Nationstar and Auction.com
I got a big box at the office today. I hadn’t ordered anything, and I was thinking that it was, perhaps, a gift. I got all excited—flowers, chocolates, a new iPad. It was a gift, but not quite one of those. It was a large box of Open House signs from Auction.com. Thank you Auction.com. When we hold our next open house on your behalf, we would love to use your signs.
Unfortunately, free open house signs are definitely not going to win over many of the listing agents with Nationstar short sales in their pipelines. Nationstar’s pre-foreclosure servicing policies and procedures have real estate agents across the nation very unhappy. You see, Nationstar requires borrowers that want to sell their homes as short sales to auction those property through the website, Auction.com. Don’t be misled by the name: Auction.com is not auctioning off a property that went through the foreclosure process. This is a pre-foreclosure arrangement between Nationstar Mortgage and Auction.com.
The Nationstar / Auction.com Short Sale Process
Here’s how the Nationstar short sale process works: After a short sale offer and all of the accompanying paperwork is submitted to Nationstar Mortgage, the listing agent is then notified that the property must be placed on the auction.com website. The property then becomes available for public bidding through the website, and Auction.com requires 1-2 open houses during the public bidding period.
Here’s the part that is a little fishy: When a buyer makes on offer on Auction.com, Auction.com charges a 5% premium on top of the sales price at closing. And buyers can make offers online despite the fact that there is a fully executed, legally binding contract that has been submitted to the short sale lender.
What also seems fishy is this: Agents have already marketed the property and the seller—the rightful owner of the property until the foreclosure date—has selected the buyer. When the property is placed on a third party website, this legal contract is ignored. In fact, if the current buyer has a contract on the property to purchase it for $100K and an Auction.com bid exceeds that offer, the current buyer will have to bid against other bidders in order to purchase the property. At the end of the auction, the highest bid wins and there is no opportunity to counter the offer after the auction closes.
California Association of Realtors® Steps In
Agents across the nation have complained about this process. And, despite their complaints, nothing has changed. In fact, the California Association of Realtors® contacted Nationstar and Auction.com and states in an announcement on the California Association of Realtors® website that if agents are going to take these listings, they need to accept the process.
At Short Sale Expeditor®, we’ve had a number of agents so infuriated with the process that they’ve contacted attorneys and even State Assembly. That being said, nothing has changed. I cannot claim to understand the underpinnings of such a relationship between Nationstar and Auction.com, but I suppose that the reason that Nationstar is allowed to proceed in this way is because a short sale is merely an option for debt settlement.
If you owe me $20 and you want to settle, it is my decision (as the debtee) as to whether or not I want to settle the debt. In this case, Nationstar is the debtee, and I suppose at the end of the day, Nationstar can mandate how and if they will participate in the short sale. I’m not saying that it’s cool or kosher. I’m just saying that’s probably why it is the way that it is. Please don’t shoot the messenger.