Let's Talk About Agency

In this crazy market I feel many agents have the attitude of their sellers, when in a short sale position, being somewhat disposable. Just a means to an end. The end being their paycheck.


We have a company here in town which will offer to purchase a home from a seller who is in distress. The investor then takes over the negotiations with the bank. Now, what i gladly admit is that they are amazing at negotiating. They are able to have people on staff who just sit and dial the phone all day, something many or even most Realtors are just not able to do. We don't have the time.


While this company is negotiating with the bank to get the short sale approved they list the home on RMLS with the same agent and start looking for an "end buyer". While on the surface this may seem illegal, the reality is many lawyers have reviewed this and find it 100% acceptable. Where we see a gray area is the fine line between legal, moral and ethical.


If the seller is going to be subject to any sort of deficiency judgment wouldn't it serve them best to have the end buyer be their buyer? If the investment company in the middle is making a clean profit of $20,000 for their work and if the end buyer is willing to pay the higher amount, shouldn't the seller be receiving the benefit of the higher price?


These companies are everywhere, in every major city, and they are likely not leaving anytime soon.


Here is where it gets clearly unacceptable from my point of view and it comes down to one word. The word is: AGENCY.




AGENCY:An expressed contractual relationship which can be created in writing or orally in which a principal authorizes and empowers the agent to act on behalf of the principal in dealing with third parties.




Really absorb that paragraph. It says somebody is trusting somebody else to act on their behalf, which means best interest. If you are a the Realtor and allow this third party to come in and negotiate with the bank on behalf of the seller is that third party in essence acting as the seller's agent? I think they are.




I will be most interested to see the aftermath of this most amazing time in real estate history. It hink our courts might see a very large backlog of cases.