Selling Poinciana One Property at a Time.: Short Sale Negotiators. Needed or not?

Short Sale Negotiators. Needed or not?

call me!!!Hi folks, today, I'm writing to pick your collective brains a little. With the huge amounts of distressed property owners in this current real estate environment a "new" business opportunity seems to have been born, The Short Sale Negotiator. 

If you are like me, I'm sure you get numerous emails from these companies, offering to assist you with short sale negotiations. They go something like this: 

  • "Why spend your time negotiating with Lenders when you could be spending your time listing and selling real estate. We are a National company helping real estate agents and homeowners deal with short sale negotiations. Our services are FREE!! We get paid by taking 1% of the purchase price at time of closing. If we do not successfully negotiate a short sale on your behalf then we do not get paid." 

Here is my question: 

  • Must these companies be either licensed real estate brokers or attorneys, since they are getting paid by commission only? 

I must admit that at one time these services seemed very appealing to me. I have since changed my mind. My problem is, I feel having another party between me and my sellers is opening up the door to unnecessary liability. I also feel I am giving up too much control. I'm a control freak and the thought of having to go through another party for updates just does not do it for me. 

Short sales are time consuming enough without adding another layer of frustration. 

Now having said all that, I'm positive some of these companies are very good at what they do BUT.......how do I find out who is good or not without having to put one of my sellers at risk to, find out? 

I need some help with this. What are your thoughts? 

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Comment balloon 33 commentsBryant Tutas • June 23 2008 04:14PM

Comments

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

xo..Be back soon :)

TLW...ROAR!

Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) about 11 years ago

These guys, one or another of them, call me every day.  I have asked some very specific questions.

1.  Are they licensed?  Answer, NO.

2.  How are they paid?  Answer, Through the transaction.  Now, you know and I know that when the bank is presented with another 1% in fee, it's going to come out of the listing broker's pocket and that means the co-op is going to be lowered.

3.  They don't represent any party, they just negotiate. 

GEEZ!  Just another voice mail, IMO.

Another entity sticking their hands in the agent's pocket. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) about 11 years ago

They take a retainer and you could also interview them if you don't know them or worked with them before. I worked with one before but they were ungrateful after I praised them for doing a great job on one...I sent them another but they told me unless I bring them a real deal they wouldn't help my clients...just left them in the dust...real mafioso tactics...a real deal...find me one. I have done them myself but now I have a friend who I give business to and she is handling one for me now and possibly another soon. They do save you the time and hassle. And no they do not have to be licensed...anyone can do it as long as you get the written authorization from the sellers.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) about 11 years ago

Broker Bryant this is a very well timed question.  I have heard of some agents locally that are being sued by their sellers because they had to sign promissory notes at closing.  I have also heard of at least one case where the deal did not get done with a negotiator.  There could be lots of liabilty to go around if agents don't know what they are doing. 

Posted by Donna Quanrud, Donna Quanrud Southwest Metro Homes (Coldwell Banker Burnet) about 11 years ago

It seems like they are charging you a lot for doing very little. I don't get it.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) about 11 years ago

parked.................. I have questions on this too. I hope Katerina chimes in.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) about 11 years ago

BB - You know how I feel about this.  So many of these companies sprung up recently.  My personal issue is that they don't have the homeowners best concerns in mind and are just looking to make money. 

I want to throw a different angle out for discussion.  I see a typical short sale handled one of two ways. 

  1. Send in the complete package and wait patiently for them to call back, or
  2. Send in the complete package and pester them daily.

Option 1.  Three weeks later you might find out that the lender is missing page 6 of the tax return.  You'll know only because you finally called and found out that the Negotiator put that in the computer notes (2 1/2 weeks ago).  You know it was in the package, you have a fax confirmation of all 70 pages, how could they possibly be missing one page, and more importantly "WHY didn't someone tell me you were missing this weeks ago?"

Option 2. Is the obvious preferred method however, how many real estate agents have the time or the energy to log countless hours on hold, wading thru phone systems, day after day?  You might be happy to do that.  Your mileage may vary.  However, multiply that work load not over just 1 file, but 50 listings?  Could you handle that?  Probably not.  Yet for most Agents, they could sign 50 short sale listings tomorrow (or within a  month).  Signing the Listing is one thing.  Doing what is right for that homeowner is another. 

Let's assume you operate by yourself using Option #2.  What's your case load going to be? 5 Listings?  10 Listings?  Assuming you can't help everyone, how do decide who to help and who not to help? 

On those that you passed up, some other Agent will do them (or they'll go thru foreclosure).  Chances are that the other agent isn't as conscientious as you are or would have been.  Is this homeowner going to be properly served?  Probably not.  They probably will be dis-served by the agent because they were using Option 1.  And because they (the other agent) did such a bad job we get to read and hear about how "All Short Sale Agents Suck!" in blogs and in the media.

