I recently drove by a distressed property with an agent's sign in the yard. I pulled it up on the MLS and it seemed to have potential for a fix & flip, so I called the agent and scheduled a showing. After seeing the inside I confirmed that by my estimates it would be a good deal if I could get it at about 90% of asking price. During the showing, I learned:
-The property is in foreclosure and the sale is scheduled for just 11 days away; one sale on the courthouse steps has already been postponed from last month.
-The agent said there had been a previous SS deal that fell through due to buyer issues and so she (or rather one of her co-workers) had a good idea of what the bank (WF) would take. If I talked to him, he could give me a good idea of how low an offer the bank would likely accept.
-The agent said her company charged a $5000 buyers premium on short sales. I asked if this was in lieu of a commission or in addition to it. She said she didn't know and would have to check(!) This is the AGENT saying she didn't know if there was a commission or not! In fact she seemed a little clueless and spent most of the showing tapping away on her phone.
-The showing occurred on a Friday and the "man in the know" wasn't available until Monday. I needed the weekend to think about it and fine tune my numbers anyway. On Monday I talked to the agents associate and he told me a number he was confident the bank would accept, it was about 93% of list price.. I told him that it was close to what I was willing to pay and I'd like to put in an offer.
-He then explained to me that his role in the deal was "negotiator" and that he got a flat fee of $5000 which is in addition to the agent's commission of 6%. The Purchase & Sale agreement he was sending over would indicate a sale price of my offer minus the $5k negotiation fee.
-The deal still makes sense even with the fee if the bank & seller accept my offer which is only a little below what they apparently accepted before. I'm prepared to put in a cash offer, close in as little as 8 days (which is 1 day before the scheduled foreclosure sale), and waive all inspection contingencies except for the requirement that the property be in essentially the same condition at close as it is now.
-Also, the seller/owner is apparently passive in the deal. The agent and the "negotiator" both said she would very likely agree to any contract they brought her and that the lender was the only one that was an issue. BTW, list price is about 74% of the outstanding mortgage principle.
OK, so lots of backstory; here are my questions:
-This is my first SS. Although I appreciate having some help negotiating the sale, especially with what seems to me an impossibly short time-table, I feel like $5k (around 8% of offer) is overpaying. Where did I go wrong and get corralled into working through this "negotiator"? The agent directed me to him when I indicated I probably wanted to make an offer. Also, now that I realize the lender is going to see an offer 5k less that my actual offer, I'm skeptical they will accept. I feel like I would have a better chance of getting the deal done if I was dealing directly with the lender. Even though I don't have any experience working a SS, the extra $5k in the deal would probably compensate.
-From what I found in the forums, this is way more than is typical for negotiating a short sale. In fact, if the bank counters within of couple k of what I offered, I think I'm going to suggest that the "negotiator" or agent (that doesn't have to split the commission) kick in the difference to make the deal happen. What do you think?
-Is it realistic to think this could go through with such a short time-table? I doubt the lender can get their ducks in a row that quick, but "negotiator" said that having a solid offer with a close before the sale date could clinch the deal.
-Would I be better off waiting for the foreclosure sale and either buying it on the courthouse steps or making an offer directly to the lender if/once they gain possession (very likely they will gain possession if they bid close to the outstanding principle balance)?
My apologies for such a long post. I appreciated any and all comments and suggestions regarding this short sale deal.
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Your short sale will not possibly close within 11 days, no matter the circumstances, even if you are nailing the bank's exact number. While possible the bank would delay the auction with a solid looking deal, it's highly unlikely this close to the auction. Yes, $5,000 is much too large of a fee, more like $1,500-$2,000. Apparently the listing agent has convinced the seller to agree to using this person. You could put in a contract, just to make sure no one else could do it and possibly get the auction date extended, then bid at the auction. I'd normally suggest using your own agent, but since this contract will likely never close, I'd go ahead and waste the time of the clueless agent that showed you the house.
Is it possible to put in an offer with two options? A higher offer not deducting the add'l agent fees. And a lower option with the agent fee deducted. I don't know that the agent will present it but it couldn't hurt. I think you'd probably be better off though trying to get it at courthouse steps.
There used to be someone that did short sales on BP, I haven't seen her for a while, but maybe she will see this, @Monica Breckenridge ?
What ever you'll need to pay, do Not include it in the contract offer price. The bank will not pay it, and won't agree afterward for a reduction. They will simply accept the higher offer price ( if it meets their net) and deny paying the fee. The bank look at two different offers, they only look a sogned pirchase contract, submitted by the negotiator. Make your contract price whatever it is, with you paying the fee yourself, in addition to.
Hi John: we will be closing on a Short Sale property shortly. We had the offer in, accepted with little re-negotiation within 1 month of the initial offer. The whole thing went fast track because of listing agent being a CDPE certified and had lot knowledge & experience dealing with Bank negotiators/investors, how to reach bank by twitter for quick response etc. He had a good idea of what the bank were looking for/earlier BPO etc. We did not pay anything from the pocket for the negotiation. I would also google shortsalesuperstars..lot of information there also.
All the best.
A little new information has come to light. I'm not sure what they told her, but apparently the agent and this SS negotiator found this seller and got her to sign an exclusive listing agreement. Agent isn't presenting anything, everything is going through negotiator.Negotiator presented the offer with his $5k fee included and my offer price reduced by his fee. No acceptance or rejection from lender, and negotiator thinks they still might postpone the sale and try to work this deal. I think he's nuts. I'll go to the sale tomorrow, but I expect lender to bid close to what they are owed and get title. If I still want it at that time (have another deal in the works), I can try to get it as a REO without the silly negotiator.
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