3rd party SS Processors
I recently changed to a new Broker. Company claims, that if you use a certain Escrow Co., that they negotiate your SS for free. Bank get charged for that, and if the bank refuses to pay, it's OK. I know, that has been a lot of dicussion here, re-SS processors. My success rate is about 98%. SSS, I would like to hear your experiences. Thank you!
Replies to This Discussion
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Permalink Reply by Smitty on -
Do your homework. Interview them. Ask how successful they are? How many approvals they've gotten? Make sure they are within licensing laws within your state, etc. OR if you are more comfortable doing them yourself, then do them. Find out all that you need to know before you make a decision. I think Jeff had an awesome list of questions he's used before...maybe he'll jump on and post the list for you.
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Permalink Reply by Jeff Payne on -
Smitty, in addition to Josephs questions, I have a list of questions and I can usually tell by the way they are answered if we have a chance or not.
Who is the lender? Who is the investor? How many mortgages? Is there PMI? Is there MI? Have there been any other offers or approvals? How many offers will you submit to the lender? How many short sales have you done with this lender? What is your average approval times? Who will be handling this short sale process? Does the seller qualify for the short sale? Have you had any contact with the lender?
The list goes on
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Permalink Reply by Brian Avery on -
I think you should look at like using any 3rd party to negotiate. Speak to the person who handles the negotiation to understand experience etc. It all depends on what you are comfortable.
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Permalink Reply by Joseph Alfe on -
look at it this way, if they are doing it for free (they generally pay a small hourly rate for their "negotiators") ask yourself how good of a job do you think they will do? I can only speak for myself and a few very good third party negotiators that I know, but I pay my negotiators VERY well. They are all ex mortgage processors with years of experience and able to handle 100+ files at a time. When interviewing a negotiator, be it a third party, attorney, or title company, ask these questions:
1. How many have they CLOSED in 2011? (should be 100+ or they don't have the experience level needed)
2. What exactly do they do, and what do they expect you to do?
3. What do they do if commission is cut?
4. What do they do if lender counters high or has high bpo
Many "order taker" negotiators simply shuffle paper. That's great but when it comes to real negotiation or defending a commission or offer, they roll over and give up or simply tell you "the bank won't move." Expect more. Just like agents, there are great ones and then there are the majority. Choose wisely. Good luck!
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Permalink Reply by Jeff Payne on
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Joseph, how do you get paid? How do you pay your negotiators? I see title companies doing them for free in order to get the title work but it sure seems like they would lose money if they have to pay someone to handle it.
I consider myself versed in short sales but no expert but not a chance would I close 100+ in one year, not in my tiny market. I would ask those that are closing 100+ per year what there closing percentage is. Are they closing 50% of them or 90% of them? The overall numbers of closings that actually occur is alarmingly very low nationwide but I believe it is getting better over the last year...
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Permalink Reply by Joseph Alfe on
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Jeff, I charge 3% of purchase price to the buyer. Sounds like a lot, but I split with my negotiators, so they have a very high incentive to get the deals done. I have a proprietary fee agreement that is disclosed and signed at the time of the contract, and I allow a buyer to lower their offer by at least 3% to compensate. On financed buyers, I usually can get a closing cost credit to further compensate. Before the nay sayers respond, keep in mind that both Fannie and Freddie have approved this. In their purchase guidelines it specifically allows third party short sale fees to be charged to a buyer, and reimbursed with a sales credit. If Fannie/Freddie allow it, then it becomes reasonable and customary. My fees are also why I do not take any of my agents hard earned commissions. A few other negotiators try to copy, but I have a proven system of disclosure that is successful about 99% of the time. Those buyers who refuse are usually the ones who end up walking away anyways. I have a recent blog post on this site, titled "Getting the buyer and seller on the same page" that nicely illustrates why this can be successful. For those who will say "My buyers here in (pick a state) will never go for this..." Wrong, they all do, because it makes sense. One of the reasons it works is because of our approval ratio, which is over 95% Do we close 95%? No, because a big problem is buyers not able to get financing, but we definitely keep the numbers high because of my strick buyer standards vthat I demand in order to accept a contract.