The caveat here is buyer beware. And You, the Real Estate Agent are the buyer.  I'd like to say...

It's not the business model itself but the operators of that business. 

Unfortunately the comments here are going to be aimed more at the business model.  (Hi Lenn) Just like we know the statement "All Short Sale Agents Suck" is wrong, so too is this blanket statement.  Hey that sounds just like the housing / mortgage industry, eh?    Sorry for the long comment.

 Active Mike

Posted by Mike Mueller (Tech and Social Media Consultant) about 11 years ago

BB,  Like you I also like to have control of my transactions.  When you add someone into the mix, you lose some control.  It really depends on what you're willing to give up.  Some control or time.  Like Lenn & Neal stated, no they don't have to be licensed, but the money comes from somewhere and you no where that is.  It really all depends on how many short sales you are dealing with.  If it's not that many, you can do it yourself.  Sorry, but these companies only have their bottom line in mind and that does not serve the client well in most instances.

Posted by Marc Grossman, GRI, Greater Orlando Real Estate Broker (Marc It Sold!) about 11 years ago

Mike, I'm glad you chimed in. You I would trust. Others...not so much. BTW....having researchd it, as I'm sure you have, what about the licensing issue?

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) about 11 years ago

BB - very interesting discussion here, I will have to stay tuned in and see how others comment.

Posted by Petra Norris, Realtor, Lakeland FL Homes for Sale (Lakeland Real Estate Group, Inc.) about 11 years ago

BB - As for the Licensing Question.  That's a biggee  Not so much for getting it done but more for adding liability and fog to the transaction.  Let's say the company can negotiate (and in FL pretty much everyone can)  If that company screws up because they don't know a particular FL law it falls back on you.  To the homeowner we're all trying to help and do the right thing for, should that short sale negotiator who is NOT informed on the particular foreclosure laws of that state misinform or misguide that homeowner - it's the homeowner that loses.  I heartedly recommend using someone who is licensed and who understands the foreclosure laws in that state.  Not because the law says they have to be - but because they need to know the laws.  of course, licensing doesn't guarantee this, but it has to help.

Of all things I just answered the phone, it was an Agent in another state.

"What do you cost?"
"What's your success ratio?"
"We have so many deals we want to throw your way"

That's not someone I want to work with and I told her so.

 Active Mike

Posted by Mike Mueller (Tech and Social Media Consultant) about 11 years ago

Bryant my experience on any sales transaction, short sale or not, is that the more people involved, the more likely that mis-communication will take place and for something to go wrong.  Short Sales are a big enough pain in the donkey without adding to the possibility for more complications.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 11 years ago

Hmmm...I can see why "short sale negotiaters" have cropped up as a "profession" but I'm not willing to take the risk, even with one client that this person wasn't good at what they do.

If I had a lot of short sale listings, and I knew there was this great person out there who could help me negotiate them, I would do it. I mean many agents have assistants, so I don't see this as significantly different than that.  You are buying back your time while trying to give your clients good service.

For me, it's a trust issue though. If someone I trusted had a good experience with someone, then I would try it out.  I think it is kind of risky though.

Posted by Melina Tomson, Principal Broker/Owner, M.S. (Tomson Burnham, llc Licensed in the State of Oregon) about 11 years ago

BB, the high level of short sale activity has opened the door for a "middleman." I'm with you, who needs that?

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 11 years ago

BB, I JUST SAY NO. But I know others who are happy with them. One of my agents just got a short sale approval back today for one of his buyers and the listing agent is trying to charge the BUYER for the fee to the SS negotiator. He asks me if they can do that. I asked 1) was it disclosed in the MLS or some other document 2) did you or your buyer sign anything about that - answers to both: NO.

So why on earth should the buyer have to pay for this service?

It is getting crazy out there. I cannot believe the audacity.

And yes, SOMEONE is going to pay for the negotiations. What is it worth to you? I know I have 5-10 short sales pending sale at any given time and so I have my transaction coordinator handle a lot of the following up - to all parties.  That has helped a lot. Before I would spend a couple of hours a day pressing 1 2 and holding, getting hung up on, sending the same document (s) to 5 different fax #s, etc all while trying to handle other business as well.

I just don't like the NOT having control and passing it off to someone else. That's just me. And I have been successful with getting good commissions so far - don't want to jeopardize my pay or the buyer's agent pay - we have to deal with ALOT to get these things closed while keeping everyone involved happy and patient.

Posted by Susan Milner, Cape Coral Real Estate Broker, FloridaFutureAgents (Florida Future Realty, Inc.) about 11 years ago

BB - we have a 3rd party negotiator here and all their sales are falling through. Nobody wants to deal with them any more. I wouldn't want to give up control to these people if I were listing short sales.

