Anna is on the ball, and submits her unilateral termination notice on day eight. She calls the listing agent and tells him that her buyer has decided not to proceed with the sale because there are too many repairs needed. During the conversation, the listing agent tells Agent Anna that he is currently at the beach, so please fax the termination to his hotel. Agent Anna does so.

Three days later, Agent Anna gets a call from the listing agent. He says that the seller wants the buyer's earnest money. Agent Anna reminds the listing agent of her termination notice and how she sent it to him at his beach hotel. The listing agent says that he never got that notice, and adds, "besides, the means of legal notice regarding this transaction are my home fax and email, and I never received notice by either of those means."

The listing agent is right. Agent Anna should have sent all notice through the channels outlined in the contract. She could have still been polite and sent the notice to the beach hotel, but should have also sent that notice through the other channels of legal notice.

Due to Agent Anna's misstep, her buyer lost $2500 earnest money.

This last example is an important one to note. Always let the other party add their means of notice to the agreement. Also, always make certain there are means of notice.

So, when conducting real estate business, keep Ward, June, Wally, and the Beaver in the forefront of your mind. Being a Careful Cleaver will save your hide and better protect your client.

3 Potential Short Sale Pitfalls for Agents

New markets bring new opportunities for savvy people. Not all savvy people have your client's best interests at heart. As an Agent, you have a responsibility, a legal duty, and a moral obligation to represent your client above all else, including your own interests.

Within recent years, the number of foreclosures have exploded, leaving many with a loss: borrowers and lenders alike. Due to this, lenders have turned to an exit strategy called the Short Sale, and truant borrowers are seemingly eating it up.

A short sale is when the lender agrees to allow a borrower to sell his property, but not requiring repayment of that borrower's loan in-full. Imagine the borrower owes $100,000, but the home is currently worth $70,000, and the borrower cannot make payments. In this instance, the lender would rather accept $70,000 today than to foreclose on the property, because if the lender forecloses and resells, then the amount of re-couped loss will most likely be less than the $70,000.

!!!Herein lies the opportunity for the savvy person!!!

Now imagine you are a listing agent. Your newest client is the one described above (owes $100,000 but her house is worth $70,000), and she has missed the last three months of payments. Your client's lender has contacted her and insists she make her payments or foreclosure is imminent. You mention the short sale to your client and she thinks it sounds like a better option than foreclosure.

The following are three of the most common scenarios that play-out next:

1) You get your client's permission to contact the lender directly and upon doing so, present your short sale idea. The lender agrees and asks you to submit any and all offers you receive. You list the property, and three offers are made within two days. You take all three offers to the lender and await their approval. The lender (eventually) accepts one of the offers and the sale is made.

2) You list the property for sale and almost instantly you get a call from another agent that has an investor that will save the day. This investor is the nicest guy in the world. He has so much kindness in his heart and tons of experience working with Big Bad Bankers. He will call the lender and negotiate the short sale terms and in the meantime, his agent will list the property for sale (as explained, they work as a team only). The investor and his agent will find a buyer for your seller (he sounds like Robin Hood). To do so, you must surrender your listing to this new agent, but do not worry, the new agent promises to pay you x% of the sales price once it closes and is nice enough to sign an agreement that says so. You and the seller are off the hook now, so just sit back and wait for the money to come in.

3) You list the property for sale and call a negotiator that you have met. This negotiator has a unique business model. He negotiates with the lender on behalf of the seller (don't worry, the negotiator's fee is paid by the lender and so is your commission). You keep the listing, the negotiator gets the bank to agree to a price that should sell fast, and all will be happy. Soon, a buyer comes along that is willing to buy at that price, and the sale is made. This scenario helps you tremendously because you are not a short sale expert but the negotiator truly is, so your client gets the best of both worlds and you don't have to spend all those countless hours on the phone with the lender.

Now the question comes:

In which scenario(s) were you representing your client as required by law?

Think about it. I'll wait.

If you are a full-time agent, you have likely encountered one of these scenarios in recent months. It is also likely that you have been challenged with the above question of legal responsibility, fiduciary care, and meticulous representation to your client, but you may not have even regarded it as such.

Before answering the question, consider this: the short sale is not a get outta jail free card for the borrower. There are penalties to not repaying one's debts, some immediate, others long-term. As an agent of the seller, it is your responsibility to fully explain the pros and cons of your client's actions regarding her real estate transaction; if you do not, then you are not fully representing your client. The Mortgage Forgiveness Debt Relief Act has taken some of the sting outta the short sale (recently extended through 2012) , but the lender may still insist upon the seller signing a deficiency judgement or promissory note for the difference of amount borrowed and the amount received at sale before the short sale is completed. This means that in the above scenarios, the seller would still be liable for $30,000 repayment.

