Notice of default versus foreclosure

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Question: I am interested in buying a home. Should I allow the listing real estate agent to represent me as well?

Answer: What you are talking about is called “agency.” There are three types of agency relationships: buyer agency, seller agency and dual agency. Buyer agency involves how the agent is to be compensated for the work he/she is doing for the buyer. The seller’s agency agreement is covered within the listing agreement. Obviously, through the listing agreement the seller and his/her agent will have discussed the terms of the agreement including what the seller is willing to accept for the property. Compensation to the listing firm and how it is divided is also covered in this agreement.

Dual agency can come in two forms. The first is when a brokerage firm has the listing, but a different agent within the firm represents a buyer. The second is when the listing agent himself brings a contract to the seller and represents the buyer, as well.

Dual agency at the company level, the first type described, should not cause any problems or raise any eyebrows. But when a listing agent offers to represent both sides of the transaction, caution is advised due to a potential conflict of interest. That is how real estate transactions can remain fair and impartial, as well as giving all parties to the transaction an equal chance of getting the most for their money.

Dear Michael: What is the effect on a FICO score of a notice of default, versus a foreclosure sale?

Answer: A notice of default is the notice to signify the beginning of what will likely end up being a foreclosure. A foreclosure sale occurs months later, and further decreases the score. It is also a more adverse situation.

A notice of default will be listed under public record, the same as a foreclosure. This will hurt the FICO score, as does the foreclosure, but it is nowhere near as bad as a foreclosure. Foreclosure is the “F word” in the lending and real estate industry. There is nothing worse than this on a record, not even bankruptcy.

A short sale is the alternative to a foreclosure. There is absolutely no reason for a seller to do a foreclosure when short sales are available for distressed properties. There is a movement at work to make foreclosure even worse in order to encourage more short sales.

Dear Michael: My agent is giving me little feedback from prospective buyers at open houses and after she shows my home. I ask her but can’t get an answer. My home has been on the market for six weeks without an offer. What advice can you offer?

Answer: My first advice for you is to take a deep breath and relax. Your home has only been on the market for six weeks. This is a short time given the current real estate market. You mustn’t let your emotions get the better of you. If the price is competitive, your home will sell when the right buyer is ready to make you an offer. It is crucial that your home be priced at fair market value.

As for your agent, she can only give you feedback if she gets feedback. It is very difficult for your agent to know everyone’s motive. Every buyer has different wants and needs, and may not want to share them with your agent. You can ask your agent to follow up with the buyer’s agents after they show your home. Be ready for positive and negative feedback, and don’t take it personally if someone says something negative about your home. Your home is right for you but may not be right for other prospective buyers.

Michael Kayem is a Realtor with Re/max/Execs, serving Culver City and the Westside since 2001. Contact him at (310) 390-3337 or homes@agentmichael.com.

Notice of default versus foreclosure