Posted by Carol Culkin, Overland Park (Reece & Nichols) about 11 years ago

Hmmm- thanks but no thanks. With every calamity comes a new business venture and these so called short sale negotiators are, for the most part, trying to make a buck on someone else's misfortune. We just had a huge federal indicment in a nearby county where they preyed on the misfortunes of those going into foreclosure and ran with tha money. I know short sales are time consuming but if that is what you seem to be dealing with more and more you might as well become the expert yourself. Its a control thing you know. :)

Posted by Martha Brown, Your Homes Around Annapolis Agent (Long & Foster Real Estate, Inc., Annapolis MD 21403) about 11 years ago

As I said right at the start, this is going to be a hot button.  I'll reiterate my point.

It's not the business model itself but the operators of that business.

I know full well that we have some really smart, ethical people here on AR.  Many here will balk at all SS negotiators because of the lack of control.  To be successful in any business we must learn to appropriately delegate responsibilities.  Sometimes that means releasing some control.  As long as that control is released to someone of trust and capability - why is that an issue?

I was arrested for Drunk Driving (not really).  My court date is set for next week.  I have choices.

  1. I can represent myself.  (I don't know diddly squat about the law, but my tank top is clean!)
  2. or I can let the Public Defender represent me.  (He's over worked, and handling all sorts of cases ranging from Murder to Jaywalking - But hey, he's FREE! )
  3. or I can hire the best lawyer in my town.  (All he does is drunk driving cases.  He'll cost me a couple thousand dollars but then again, he knows what he's doing.  If the glove doesn't fit...)
  4. or I can hire that guy that lives above the nail salon.  (He's much cheaper than that other lawyer fellow.  And he guaranteyed he'd get all the charges dropped.  I wonder why he didn't spell guarantee right - oh well... )

We can all see the argument and the right answer in that analogy.  Yes, Short Sales are not drunk driving cases.  But giving up my control would be a good thing - as long as I made the right choice.

Given that you have a finite amount of people that you can help (if you do it all yourself), or given that should you work with the right Short Sale "assistant" and be able to help far more people, isn't the right thing, ethically and responsibility wise, to be able to help as many people as possible?  These people you help today will become buyers tomorrow (ok 5 years from now)

The agent who says "All of them are slime", might also agree that all Loan Officers are slime? Are all Real Estate Agents slime too?  Of course not.  Blanket statements don't hold water.

BTW: Love the debate!
 Active Mike

Posted by Mike Mueller (Tech and Social Media Consultant) about 11 years ago

BB - I'm beginning to think you and Jack are long lost brothers - he says the same things (p.S. He subscribes to you now and he doesn't subscribe to anyone - lol) Parked for more insight. Go Mike!!!

Posted by Cyndee Haydon, 727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes (Charles Rutenberg Realty) about 11 years ago

Really nice to have all the input here in answer to your post. 

Posted by Susie Blackmon, Ocala, Horses, Western Wear, Horse Farms, Marketing about 11 years ago

Too many cooks spoil the soup or should I say overbake the brownies?

Posted by Allison Stewart, St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904 (St.Cloud Homes ) about 11 years ago

I'm not surprised that a service like this would crop up because the process is so frustrating to all, and I'm not surprised that busy agents would want to jump at the chance to make life a little easier or move the process along more quickly. However, my opinion is that if someone has his or her hands in the transaction in any way that involves being paid for his or her services out of the commission...that person should be licensed. One thing I don't understand...why would the bank work with the negotiator any better than the bank would work with the agent they already hired to represent them?

Posted by Kelly Sibilsky (Licensed Through Referral Connection, LTD.) about 11 years ago

BB - never worked with one and don't plan to. But they are seemingingly becoming more popular. Are they successful? Does it make a real difference? I'm dubious. And as Lenn points out, the banks already are cutting the commiions as part fo the negitiations; why make rewsolving the money issues more difficult?

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) about 11 years ago

I've handled these things myself and as the foreclosure crises has deepened, I've found that the banks are getting better at being upfront and not playing so many damn games!  Therefore, since it's gotten easier, I'll keep doing it myself when the need arises.

Bob Mitchell

ValueList Real Estate Services, Inc.

Posted by R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham, Bob Mitchell (NMLS#1046286) (Bank of England (NMLS#418481)) about 11 years ago

Great discussion here and very important topic.  Personally, I wouldn't use someone but I must admit we have very few short sales here in the niche I work so I may have more time than you.  It still doesn't feel right that they get paid without a license...who pays them...it can't be a referral fee?

Posted by Diane Aurit, Lake Norman Real Estate (LKN Realty, LLC) about 11 years ago

Ooops...

