BiggerPockets

Hi, I am considering putting an offer in on a home in FL that is listed for $120K as a short sale. The property was previously listed for $160K with no bites. In reviewing the tax and owners records no Lis Pendens appears to have been filed but I've been told by my realtor it is a short sale. I was told that the process to obtain an answer or counteroffer would take 60 days. The realtor also told me that the offer would be handled by a " short sale company" who specializes in negotiating short sales with the lenders. For this service, the seller pays a portion of the " fee" and I would be responsible for the balance (I'm told $1,000). I am hesitant about this as I've never heard of a fee being charged in these situations. Is this something new?? I googled short sales and did find some sites that listed short sale companies. I was just wondering if anyone has experienced anything similar.

Thanks for reading. Ingrid

Well the seller won't be paying anything if this is a short sale. The fee paid to the " short sale company" comes out of the listing agent's commission.

I respectfully disagree with mitch. I don't think that is what happened at all. I think that the agent has hired a short sale company and the short sale company charges a fee to negotiate the deal.

We can make comments all day long about who should and should not pay fees, but the bottom line is who will pay the fee. You never have to pay a fee, but if paying a 1% fee saves you 15% on purchase price then i would call it an investment (a very good one).

I use a loss mit. company to negotiate short sales on behalf of my buyers and sellers. So who pays the loss mitigation company?

The Buyer.

Overall, you shouldn't pay a fee for anything

Mitch, with no disrespect intended, but why wouldn't a buyer pay a fee for a service?

Every real estate transaction I do feels like I'm being nickeled and dimed by this fee and that charge. Seems to me that if the agent hired this negotiation, the agent should pay the fee.

Jon,

I couldn't agree more. As a matter of fact, i find this in almost every transaction, and I'm an agent. Therefore, the only ones I go through with are the ones that i can find and prove value to myself and to the customer.

Have you ever noticed that when banks list bank-owned property with real estate companies, they don't turn the utilities on? That may not happen everywhere, but in my area banks never turn the power on. In addition, the water has been cut off and the house has been winterized. As a result, the home appears completely distressed, even if the price does not reflect it.

The reason I bring this up is because a good agent will be able to sift through the good deals and filter out the overpriced, distressed garbage. And, in the process solve the customers problem, whether it's buying as a end user, selling, or investing.

In my opinion, there are many bad agents listing short sales, without knowing what they are doing, and trying to " negotiate" good deals with the banks. In that respect, I agree with the " too many hands in the cookie jar" sentiment. Any hand in the cookie jar that doesn't add value, is too many.

Ingrid, another option is to tell your agent that you don't want to pay the fee and that you will negotiate the sale with the bank yourself. If anyone is expecting a good agent to find deals, market property, show property, qualify buyers, communicate with title/mortgage/inspector, and negotiate with the bank themselves, then you are in for a let-down somewhere in the process. There just isn't enough time, knowledge, or resources for one person to do it all.

just my thoughts.

Charging the buyer a fee to have the short sale negotiated is almost like saying it's the buyers problem that the home is in short sale in the first place...

I don't think it's the buyer's problem. Quite the opposite, I think it's the buyers opportunity. Cupidity is motivating everyone...to include agents, buyers, banks, and loss mitigators. It's not the buyer's problem, it's their opportunity. And to your point, it's also not a " right" .

Why should he/she get paid a full commission for outsourcing work?

Full commission? I don't think banks are in the habit of paying " full" commission on short sales.

They buyer is already paying a fee for the agents to do their job...if they need to outsource...whose problem is that?

Again, I don't think it's a problem. And, I don't see this as a matter of right, wrong, equality, etc....I see it as a matter of value. For me, it's a matter of " is it worthwhile" ? As an agent, to do this profitably, you cannot be a jack of all trades. Although the commission dollars look huge (and easy), that's not the case. Like anything in life, you get what you pay for.

If it's a matter of frugality, then the buyer should:

1. conduct marketing
2. Screen inbound phone calls
3. Go on Appts
4. Qualify Sellers
5. Help Sellers with hardship letters, tax docs, pay stubs, bank statements, cc info, loan mod work sheets, financial statements, etc...
6. Analyze market data
7. Determine price point feasibility for banks and for buyers and for investors
8. Market to buyers
9. Buy signs
10. Buy lock boxes
11. Communicate with the bank
12. Negotiate the BPO with BPO agent
13. Don't forget the photos
14. Submit docs to bank
15. Communicate with Bank
16. Convince the Bank why they should take the offer
17. etc....

Truly, if they can do that and save $1,000, and that is their business model, then cool.

It is truly a matter of value, not justice or fairness.

Wow Mitch,

Seriously, I didn't mean to pick apart your post...truly.

I like listing short sales because I think it truly helps people.

I don't turn away any buyers. The offer for the loss mitigation company is truly optional. All offers get submitted to the banks, regardless of agreement to use a loss mit. company.

The best interest of my client is to get their home sold as quickly as possible. They know the process every step of the way. That's why I use professionals at every chance possible to ensure I give every opportunity for the deal to close.

I don't feel like arguing on some forum thread. Obviously, I wrote something that offended you. There were no intentions of this.

Later.

I have recieved information from a few "short sale" companies and one interesting thing that I have seen a few recommend is not putting the house on the MLS until negotiated. I have heard agent say the bank came back and said it must be on the MLS for 90 days first... any experience with this?

I have been involved in short sales for quite a while and many companies were quoting an admin fee + percentage of sale price or exhoritant fees in excess of $1500 per file. I was referred to and recently used a company that charged a flat all inclusive fee of $750.00 I was really satisfied with their performance. If you are interested contact me and I'll forward you their information.