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The Hagley G…, Real Estate Pro in Pleasanton, CA

Tips on negotiating short sales with lenders

Asked by The Hagley Group, Pleasanton, CA Fri Aug 24, 2007

Any tips on protecting our commissions? I am working on two right now and it seems like our commissions are the first thing they target.

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Hi Cindi. I recently attended a short sale class and there was a lady whose business it was to assist real estate agents with short sales. Basically she conducted all the negotiations with the banks and put the short sale package together. She reported that she was typically able to save the agents' commissions at a standard level. That does not mean that the banks won't try to cut your commission. You may have to give a little bit, but if you stand your ground, they'll back off. One of the things you have to remember, a lot of the employees that handle the short sales for the lenders are inexperienced as lenders are hiring like crazy right now to cover the influx of short sale files. I also don't believe that the higher commission will in the end tip the scale. They try to rattle your cage and bank on you fearing that the short sale will fail because you were not willing to lower your commission. The reality is that most short sales don't go through and I can assure you it's not because of the commissions. Good luck with your short sales.
0 votes Thank Flag Link Fri Aug 24, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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UTE
So the Realtor hires someone to do all the Negotiations and all the Paperwork. That sounds like the Realtors job? How much do you have to pay her? Do you still have to pay her if the deal Falls Through?

Even though Cindi gave you best answer, I have to disagree with your statement that "the short sale lenders are inexperienced" The Loss Mitigators I have met are very savvy, and very experienced. I would not play poker with them. As for your statement that " Lenders are hiring like crazy" All I can say is tell that to that to the 56,000 that were laid off in the last two weeks.

Cindi correct me if I am wrong, what am I missing?
1 vote Thank Flag Link Sat Aug 25, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
In my experience there are many ways to protect agents commissions on Short Sale transactions. One simple way to do this is to raise the net offer to cover the commissions if the bank is being stingy about allowing commissions at their full price.
0 votes Thank Flag Link Mon Dec 14, 2009
I have participated in two short sales. The first one was with Chevy Chase Bank in Md. The loss mitigation specialist was professional and cooperative. We focused on working together to find the maximum market value for the house and getting it sold. I think it helped to set the tone that I was fully prepared with a detailed analysis of the particular property and the market area. My commission was never discussed and was paid without any objection. My second experience has been with an unnamed lender bank, one with no bricks & mortar branches. The was no loss mitigation department. My client had no luck with them at all and then handed it over to me. What I discovered was that the person on the phone did not even know what a short sale was until I explained it to him several times. He kept thinking that I wanted to get a loan and tried to refer me to sales. Finally I got him to get through to a higher authority. Then he told me that they do not do short sales . . . ever. The deal failed and we are trying something else. Now I see that same bank trying to hire loss mitigation people. I think this is a learning experience for many of us, including the newer crop of lenders who have never experienced a down market.
0 votes Thank Flag Link Tue Aug 28, 2007
My point exactly..Thank you.
0 votes Thank Flag Link Tue Aug 28, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
Patrick. No offense intended. Not sure what putting my answers side by side will tell me. Sarcastic is rough around the edges to me. It's just a personality thing and I don't mind it if you don't. Written statements will always be taken more literally than when you speak to someone in person and you can see the facial expressions that go along with what's being said. Yes, you are stating the facts the way you see them. What's fact to you may not be fact to someone else. We can disagree to disagree and live happily ever after. This thread is meant as a healthy exchange of opinions and it would be pretty boring if we all just agreed on everything.
0 votes Thank Flag Link Tue Aug 28, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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Ute
Rough around the edges? Not really. Sarcastic yes. I am just stating the facts.
Print off both your answers and put them side by side.
0 votes Thank Flag Link Mon Aug 27, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
I've never had a lender ask to cut commission? They know we are valuable to the process. In fact without us it is unlikely they'd get the sale done. If anything Realtor fees should perhaps be higher on short sales due to the amount of work involved. I'd guess double versus that of a typical sale.
0 votes Thank Flag Link Mon Aug 27, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
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Patrick. I am not advertising that a realtor should hire someone else to do the negotiations. I agree with you. That's the realtor's job and I would not want someone else do my negotiations. I only mentioned what I learned at a seminar and I have no idea how much you have to pay her and if you still have to pay if the deal falls through. My guess is that she's asking for some payment in advance. I did not ask because I had no intent to hire her. As far as lenders hiring is concerned. Needless to say, there were a lot of lenders that went out of business or stopped accepting applications and they laid off a lot of people. That does not mean that there are not lenders that hire people to handle the short sale applications. I like your to the point approach. A little bit rough around the edges but at least you don't beat around the bush or hold back. I am glad your experience was with savvy employees and I am not saying that they are all new and inexperienced. When did you try to negotiate your last short sale. Maybe things have just changed a little bit. I personally hope you are right.
Web Reference: http://www.go2kw.com
0 votes Thank Flag Link Sun Aug 26, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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I'd also be interested in hearing recommendations from agents who have taken a course (in-class or online) on Short Sales that has been tailored or designed with the real estate professional in mind.
0 votes Thank Flag Link Sat Aug 25, 2007
Vicki Masell…, Real Estate Pro in Duluth, GA
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I haven't had that experience. I ask up front before I even get the package, "what commission do you pay?" It has always been 5 or 6%. Depending on who you are assigned as the "negotiator" counts for a lot...sometimes you get someone who just won't budge and unfortunately I had one go to forclosure because the bank wouldn't accept a great offer...of course they had zero bidders at the forclosure sale and they will lose a tremendous amount of money. That was a negotiator who refused to negotiate.
0 votes Thank Flag Link Sat Aug 25, 2007
Disclaimer - I have had no luck with the bank. I do not know if you are the buyer or seller.
Build your case, build your value. Show them all the work you have done.
If you are getting a great deal for the buyer, ask them to make up the difference?Maybe?
If it is a short sale and the seller will be repaying the balance( Don't Laugh) Than it is the seller who is paying. Build the Value. Negotiate in .10 of a percent. I don't think the bank will do anything worth while until just before the Foreclosure.
Good Luck Keep me posted.
PS don`t forget to try and get some REO business while you are there
0 votes Thank Flag Link Fri Aug 24, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
cindi....you might want to check out this thread on short sales. http://www.trulia.com/voices/Tech_Tips/What_percentage_of_Sh…
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Fri Aug 24, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
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