Short sale negotiations

[Jairo Freyre]

Hello,

I have been studying up on negotiating short sales and already have a client that will allow me to negotiate the structure on the property. My question is, is there a conflict of interest with me negotiating the short sale and also purchasing the property? If so, would it be better to set up a different company that handles the purchase and consequent sale of the property or, should I just have a realtor list it while I collect a negotiation fee? Any advice would be appreciated. Thank you.

FYI this deal is in Texas if that makes a difference. 

[Kim Knox]

Yes, a conflict exists.  You will be asked to sign an "arm's length transaction" document by the short selling bank, which indicates that you are not collecting any money that is not disclosed in the contract.  You are much better locating a listing agent for the property BUT, a listing agent (and Seller) will be required to have the property active on the market for a certain period of time.  Meaning, you might not be the person who gets into contract with the Seller.

Further, in Oregon, a real estate agent can't pay anyone a negotiating fee except an Attorney or a fellow Realtor.  PLUS, if a Realtor hires you as the negotiator, it could be argued that they are not representing their client by recommending a non-experienced party be the party to negotiate with the bank.  Short sales are much more complicated than you are expecting.

Not only do you have to sign the arm's length affidavit, but so does the Seller and the Real Estate Agent(s).  All parties would be subject to fraud charges if you are the purchaser and collecting money on the transaction.  The Listing Agent and Seller would be subject to fraud if they didn't have the property on the open market.

Further, even if you were a licensed Realtor, representing yourself, you would (often) be ineligible for collecting a commission for representing yourself.  Banks don't consider that discrimination because we (Realtors) are not a protected class.  Many Realtor's who are purchasers do not represent themselves in short sales for this reason.    

Any company that is involved with a purchase is required to provide articles of org as proof of the signing parties and company structure. Meaning, starting another company will not stop your relationship to the transaction from being known.