As a Realtor (and a CPA), I used to negotiate all my own short sales, and had an almost 100% success rate. About 2 years ago, I started using a 3rd party negotiator - a local law firm. My success rate has dropped significantly, in fact, lost 4 transactions yesterday because homes have been referred to Master in Equity for auction. We have had offers on these homes for a few months, documents have been submitted, and no negotiator assigned.
My frustration is that I NEVER hear from the 3rd party negotiator unless I call or email them. Frequently, I feel like I get stonewalled, or excuses. I believe in reality that the firm's two negotiators are overwhelmed with the workload, and have inadequate resources to keep up with them. Further, they are employees, who get paid regardless of whether or not the transaction closes, so are not NEARLY as motivated as either myself or my clients to get these transactions moving.
I think I can be more successful at negotiating / closing short sale transactions, but as a Realtor, I do not get paid for the time involved. But likewise, can not afford to keep spending time marketing short sale properties, negotiating offers, and having them fall through, unclosed.
Any one else facing the same dilemma? Any ideas, comments, suggestions?
Just curious what is the ongoing rate for a "small base + per file bonus?" Or what are you paying your in-house negotiator?
So between $14-$17/hour + $100-$300 cloing bonus is average out there?
I'd agree whole-heartedly. Every time I've tried to out-source this, it's been a disaster. On several files where my buyer was purchasing a short sale and the processing was out-sourced, the results were terrible. It's a supply demand issue, the price to the listing agent is $0, so they get very high demand, then they get over-whelmed.
I quit using a 3rd party when they were harder to get ahold of than the negotiator at the bank!
Some company's out there actually take pride in communication and their work. It's unfortunate that many don't. I manage a team of guys who handle transactions nationwide and it's mandatory to update agents on a regular basis. No upfront fee's. We need the deal to get closed or we don't get paid.
I hear you loud and clear. My partner and I started a 3rd party negotiation firm because every realtor and lawyer we had dealt with before wasn't able to communicate what was happening with the file. First, lawyers typically get paid either way, so the firms I have dealt with just didn't have the motivation, OR they got paid at closing but weren't set up to communicate effectively with buyers or sellers, and we were constantly callling them to find out what was happening with the file. Lawyers are processors. They don't really negotiate. They have someone else in their office submit the paperwork and it's hit or miss. They dont' work with agents on how to structure the sales, they don't advise how to set up the BPO walk through, they don't know how to pull comps etc.
When we had several failed files with others negotiating, my partner and I started our own firm and now we are hands on with every file. Every person gets weekly updates, sometimes several times a week depending on the activity of the file. We have instructions on BPO's, pricing, MLS set up, we involve attorneys to review contracts, pull title but we are in charge of the files.
It sounds to me like you're working with a processor who may review contracts but not really have a vested interest in closing these deals. You have to INTERVIEW 3rd party negotiators just like anyone you would hire. My biggest questions are, how many approvals have you gotten and what is your average time from submission to approval, oh, and of course, how many have you not been able to successfully negotiate.
You don't have a good negotiation firm. that's clear.
I believe most of the 3rd party negotiation firms do not have the follow through necessary to be as successful as you.
I think you have 2 options, have an assistant negotiate them for you, that way you can see the results, you could also do it with another junior agent for some smaller portion of the commission. Or create your own negotiation firm and collect the negotiation fee from the Lenders.
I am an attorney and I do foreclosure defense work including negotiating short sales in MD, DC and VA. I have completed over 500 short sales since 2008 and I have only had about 5 not go to closing. It amazes me that real estate agents want to (1) spend the time making phone calls and chasing paperwork rather then engaging in money making activities (2) would risk the liability of being accused of the unlicensed practice of law, in particular when there is a deficiency balance that is not forgiven in the short sale (3) if a client is unhappy with the result and decides to sue, E&O insurance will not cover a real estate agent for negotiating with lenders, even if the agent calls it "facilitating." Discussing hardship, borrower financials, repayment plans, and settlement offers is not a normal and customary part of being a real estate agent. (4) is the agent going to represent the seller in mediation or try to stop a foreclosure.
