Short sale upfront fee?

Asked by Mdn31, Milwaukee County, WI Sun Jan 29, 2012

After months of lamenting, searching, and researching, I think I have narrowed down a couple of Realtors for my short sale listings. Most Realtors in my area charge an upfront fee of 500-600 dollars. Since I will be doing two separate properties, I would be looking at a hefty 1000-1200 upfront. That is a lot for someone struggling. I did find one agent who does not charge a fee. She is from Keller Williams. The other one, from Re-Max, does charge the fee but seems to be a bit more aggressive. That said, I don't want to base my choice on fee/no fee, but I would rather base it on who is better. It is a tough call. Does anyone know why this fee is charged? I think it is legal in WI, but do I need to be leery of the Realtors who ask for it? Or perhaps I will get better service from someone charging a fee? Is it negotiable? Any other thoughts are appreciated. Thank you.

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8
Annette Law…, Agent, Palm Harbor, FL
Sun Jan 29, 2012
MDN,
Short sales are a real burden to everyo ne involved. In the Tampa Bay area of Florida, only 25% of listed short sales actually close as a short sale. That means, 75% of those homes which consumed so much time and resources resulted on nothing more than lint in the pocket. As banks continue to place obstacles in the path of buyers and sellers, the cost recovery aspect is a real and critical part of being in this business.

What you should be looking at is sthe strategy these agents will implement in regards to the sale of your home. The more comprehensive the strategy, the more predictable the outcome. If it's just a sign in the yard and entry into the MLS, you've not found the right agent. I know, it is easy for me to say, but you must focus on the outcome, and not so much on the fee.
I wish you the very best outcome.

Annette Lawrence
Broker/associate
ReMax Realtec Group
Palm Harbor, Fl
727.420.4041
Web Reference:  http://www.mydunedin.com
1 vote
Debby Thomps…, Agent, Wauwatosa, WI
Mon Jan 30, 2012
I have also heard of agents charging an up front fee to do a short sale. I would perfer to make sure that the short sale is going to go through. Many times the lenders will not pay certain fees that are associated with closing the deal. Seller are asked to cover these fees. But to do that up front I guess would be at the agent decision. I agree with you that you need to look for an agent that has done short sales. Even as far as the buyers agent. Short sale are a whole new ball game and not everyone is in for the long hall to get it done. I would interview you first to make sure that the short sale is going to work. so sellers do not understand that they have to have a reason for a short sale. It can not be that the home is worth less then what they paid for it. Reason meaning a hardship. Heath, loss of job, reduced income.....and so on.
Debby Thompson
Homestead realty Inc
Milwaukee WI
0 votes
Alain Picard, Agent, Puyallup, WA
Sun Jan 29, 2012
Some agents charge fees upfront and some don't. If you call around you should be able to find a good agent that doesn't charge you anything upfront.
0 votes
Carol Perdew, Agent, Manteca, CA
Sun Jan 29, 2012
Hello,

Short sale transactions require persistence and strong negotiation strategies to achieve success. The banks seem to be trying to get systems in place to help make the short sale process be a smoother. Short sale banks prefer working with the sellers and their real estate agent over 3rd party negotiators.

Sellers who consider selling a home as a short sale should interview several agents and ask for recommendations from their past short sale clients. Real estate agents that take classes and earn short sale designations help them become a short sale expert. Ask for referrals from your friends and family of an agent they have worked with on a short sale.

In our market, agents are not allows to collect upfront fees on a short sale. Real estate agents are compensated by the real estate commission on the sale of the home. The agents earn their commission because buyers may back out causing the agent to have to find another buyer for the home to sell. Short sales can be challenging and working with the bank can take time.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
http://www.CentralValleyHomes.com
DRE 985176
0 votes
Susan Rahn, Agent, Fitchburg, WI
Sun Jan 29, 2012
why the fee is charged: many short sale agents that charge an upfront fee do it because it will cover their upfront attorney costs when using a 3rd party negotiator. but some agents may have a low closing rate with short sales so may be charging the upfront fee so that they know their marketing costs are covered. so, ask what that fee is used for. if they say anything other than upfront fees they would have to pay to a 3rd party negotiator/attorney you should consider a different realtor.

Is it negotiable?: everything is always negotiable.

Better service?: Ask for their stats with short sales: how many have they listed in the last year, how many have closed. ask for their process (you don't want to list then find out they want you to pay for various things during the transaction). find out if they have someone they can go to if a problem should arise that they have never encountered.
like you said, you want to base your decision on who can get the job done.

I hope that helps....
by the way.... I am mainly in the Madison area but my team does a lot of short sales, and very successfully (without a 3rd party negotiator and no upfront fees).
if you have any additional questions please don't hesitate to contact us.
0 votes
Christopher…, Agent, Methuen, MA
Sun Jan 29, 2012
You should be able to find an agent that will help you on a commission basis. Commissions and fees are negotiable. Short sales can be very difficult depending on the bank holding the loans. Ask the agents if they negotiate with the banks directly or if they use a third party negotiator. Either way can work, but you want to make sure that you have a strong negotiator communicating with your lenders. If there is a third party negotiator they usually negotiate their fees with the bank as part of the process. Also, ask the agents to share their experience with short sales with you. How many have they closed successfully? Ask them to show you some of their closed deals.
Web Reference:  http://teamlefebvre.net
0 votes
Jim McCowan, Agent, Arlington, VA
Sun Jan 29, 2012
I've never charged an upfront fee in almost 10 years. Guess things are different there!
Web Reference:  http://www.JimMcCowan.com
0 votes
Scott Godzyk, Agent, Manchester, NH
Sun Jan 29, 2012
Not all agents charge an up front fee, the fact that an agent not being paid up front may work harder to get get an offer, approval and sale so they do get paid. Some agents charge a fee as it is hard work, i do not charge an up front fee. I also hire an attorney to negotiate teh short sale who gets a percentage of muy commission only if it gets aproved and closes. You should look for an agent who is local, is WELL experienced and will not charge you up fron, especially for 2 listings.
Web Reference:  http://www.ScottSellsNH.com
0 votes
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