Replies to This Discussion

Permalink Reply by Joseph Alfe on January 30, 2012 at 3:31pm

I know, Thom, and it's not personal.  I will defend my business model because there certainly are alot of third party negotiators who do not operate like I do, so I need to make that clear.

www.ssprocessors.com

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Permalink Reply by Brian Avery on January 29, 2012 at 11:30pm

In general I do not have a problem with buyer's paying negotiation fees. Many times the buyer has to pay a piece of the second lien or HOA etc to purchase a property ($ is $ regardless to who it is paid).  The bottom line is what process make all parties to the transaction happy, legally of course. Even though as 3rd party negotiator, processor or what ever we may be called?  We are supposed to work primarily for the seller, but who has not coached the buyer how to present an offer etc?? My only "RED FLAG" in charging the buyer a fee, is that a Realtor would not take an offer on the property (lets assume it may be the best or possibly the only offer) unless the buyer agreed to the fee. The Devil's Advocate in me would say this is a form of extortion. In a fair / open market typically the best offer is presented to the seller ( based on all the basic criteria , not just $ amount). In a traditional sale the seller would care about the best offer because it would help their equity position. In a short sale the seller usually could care less because the bank/ lender takes the loss. So ultimately my position is as long as We/Me practice fiduciary responsibility to all parties . More power in getting paid!!

FYI , law firms in CA practice charging buyers fees all the time. Many time upfront and non-refundable. 

my 2 cents

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Permalink Reply by Anna Chroscicki on January 30, 2012 at 3:30pm

My experience is that ( and I hope I do not step on anybody's toes here) that first of all -I spend as much time following up with Title/ Escrow Company to find out what is going on, as I would following up with bank while negotiation short sale. Usually the do not know much more than I do . And when it comes to negotiationg- they just don't. Example : I have short sale that I handled to Attorney's office for negotiations. Price of property - $44,000 ( that is not usual in my market - it is fixer upper cash deal, I actually have agents and buyers sending me e-mails asking to keep them in mind if deal falls apart). After months of nothing ( and I know it was nothing, because I followed up), they ( negotiator from attorney's office)comes back to me with " Bank said that they will not allow more than 10% of the purchase price going toward closing costs ,so you and the other agent have to cut commission 2 points below regular rate ( I write it this way, because I actually do not know if I can mention numbers- ooo man, I need some classes- completely forgot). I ask this person....."Do you actually see that this is $44,000 home? I want to help my sellers, but after probably "eating" transaction fee, I will end up with.....well- you do the math. What bank considers as closing costs in this transaction? I have no problem asking buyer to pay for some" And this is HAFA short sale, so I am really thinking that she is not even including $3000 relocation money in this-This person's answer ? " Well, we all have to give up something ". So I asked to see HUD. That was last Thursday. Still did not see it.  My feeling is : Commission is cut, relocation money is cut ( or not there) but Title Fees stay. This is last time that I sent my short sale to Attorney's office for negotiation ( free negotiation). I dealt before with companies that my seller hired and paid for it ( usually when they were trying to do modification and it did not work out and those were pretty good,        

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Permalink Reply by Eric Mieles on January 30, 2012 at 4:02pm

Just because you'll defend your business model does not make it a right business model. Look I understand you trying to get compensated for the work you do. I understand some of the other negotiatiors that operate like yourself and I understand that short sales are tough and require a lot of work.

 However what I don't understand is how when a buyer, young beautiful couple, just married, money saved, dreams of home ownership start searching on the internet and find the home of there dreams, call an agent and he has to break the news to them that they can't even SEE the home because so guy attached a fee to it so sorry.....On to the next!!

That's where I'm a little confused on how this issue gets support from some of the members. Let's please not forget guys we need these buyers. Have you guys not noticed that the buying experience for short sales in our country is horrendous and the word has traveled that buyers don't even want to buy them.

Here we are, together as a community trying to promote education and advancement for our niche yet we have gatekeepers who want, need, "Deserve" compensation to open the gates of homeownership on specific homes.

 

The argument of "Well what about the buyer paying closing costs or jr liens or whatever" Well that's cost asscoiated with the transaction IF the buyer is willing to pay and absord those costs in order to buy. The difference is at least they got that far and were able to go through the process, and have a shot at buying it. With the other option they can't even see the home or put an offer in, a real legitimate offer because "The Gatekeeper" has attached a fee.

Please let's just remeber the only real purpose this fee is serving is to compensate someone who had to figure out a way to make the business model of negotiations work for him.

