Realtor Short Sale Leads
Real Estate Investor · pittsburgh, PA · Member since 2008 · 13 posts · 0 votes
I'm trying to get short sale leads from realtors. I buy short sales from the bank and resale them using a double close to a new buyer for a profit. I use the realtor to look for buyers as I'm negotiating with the bank for a lower price.
But can I contact other realtors who don't have short sales listed and have them search the MLS for me to find short sales? How would they get compensated?
Thanks.
I have a realtor send me an email daily with all short sales lisitngs in my county. They can put you on an automated email list with your criteria. You compensate them a % or fee, its your decision how you want to work with them. Just keep in mind, you want to build a team and want people who will want to work with you and give you plenty of leads. Make it a win win situation for everyone. Hope that helps.
Thanks Bridget,
Would 3% commission be too much? I'm just getting started doing this and really need some more leads.
Thanks.
If you get a listing from an agent, their commission will be paid from the seller. 6%, split between the listing agent and the buyer's agent is traditional. Banks will often clip that back a bit for short sales and REOs.
Sounds like you would want to turn around and re-sell the listing with a realtor, too. That's unusual, because most realtors deal with retail buyers, and getting conventional funding for a double close is tricky. Better to sell to investors who are using cash or hard money. But, if you can make that work, I'd find an agent you can work with and negotiation the commission structure up front. At the simplest, its two transactions, so there would be two commissions. Paying 12% out of the deal would be a killer, though.
I get an agent to fax me an offer of a short sale that is already listed on the MLS. The original listing agent gets 3% from the seller. I option the property and have the listing agent continue to list it on the MLS to find a buyer for me while I negotiate a reduced price with the bank. At the double closing I purchase it and immediately sell it to the end buyer. Doesn't the listing agent just get his 3% from the seller and 3% from the buyer and I give a finders fee of 3% to the agent who originally faxed me the MLS listing? That's a total of 9%. Is this correct?
Stephen, I'm currently working one of these exact deals as a Realtor.
I'm the listing agent on the property. I found a buyer who is an investor and he put the option contract on the place and is curerntly negotiating with the bank. While he's negotiating his deal with the bank, I'm continuing to market the property. A Realtor in my office has found a buyer and wrote a PA. That PA is contingent on the short sale being approved with the seller (which he doesn't care what the price is - he wants out) and the lender. The property will double close since the end buyer is an investor too.
Since this is a small deal, the commissions are all a straight $1000. Even with 3% it'd be the same principal.
For the first transaction:
- $1000 payable to the listing agent
- $1000 payable to the buyer's agent
(both are me in this case)
For the second transaction:
- $1000 to the listing agent (me)
- $1000 to the buyer's agent (agent in my office)
I'd still be 12% if you added up the percentages.
First off, you can sell to end users so long as all the disclosures are made to the end buyer's side, including their lender. The sale is subject to you receiving title to property.
As far as commissions to the agents, if you use other agents to find you short sale listings (they are not the listing agent) have them compensated by writing the offer to the list agent to represent you (even though you will work the short sale negotiations). This way, your birddog agent gets the 3%, the list agent gets their's, and then the list agent can double dip by finding you an end buyer before you find one yourself. The birddog agent can also search for an end buyer to double dip. This way, the total max commissions paid are 9%, rather than 12%
Just wanted to thank everybody who replied. It solved the problem I was having understanding how to do this.
On the A to B transaction, the listing agent "Sally" gets 3% and the buyers agent "Christine" (my friend) representing me gets 3%. The lender will be paying this commission so they may or may not try to knock it down.
Then on the B to C transaction where the original listing agent "Sally" is now listing the property for me, I was going to pay just 3% to whomever brings a buyer to the table. So if Sally is able to find a buyer for me then she has an opportunity to make another 3% on the B to C.
I'm under the impression that if the lender sees 6% going to the same agent (if the agent is representing both the seller and buyer in the A to B) then they will try to cut that down, so using a separate buyers agent (my friend) on the A to B will decrease that likelihood.