Time for answers:

In scenario 2): you have abandoned your client once you willfully dissolve your listing and allow the new agent to create a "listing agreement" with the investor. The investor has negotiated a short sale price for himself and hopes to resell the property to a buyer willing to pay more than the lender is willing to sell. This is how the investor profits. If the investor cannot find a buyer willing to pay more than he can purchase for, then he will abandon the project and your seller becomes the newest foreclosure in town.

If the investor and his agent are able to attract a buyer, then you could have done the same. So, why would you need the investor and his agent? Imagine this: the investor negotiates with the lender to sell at $60,000, then finds a buyer to pay $70,000. The penalty to your client for your abandonment is another $10,000 (the investor's gain) in deficiency judgement. In this scenario, you have not represented your client unless you have fully disclosed all of the above-mentioned pros and cons (plus several others) and your client has signed-off to the possible risks. That extra $10,000 is your client's money and you have let it slip away without any effort.

In scenario 3): you may have been fooled by the negotiator. He is most likely performing the same investment strategy as the guy in scenario 2). The problem here is that you may have introduced your client to a wolf in sheep's clothing. Many times, the negotiator is looking for a buyer also, but he allows you to keep your listing and hopes you attract the buyer. This way, the entire thing looks like he is working on behalf the seller, but he is really working for himself. You have not represented your client by allowing an outsider to "negotiate" on your client's behalf. That is your job. The result is increased financial liability for your client. Not good.

That leaves scenario 1): but you have not exactly represented your client's best interest in this scenario either. Remember that your client is the seller and only the seller. Your client may need the lender's blessing by selling her house for less than she owes, but that does not mean that the lender becomes your client. When you do as "instructed" by the lender and present all the offers you have received, you have abandoned your client's best interests because it is none of the lender's business how many offers your client receives (the lender is not your client). When you present more than one offer, the lender will take longer to decide upon an acceptable price because they may feel the price is too low and it may attract a better offer.

Remember this: you have a legal duty to represent your client. When you engage in actions that do not represent your client, then you are committing a crime and are opening yourself up for legal liability that may cause law suit and/or license revocation. Always stop and consider who your client is and if your actions are congruent with their needs and interests.

In the above scenarios, the investors are working within the boundaries of the law. They are doing nothing wrong (however, I think the negotiator in scenario 3) is guilty of fraudulent representation by not disclosing his plan fully). However, by allowing (or worse--encouraging) your client to follow their lead is a crime unless you have fully disclosed all the risks to your client (if you do this, then get it in writing).

If you feel that the short sale process is over your head, then you should refer that business to another agent. If you do take the short sale, then do your best to interpret the value of your client's property, list the property at that interpreted value, and get the highest price possible.

A point of note: If you attended at three-hour CE class on short sales, this hardly enables you to declare to the world that you are a short sale specialist or expert. Remain mindful of your fiduciary responsibilities and curtail your actions to meet those imperatives.

Just Say Zerooooooooooooooh!

I like to cut to the point with zeros. I think simplicity works best.

There are several benefits to keeping it simple when pricing your listing:

a) The buyer knows that $99,900 is the same as $100,000. The buyer isn't stupid; he thinks less of you .

b) Pricing at $100,000 gets you into two MLS searches: $75,000 up-to $100,000 and $100,000 up-to $125,000 - your listing at the top of one range and at the bottom of another. Pricing at $99,900 only gets you into one MLS search: $100,000 down-to $75,000 - your listing near the top (and near is never as good as on--we're not playing horseshoes).

Remember, these MLS searches are markets created by agents and buyers. That being so:

The best pricing-position for increased market exposure is being priced in two markets.

Two markets are always better than one; you're being seen by more eyes. Priced at either the top or the bottom of the list also makes you stand out. For this reason, an agent should price their listings at the top and bottom of markets.

These markets are generally:

$100,000 to $300,000 in $25,000 increments
$350,000 to $600,000 in $50,000 increments

Just as offering a listing for sale, lease, lease/purchase, and owner-financed opens that listing to several different markets, so does pricing on the zero.

Some agents add their signature to a listing with the last three digits of a price, like this: $100,123. I think this is a mistake because this cute little pricing display does not allow a listing to be at the top or the bottom. Besides that, who notices this gimmick? Other agents? Yes, but do they really care? I don't think so.

A listing priced at $99,900 isn't fooling anyone. Embrace the zero. Your listings will get more exposure, and more exposure means greater likelihood of selling.