My firm as involved with the foreclosure prevention project here in Maryland, we have all worked in weekend workshops with homeowners going over their documents and trying to determine the best options. If you want to protect the rights of your seller, the best thing you can do for them as a real estate agent is to refer them to an attorney if they are behind on their mortgage. The banks are being sued, the brokers are being sued, you do not want to be next.
We communicate with all parties every week. The attorneys handle the files themselves - not a processor. I go to mediation with my clients in DC and MD. I negotiate off the HOA liens, the credit card judgments, the IRS liens, etc. My hope is for the borrower to come to the table with nothing. I do charge my sellers a fee, but it is less than 1 months's mortgage payment and we stretch it out or even waive it if the borrower cannot pay. I love my job and want to help people, that is why I do what I do. Do not lump us all together. When my client is able to stay in their home (if that is what they want) or get out without filing for bankruptcy it is a great celebration and my clients love me. Even my son brags about what I do - it is a great feeling.
I couldn't have stated it better myself. I find "Smitty's" terminology of they don't do this they don't do that to be downright offensive.
I work for a law firm in St Petersburg Florida and while I am not the attorney, I am a negotiator NOT a processor. I personally handle all of the short sale files in our office and my closing ratio is extremely high. Because this is a law firm our clients get the best legal advise as to which is the best course of action in each case.
Believe me there have been many occasions to bash Realtors who advertise themselves as so called short sale experts if I so chose to but I don't do it. I recognize that having the license doesn't make you a rocket scientist. Yes, I feel quite comfortable with that assessment as I am a former licensed real estate broker and quite frankly when I joined this site I believed it was to be an open forum for all professionals that either handle short sales or need information on short sales. Unfortunately what I have found most often are Realtors that continually denegrate any other professionals that specialize in short sales as somehow being incompetent, money grubbing attorney's, uneducated hacks... the list goes on and on.
Sorry for the rant, it has been a long time coming.... can we not show some respect for all the professionals in this field please !!!
Bravo Michelle for so eloquently expressing what we do !!! Thank You!!
Michelle, I love your response! Find me a "Michelle" in South Carolina! I absolutely understand and agree that what you have described is exactly what I would expect from a short sale negotiator. I do NOT want to sit on hold for 30 minutes, do tons of paperwork, "practice law", get sued, etc., etc. And apparently, my negotiator does not either. In the past, they have contacted me to advise that a second lien holder would not accept the first lien holder's offer of settlement, and on at least two occasions, I have picked up the phone, contacted the second lien holder, and worked out acceptance of the settlement. If the property is referred for foreclosure, they essentially "give up," even though there's a 90 day window where offers can still be submitted and negotiated directly with the foreclosure attorney. They advise me to have my clients hire one of their preferred "foreclosure defense" attorneys for a fee that none of my clients can afford. And last, I am also a CPA, so I am the one who actually sits down with my clients and helps them prepare all the financials, and RMA and RAS docs, and makes sure the packet is complete. Again, I think my negotiator is simply overwhelmed, and lacks systems and processes to successfully do the job.
Refreshing response, Michelle! Thank you!
@Michelle - loved your response too. We need more attorneys like you. Wish you worked in my state
@sherri - I'm not trying to offend, but merely share my experience with EVERY attorney firm I've worked with. OF COURSE not all are the same, just like not all Realtors are the same and not all 3rd party negotiators are the same
I handle my own Short Sales here in Palm Springs, CA. We are a non-recourse state. The few deals that a 3rd party has gotten in the middle of have crashed and burned. I wish I knew a "michelle" out here in the desert! I would use her. She is obviously hands on. Many, many of the negotiation companies are just in it for the buck and have to close a ton of files to make any money. They play the odds and my file may not be as attractive as the next one so gets shoved behind.
I will say..GMAC fired their 3rd party FNMAE group that I was forced to use. Now I'll get it approved..
This issue is a dead horse. You cannot grade all third party negotiators off of your one experience. Nationwide, only 23% of Agent led short sales are successful: Do we say that ALL agents are incompetent? Of course not. Just like any profession, you can either deal with the overhead and responsibility of setting up your own in house department, or you can interview third parties and find a good one.