Let me know what you guys think. Should I be offering 1% to the listing agent on the B to C?
It's sort of like 2 transactions for one deal. S
I got a short sale going without any realtors and am busy trying now to sell it.
But I think the beforementioned idea is good:As far as commissions to the agents, if you use other agents to find you short sale listings (they are not the listing agent) have them compensated by writing the offer to the list agent to represent you (even though you will work the short sale negotiations). This way, your birddog agent gets the 3%, the list agent gets their's, and then the list agent can double dip by finding you an end buyer before you find one yourself. The birddog agent can also search for an end buyer to double dip. This way, the total max commissions paid are 9%, rather than 12%
Can't you just get on the listing agreement as an option holder and have all other offers brought to you? That way you only pay a total of 5-6% commission?
Hi Alex
So are you saying on the A - B transaction:
- Listing agent would get 3% commission paid by Seller (lender)
- My Buyer's agent would get 3% commission paid by me
On the B - C transaction:
- What ever agent brought my end-buyer to the table to buy would get the 3% comm.
So the the Investor would pay a total of 6% commission in this scenario and if I had no buyer's agent to represent me, I would then pay total of 3% commission? Thanks.
LuckyOne-
I think Alex meant to say that no commissions are being paid on the A-B side. It is treated as FSBO.
The listing agreement is for the B-C. The listing agent recieves 3% and the end buyers agent recieves 3%.
Total commissions paid after both deals is 6%.
The concept behind giving the agent 9% is that then he is eager to work with you. And it helps recruiting other agents to work with you and essentially also provide the buyer. Sure you give up a few points but you gain their loyalty and eventually make more money.
Thanks Justin and Stephen.
I'm new to short sales.
So you are saying on the A-B side you get your own lead with NO realtor involved, right?
Is it better to
(1) find your own leads
(2) use a buyer's agent
(3) contact listing agent directly
I haven't been successful yet directly contacting the listing agents with short sales with my benefits to their client and the realtor.
In states such as Maryland there are very restrictive laws regarding investors/foreclosure consultants contacting homeowners in default. Maybe I will look in other states.
Thanks for all your help!
This is exactly how we do it when agents bring us a deal and the agents love it because they're going to make more money, have our team do all the negotiations and they know that we'll stick around and be able to deal with uncooperating 2nds and other liens.
Moe
Great post Moe, got my vote.
Thanks Moe for the great informative post!
Does anyone here actaully do short sales in Maryland?
Some agents tell me that all the shorts in the the Maryland MLS have either attorneys or agents doing their own shorts.
Thanks.
Hey Moe, good post, but I think it will be very difficult to find a bird dog agent willing to stoop to a $500 referral. I'm not sure how things are like in your neck of the woods, but Orange County agents expect 20-50% of a 3% commission as a referral, so it would be very difficult to find buyer's agents who would settle for a fraction of that.
Just wanted to clarify if you negotiate all these short sales yourself? That seems very time consuming-- wouldn't it just be easier to find a listing agent who is adept at short sale negotiatons, pay off the current listing agent at 1% and let them go down as co-listed, and let the new listing agent (who ideally has an in-house buyer's agent) double dip? This would free you up to invest your time in finding more deals, no?
If any of you short sale investors need funding to close your A to B transactions with the banks, I can assist. I do transactional funding for many BP members already. Send me an email or PM (my email is in my signature and my profile)
Hi Hazel
In your post you mentioned
"find a listing agent who is adept at short sale negotiatons, pay off the current listing agent at 1% and let them go down as co-listed, and let the new listing agent (who ideally has an in-house buyer's agent) double dip? This would free you up to invest your time in finding more deals, no?"
- Could you please explain what you mean when you say pay off the current listing agent 1% and let them go down as co-listed?
- Are you saying to pay the original listing agent to give up their listing and find another agent to do the neogotiations?