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Permalink Reply by Jeff Payne on
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Thanks for the reply, there is one here in my area that charges 1.5% to the buyer. There are some on this site that also charge the buyer. I disagree that "they all do" because I have seen those that don't.... but believe that it happens and most motivated buyers won't balk at this but some do as I have seen it happen, especially with the amount of inventory on the ground in my area of Florida, they have alot more choices and can be very choosy. Do I beleive that many are not seeing the forest for the trees? Sure do, but that is reality when they have so much to choose from.
How would you handle this situation.... we have alot of buyers in my area that are simply cash poor and need 3% or even 4% to be applied toward their closing costs. How do you add in the 3% fee in that instance? Do you ask for a 6% seller concession? How would you handle this with an FHA loan?
Thanks for the input, we appreciate it
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Permalink Reply by Joseph Alfe on
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Jeff, I'm not kidding when I say that I have a 99% conversion rate. I have a very specific system and delivery and I train my agents how to properly disclose the fee agreement. Also, the fact that they buyer gets a discount to the offer goes a long, long way to do two things: Agree to my fee, and gives incentive to stay in the deal. A huge problem agents complain about is buyers walking away, With my system, this is dramatically reduced. As I said in my blog post, the key is getting the buyer and seller on the same page. It's not "us against them." In fact, the line I use is "I'm helping my seller by helping your buyer buy." And it's true!
As far as buyers who NEED a credit to close, the answer is: We don't take their offers. They are simply not qualified to make an offer on a short sale. Period. What is going to happen if we end up short to close, or the seller requires a cash contribution, or we have to buy out deficiency, or....See what I mean? That buyer would end up falling out and then we wasted our sellers time taking the property off the market, possibly forcing a foreclosure because we recommended a bad buyer. Is there liability in this? Can a seller sue an agent for bad advice because we told them to take an offer and the buyer wasn't qualified and they ended up in foreclosure? Absolutely! This is what I mean by "looking down the road" and not simply reacting to what comes our way in a short sale. If we are only getting VA?FHA buyers, I ask "Do you NEED the credit to close." Many times they actually don't. The better solution is to add in agents remarks "Discount for cash buyers" or "cash buyers preferred." Pricing at or slightly below the comps average also attracts cash buyers, and if priced right, you will have no shortage of offers.
As far as closing issues, one is allowing buyers to wait until approval to start their mortgage process, another is failing to properly prequalify buyers, another is failing to lock the buyer into a contract for adequate length of time. If you have a great local lender who closes 100%, you are way ahead of the curve.
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Permalink Reply by Jeff Payne on
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I believe you, no reason not to believe you.
Thanks for the response, I am glad to hear that I am not the only one who believes that not everyone qualifies for a short sale on the buyers side.
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Permalink Reply by Jeff Payne on
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What issues are you seeing with buyers not able to get financing? Are you getting preapproval letters only to find out later that the lender wont finance them? We used to have that problem but in the last few years we have little issues with getting a buyer financed. We have a great lender that has closed 100% of our buyers that she prequalified. Over 250 buyers closed with this lender and everyone that she said were qualified has closed. We do have issues with some of the national lenders who will give anyone a preapproval witht the hopes that they can finance them and in the end they drop the ball and our local lender gets them done.
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Permalink Reply by Brian Avery on
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buyer fall out is always an issue. I always try and have a conversation with the actual buyer to get a feel of financial status
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Permalink Reply by Thom Colby 888-391-5245 CA Brkr on -
Joseph -
What happens when the Purchase Agreement (offer) from the Buyer has specific language stating "Buyer will not pay or contribute to any Short Sale Negotiation Fees" and the Seller has accepted the contract? That's how I write all of my Buyer offers...........
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