I respect great agents, I respect great professionals, I am always trying to learn and get better at what it is I do and in no way want to be disrespectful in my views with anyone. I just have to humbly disagree with you guys on this one.

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Permalink Reply by Joseph Alfe on January 30, 2012 at 4:13pm

Eric, apparently you will see what you only want to see.  At no point is someone turned away from seeing or making an offer on a property. The bottom line is that I close a very, very high percentage of my sellers short sale, most often with no deficiency, and above all, both seller and buyers are happy.

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Permalink Reply by Smitty on January 30, 2012 at 4:21pm

"call an agent and he has to break the news to them that they can't even SEE the home because so guy attached a fee to it so sorry.....On to the next!!"

Eric, Again, this is up to the BUYER to decide, NOT any agent.  If the listing CLEARLY showed a negotiation fee, just like any other fee, i.e., smoke certs, septic, COs, etc, that are NORMALLY associated with the seller, put in the MLS as a "fee that is the responsibility of the buyer" it's NOT up to the AGENT to decide not to show it.  It's up to the BUYER if they want to see it.  Again, these are fees customarily that the seller pays, but in a distressed situation, ie, REO, Short Sale, many times it is passed along to the buyer.  It's not up for any agent to decide "NEXT" it's up to the buyer to decide if it's worth pursuing.  Keep in mind the buyer is not OVER paying for the property.  They are paying the exact price they want to offer, so I'm not sure exactly why this fee is such a thorn in your side.

 

"Well that's cost asscoiated with the transaction IF the buyer is willing to pay and absord those costs in order to buy."  EXACTLY the same thing.  It' sa cost that IF the BUYER is willing to pay and aborb to buy a particular property.  There is no GATEKEEPER.  The fees have been CLEARLY DISCLOSED to the buyer.  It's up to THEM if they want to pursue the sale and absorb those costs as you eloquently said.

"Please let's just remeber the only real purpose this fee is serving is to compensate someone who had to figure out a way to make the business model of negotiations work for him" - And doesn't every business in the country do that? If you couldn't find a way to compensate your business wouldn't we all fail?  There is nothing wrong with someone utilizing an alternative method to being compensated than what has been drilled in your head for the last 4 years.  Keep in mind in the early 2000's almost NO short sales existed and Realtors didn't do them at ALL...which left 3rd party negotiators to do it, all that CHARGED A FEE.  Lawyers, title companies, mortgage originators and others charged for their time to negotiate short sales back in the early 2000's..fast forward 12 years later and we Realtors seem to be brainwashed that we are the only profession that can handle a short sale effectively..(maybe so in most cases) but it's very narrow minded thinking to think 3rd party negotiators can't be as good.

 

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Permalink Reply by Eric Mieles on January 30, 2012 at 4:21pm

But Joseph we all do. Why is that your argument?? It may sound good to a homeowner who listens and then signs your form but to professionals who are dedicated we provide that service when we choose to take a listing and work dilligently for our seller.

I will state it again I bet if I was to sit down with your sellers and explain everything about a short sale and the potential for them to miss out on a buyer because you ahve attached a fee they would realize it's not a necessary service that needs to be added on. Plain and simple!!

Im sure you love what you do and do it well but that's not the argument. The argument is if it's right, ethical and advantageous to our sellers who are facing foreclosure.

Okay so I mispoke. They can see it, fall in love with it, place an offer on it but ultimately not have a shot because it will be turned down per "Your Recommendation."

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Permalink Reply by Joseph Alfe on January 30, 2012 at 4:40pm

I guarantee you, Eric, you would be turned down flat by the majority of my sellers.  Why?  because I have a great track record.  I take the time to thoughtfully educate the sellers and agent about the process.  I care enough to make sure sellers have competent legal representation, and I make freely available references by sellers, agents, and attorneys who have worked with me. Plus I have a decade of experience as a lending executive and I probably know more about the entire short sale process from listing to closing than all but a few elite agents. Put my reputation and track record of close to 1,000 short sales closed since 2005 against some egocentric agent with a few?  Please...

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Permalink Reply by Eric Mieles on January 30, 2012 at 4:55pm

Here's the revelation Smitty....I am a negotiatior. Have over a hundred and have done them for a while. When getting into negotiating for others I saw the business models out there and new the market was commoditized. Saw the various models and choose to find another way and get compensated on the back end by lender (There are ways).

I'm not stating that to say my way is right and your way is wrong. I just fundamentally believe it's not a required cost that should be put on top of the other costs because you had to be creative and get paid. Your trying to bundle in the 3% fee with the other costs when buying a distressed property.

