Short Sales Don’t Work — Part 2 of 4

What is it called when a person demands “compensation” for
something in a threat to avoid performance on some other item or service?  Is that called extortion or just a
shakedown?

I recently had clients showing interest in a home in
Campbell, a short sale that appeared to be priced under the market value so
surely we expected multiple offers. 
As I was writing up the offer and getting ready to go over it with my
client, the listing agent calls me to tell me his seller is demanding an
addition condition for the sale — the seller wants to walk away from the
short-sale with $50,000 in his pocket. 

I wasn’t sure I heard him right, so I asked for
clarification.  The listing agent
says “to keep it legal it will be written as a purchase addendum for $50,000
for his furniture and art, which admittedly is only worth about $3,000 on
craigslist.”  I was shocked.

Basically, the seller can decide which offer to send to
the bank as the “accepted” offer for the short sale.  He will pick the one that agrees to give him the $50,000
side money for his crap.  Essentially,
he is saying “You want my house, you’ll give me $50,000 on the side and I’ll
accept your offer and work with the bank to short sale my home to you.”  The bank has no way to know there may
have been higher offers for the property without the side money.  Disgusting.

It gets better. 
As I dig into the Title report where we find how much is owed against
the property, I see that the first name of the listing agent has a 3rd
lien on this house for $19,000!

It’s pure speculation on my part since I have no “court
proof”, but here is what I think happened.  The listing agent will get nothing for his personal loan of
$19,000 if a normal short-sale goes through since his loan is in 3rd
position.  So he cooks up a scheme
with his seller-friend to get the short sale approved with this additional cash
on the side so he can be re-paid his $19,000.  Where is the IRS when you need them?!

In the end, we moved on to another home and our clients
are now happily moved into a normal sale just one block away from the
“shakedown” house.

-Mark

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