I forgot all about you. Must have been the sugar buzz from the REAL Brownies :)

P.S. If they're taking part of the Commission...In my NSHO...It's WRONG. Just because they can...Doesn't mean they should :)

Note to whoever: NSHO = Not So Humble Opinion. If you knew me...You'd understand that one :)

TLW...ROAR!

Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) about 11 years ago

Mike, Sorry man!!!! I really was curious what folks thought and it looks like the responses are heavily weighted towards go it alone. I'm actually surprised about that. I think the problem is we are getting bombarded with solictations.

Great comments everyone!!!!!! 

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) about 11 years ago

Hi Bryant...

  • We now have companies that are better than we are at negotiating short sales.
  • We also have companies that are better than we are at generating leads for qualified buyers.

Well then, why don't they just become REALTORS and get the whole pie (commission) instead of just a piece of it.

We know how to negotiate a contract and we know how to generate business.  They are just middle men and I will not pay my money to someone else to do what I can and should be doing.

We have to stop supporting these third parties, that is why they are proliferating and making it more difficult for us.

I recently wrote a post about the lead generating companies because every time an agent signs up with one of them it creates business for the company and less for us directly.

You are an example of relying on yourself and doing it well.  We all need to do that.

Posted by Kate Elim, Realtor 540-226-1964, Selling Homes & Land a (Dockside Realty) about 11 years ago

Hi,

I am new to ActiveRain but not new to short sales. I have been doing short sales for 8 years, first as a investor buying properties for rehabbers, then as an employee of an investor.  I was paid to do short sales.  I have to disagree with the majority of the posts.  I believe that a short sale negotiator is an asset.  The fact that they have created relationships with loss mitigation negotiators is invaluable.  If they are perceived as diligent and hardworking their short sale packages have the advantage of moving to the top of the pile.  I am a short sale negotiator and I have the advantage of knowing the other side of the story.

My mother was until just recently as loss mitigation negotiator for Wells Fargo.  Each loss mitigation negotiator has at the minimum, 50 short sales on their desk at any one time.  They also receive bonuses based on how many cases they clear (i.e. get off their desk by refusing or closing).  If the loss mitigation negotiator sees a name of a company or person they trust and know will be diligent, that short sale gets attention.  How much is it worth to a seller to know that their deal is being looked at?

Dawn Uselding, Short Sale Negotiator

www.virtualshortsaleassistant.com

 

Posted by Dawn Uselding about 11 years ago

BB~I have wondered what the advantage is of having a Short Sale Negotiator.  The way I see it, my clients already have a negotiator....ME.....what we need is a short sale negotiator AT THE BANK!!!

I see that Dawn said that they have a way of getting the loss mitigators at the bank to notice them, and if that's true, more power to them, I just haven't seen that this is more than a great catch phrase.  If a short sale negotiator could tell me how they do that, I will be happy to listen.

Posted by Pam Pugmire, Meridian Idaho Real Estate (Silvercreek Realty Group) about 11 years ago

I work for a short sale negotiation company. I'm also a Realtor. My company was started by Realtors.We've never touched a commission, because we don't have to. We're paid on the HUDs when the deal closes, by the bank.

Our client is the mortgage holder....period We work with the Agent to get the short sale approved, and then it's up to the Agent to do what they do best. CLOSE THE DEAL..

 

Posted by Steve about 11 years ago

I have handled a few short sales as a Broker and really prefer doing the work myself, but I just did one and the bank GMAC refused to pay any fee for a huge amount of work. Does anyone have suggestions on how to get paid for doing this?

Posted by Rob Rose about 10 years ago

Unfortunately, I partnered up with a short sale negotiating firm.  I was drawn to working with them because of the professed '93% success rate'.  Well, let me tell you.....out of the 20 deals I have sent them, two have closed.  As a matter of fact, one of the properties was foreclosed on and I wasn't even informed. The rest were also lost to foreclosure.  Not quite a 93% success rate, now is it?  To make matters even worse, I had the hardest time getting information, updates, etc.  When I questioned tactics, I was denigrated and accused of not being a 'team player'. My telephone calls and emails begging and pleading for updates and information were all but ignored. When someone finally deigned to throw me a tidbit of an update, it was often nebulous or incorrect.  It was a terrible position for me as a Realtor and even worse for my clients.  It has been nothing but a nightmare and I will be the first to admit that this was the biggest mistake of my professional career.

I have worked a number of short sales on my own over the past year...with a 100% success rate.  Sure, it's alot more work, but it's worth it to me to provide the best possible service I can to my sellers.  Furthermore, I know exactly what's going on with my transactions and I don't have to beg and plead a third party for an update.

My suggestion to you--if you want it done right, do it yourself.  Stay away from those shysters.

Posted by Virginia Realtor over 9 years ago

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