Yes, I know it's the buyers choice but lets look at a scenario. Buyer saved for down payment. Worked hard, saved right, got a loan, saved reserves for 6 months of payments plus living expenses. Did the right thing and didnt want to go over a certain monthly or down payment. Got FHA, negotiated closing costs and got a home. Now in your model he would have been overextended and/or would have ahd to dip into his reserves to pay YOU because you negotiated the short. When an agent, who was experienced, professional and knowledgeable could have done the same if not better job.

Smitty to be correct short sales have been going on for decades. It was a strategy used by investors when finding a homeowner with little or no equity and they called it "Creating equity out of thin air) there were many who were successful and it was another way for them to get a deal done when novice investors saw no deal at all. The investors would do it themselves not call a negotiator. It has been around for a while it just happned to be an adopted skill by those that wanted to stay relevant as our market shifted.

I don't believe only Realtors can do processing. Again we have the same job partner and I believe anyone can do this niche successfully if dedicated, determined and dilligent about learning and getting better.

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Permalink Reply by Smitty on January 30, 2012 at 8:02pm

Eric, this is what I'm not understanding in your argument:

"Now in your model he would have been overextended and/or would have ahd to dip into his reserves to pay YOU "

No one is dipping into reserves.  What does the buyer want to pay for the house?  They want to pay a total of $130,000, now in both Joseph's and my model (and we both charge differently) the buyer can reduce the offer amount the price of the negotiation fee. So let's say the negotiation fee is $3000.  Well, the P&S into the lender would be $127,000 and then the $3000 would be brought to closing.  Realistically I would have the buyer even put in a lower offer if I had comps to support it and knew I could get a deficiency release AND let's say they put in an offer for $118,000 and I knew they would go up to the $130,000, and the lender says, "we want an additional $5000 to release deficiency," well, now I have a buyer who can give that additional $5000.  I have NO problem allowing a buyer to lower an offer if the comps support it.

I haven't seen a reason why yet you are so against this.  You don’t want your buyer to pay a negotiation fee, but would you allow them to pay a HOA fee? I’m sure your buyer’s would take a seller credit for closing costs right?  What other fees in your state are the responsibility of the seller that you’ve seen that in a short sale situation become absorbed by the buyer.

Eric, bottom line – It’s a contract, and two people have to agree to it.  If a buyer doesn’t WANT to pay particular costs associated with the purchase of a house, THEY DON’T HAVE TO, HOWEVER if the SELLER has made that a stipulation of the sale, then the buyers can pound sand.  If the seller feels strongly enough that that is a condition of the sale, then that’s it.  You can make a decision to not show those properties I guess.  I don’t agree with that at all, but don’t you feel that those decisions should be up to the buyer and seller?

“I will state it again I bet if I was to sit down with your sellers and explain everything about a short sale and the potential for them to miss out on a buyer because you ahve attached a fee they would realize it's not a necessary service that needs to be added on. Plain and simple!!”

Eric,have you looked into buyer paid fees at all?  How do you know the sellers will miss out?  That is purely speculation…just your opinion.  Have you looked in your state for all the short sale listings with a negotiation fee and done a percentage of how many are under contract? 

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Permalink Reply by Bryant Tutas on January 30, 2012 at 4:56pm

Ok guys. Lets keep the personal attacks out of the conversation.

Don't make me........

The beauty of our business is that there are MANY different ways to help folk and many ways to charge for our services. As long as negotiators are operating within the law then who are we to judge the way they handle their business? Shouldn't the consumer have choices? Isn't it ultimately up to them to decide who they want to hire and how they want to pay for those services?

I mean let's be real....MANY agents are harming their sellers by being completely clueless about short sales. So I say kudos to anyone that is actually helping.

Buyers just want to buy a house. If the value is there then they truly don't care about what fees that have to pay. But of course a lot of this depends on how the deal is presented to them. If they are poisoned right out of the gate then their options are going to be limited. Maybe it's best for us to fully understand how these alternative compensation models work so we can be in a better position to discuss the cons AND pros so they can make an informed decision.

Our jobs are to educate not to make decisions for our customer/clients. Don't you think?

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Permalink Reply by Eric Mieles on January 30, 2012 at 5:09pm

Now Joseph I believe your getting a little touchy. No hard feeling. I said over and over I'm sure your well educated, versed and professional. I'm sure you know your stuff and just for the simple fact that me and you are debating real estate while many are eating lunch or watching TV is a testament to us staying current.

Please remember I just disagree with your with upfront fees in order to present an offer on a home and get it looked at by the seller. That's all.

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