For years many real estate agents avoided shorts sales like the plague due the difficult nature, complexity, and lowered commissions involved. But now, many are trying to do them because they cannot make a living without them in today’s San Diego real estate market. Some agents have found an even easier way to make money without doing very much work at all.
Recently, new companies have sprung up all over offering to negotiate the entire short sale transaction for a real estate agent, for a fee ranging anywhere from $1500 to 1.5% of the purchase price. This allows the real estate agent to a collect a large portion of a a traditional real estate fee, for doing almost next to nothing! What’s worse is some of these real estate agents are passing this negotiating fee on to any buyer who may want to purchase your home so they can collect the full real estate commission fee, for doing almost nothing!
Don’t be a victim of a real estate agent trying to pull this scam on you, too much of your financial future is at stake, and the chances of a successful short sale are greatly reduced.
Currently The San Diego MLS is taking action and putting in place rules against trying to pass this fee on to other parties, but agents are still trying to do it anyways. There have also been complaints sent and filed with HUD (US Department of Urban Housing) and it will be determined by them if it is ethical or legal to pass a fee on to a buyer by a real estate agent who is essentially doing nothing to earn his commission.
Don’t fall victim to this model of buisness. It is my professional opinon after years of doing hundreds of short sales that you should work with a real estate agent that has the experience and knowledge to handle your short sale themselves. Many of these third party negotiating companies or individuals are not even licensed. They have no fiduciary obligation to you as a home seller, and have no real interest in fighting for you to get the terms approved you need. The real estate agent doesn’t care if your home sells, because they haven’t put any money or work into the short sale. Also many of these third party companies are brand new and didn’t even exist 12 months ago, so they lack the experience
On top of that, to require a buyer of your property to pay for a third party negotiating fee, will drive away buyers from your home, and cause all kinds of problems with their loan, while in escrow, because they have to pay more money out of pocket.
In time, I predict that this model of doing business will go away, as it will prove unsuccessful and non lucrative. But the laziness and greedy nature of these real estate agents, will cost many home sellers their credit and embarrassment of having a foreclosure on their record.
If your agent tells you they use a third party negotiators, be sure to ask them this question…”What do I need you for then?”
Kurt Wannebo
San Diego Real Estate and Investments
www.shortsaleinsandiego.com
I’m very interested on how you managed to get BAC to change this language. My short sale approval just came in (in North Carolina) and we were very surprised by the deficiency language – it was the first we ever heard of it despite our understanding that the cash payment we are bringing to closing would be in leu of a promissory note or a deficiency. We still have time to salvage the deal (closing in 2 weeks), but i will not sign off on what could be a $400k liability down the road.
PLEASE let me know when your blog updates.
Daniel,
If you are talking about the CW / BAC approval, without the deficency, I will reveal this next week. It does take time and is complicated. We went 3 weeks past the original approval date, to get this deficiency waived, and had to get another approval. So stay tuned.
I agree with not paying the fees for outside services…however there are agents that have outside Short Sale Attorneys on retainer and the fee is well justified. We have not seen a buyer shy away from such a nominal fee for a home that is approved at better than fair market value. The cost of moving in today outweighs saving $1000 to wait months to find the next home.
Max,
I agree with you in the instance of using attroneys. As banks are getting more and more agressive in not releasing deficeincy for the sellers, it is becoming more and more important to team up with attorneys to get proper negotiatons done and get sellers released from having to pay the banks back. When i wrote this article it had more to deal with the low level negotiation companies that are start ups, who simply go through the motions of performing the short sale and releive the agent from taking any action in the transaction. Many of the 3rd party companies are starting to die away (as I predicted) and many attornies are jumping into this business because of the level of expertise that is required to get the defiencies removed, and I am all for that if these banks are going to start playing hardball.
I am an agent. Last year, I closed 15 my short sale listing. I could not focused on my other business because of my short sale.
Do you know any company will work for short sale deal for agent?
Please let me know.
Kay
kaykim@cbss.net
404-388-1116