Bank of America's policy on allowing third-party negotiators to work short sales
I am a third party negotiator that the agents and homeowners select to assist with the short sale process. For a year I have been negotiating with lenders through the Equator system, this past week I was told that I was not an agent or attorney and that I was not allowed to be working on the short sales. Has anyone else encountered this? Also how is Bank of America able to tell the homeowner whom they can have negotiate the short sale for them as long as I abide my our state laws (which I am). Most agents don't want to spend the extra time it takes to get a short sale approved and closed and that is why they come to me. I had 4 BofA short sales that have been being worked on for 3 months get denied and closed due to me not being an agent. I think that if the government investors were aware of this issue they would not be ok with it.
Replies to This Discussion
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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Freddie Mac Bulletin just published see Page 2
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Freddie Mac 11-21-2011.pdf, 109 KB
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Permalink Reply by Smitty on
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Excellent reason to charge buyers.
Here is the Fannie publication
https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel012711.pdf"this fee does not represent a common and customary charge and therefore must be treated as a sales concession if any portion is reimbursed by an interested party to the transaction."
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Permalink Reply by Kathleen Couch on
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I have a short sale in progress that is owned by Freddie Mac. The negotiator at the bank sent us a form to be notarized concerning "arms length transaction". There is a place for the buyer, the homeowner, the buyer's agent, the seller's agent, the escrow agent (title, or attorney), and the 3rd party. Also, he told me that if there are any other people involved, to make copies and have them get their signature notarized.
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Permalink Reply by Dana Harris Carter on
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Hi Kristen!
With all due respect, if you think about it logically, why would a lender want to pay a non-Realtor or non-Attorney a fee out of their proceeds PLUS pay a commission to a Realtor. Regardless of everything else it would make more business sense for them to pay one flat fee (commission) to the Realtor to perform all duties up to and including the Shortsale Negotiation. Again, in lieu of keep reiterating that there are a lot of unqualified Realtors to do Shortsales which is why you started the process I would simply do what you need to do to get paid which is become a Licensed Realtor.
More importantly, it's ILLEGAL to conduct real estate practices in any state and you could be prosecuted by the local Real Estate Commission for doing so. There is a fine/thin line in being a Shortsale Negotiator and practicing Real Estate. It's just not worth the risk. For example, you can't even pull the necessary comps using your own i.d. via a real estate listing service. On the other side of the coin, as a Realtor who has specialized in the distressed property market for 15 years I would NEVER allow a 3rd party to get involved and do my job not only for ethical reasons but for liability reasons. If I were a property owner in this type scenario and things didn't work out to my best interest, I'd probably sue the Realtor or at the very least file a complaint with the local Real Estate Commission for their "Negligence and Careless" in allowing a 3rd party in the transaction. Again, it goes way beyond Real Estate! Being a licensed Negotiator is NOT the same as being a licensed Realtor. You still cannot practice real estate legally.
Personally, I feel that any Realtor that does so is simply LAZY and doesn't need to be in the business. Once again, no disrespect to you. However, shopping around for the answers that you'd like to hear is simply NOT going to help you right now. If this is, in fact, your livelihood I continue to strongly suggest that you secure the correct credentials ie) Real Estate license and continue doing what you state that you love do which to help families in distress. It appears that the majority of the people on here are suggesting the same. I sincerely wish you the best!!!
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Permalink Reply by Natalie Arndt on
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Great answer Dana.
I am not crazy about short sale process but I had to educate myself and limit the number of short sales I take and give each file and seller my undivided attention.
I turned down 2 short sales a few days ago. I could have referred them somewhere else but I could not trust anyone to refer them to.
My sterling reputation in this town is the only thing I have once everything else is said and done.
The only way to assure that I keep sterling reputation is to rely upon myself.
Natalie
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Dana, why do lenders want to pay ANYONE? Do you think if they had their choice they would pay real estate commissions, closing costs, taxes, unpaid liens, etc?
With regard to negotiation of short sales, one could argue that ANY Realtor is operating completely out of the scope of their license when they "negotiate" a short sale and could be fined. As a matter of fact the Northeast Atlanta Metro Association of Realtors published a document related to this very subject
http://www.namar.org/sitefiles/namar/resourcebin/Short%20Sale%20Leg...
"Normally, real estate brokers and agents do not get involved in negotiating with the terms of loans for their clients and should not run afoul of the Act. However, what about in short-sale situations? If an agent contacts the seller's lender trying to negotiate terms for a short-sale, does this violate the Act? The answer appears to be "YES.So what's an honest agent to do? Limit their role to have no negotiations with the sellers lender"
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Smitty,
That was from the very attorneys that were marketing the classes called "Do a Short Sale and Go to Jail". They were using vague verbiage in the Safe Act as fuel for their greed. They were trying to scare agents "to death", so they would use them to facilitate their short sales. Funny, though, the wording did not make them qualified either. Also, about that same time, agents thought they were the only ones qualified, but the wording did not make them qualified either. A friend of mine who is also a retail short sale third party facilitator, contacted the Georgia Banking Association, non-depository branch to get clarification on the matter. The response was the "Safe Act" was formulated before anyone knew of short sales, and was not intended for short sales. She subsequently taught some information classes with the director to interested groups. Later, the attorneys got into the picture by marketing to agents to do their short sales. However, they found it not as lucrative as they thought it would be, and much more time consuming. Also, I have been told by agents, and a Georgia banker, that the attorneys (or probably their paralegals) really don't know what they are doing in that arena.
The summation is that in Georgia is not against the law for a third party to facilitate. The decisions are for the bank, and the homeowner to make. We are not negotiators, we facilitate the transaction. It is also, not against the law for agents, or attorneys and their staff to facilitate.
Just as in anything, the important thing is that someone is competent. Many agents are not competent, just as many 3rd parties are not competent.
I am working with a respected broker in the Atlanta area to educate the consumer, and real estate agent.
I do have a background in real estate investing. That is how I learned about the specifics of short sales before they were popular. But, in my short sale business I do strictly retail short sales.
It is sad that misinformation is still out there with the scare that was put into real estate agents in the Atlanta area. I will also sometimes have a homeowner contact me directly to facilitate their short sale. I have had some homeowners say they called 5 agents to list their property, and did not get a call back from even more. And, the 5 agents told them they would not list a short sale. No wonder the 3rd parties are so busy. I have agents that I can trust to list, and sell the property and work with me.
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Hi Kathleen,
The misinformation out there goes all different ways. If you talk to lawyers, they say Realtors doing short sale negotiation are working "outside the scope of their license" If you talk to Realtors, many say only REALTORS are truly qualified to negotiate short sales BECAUSE of their license. I think my only point is that people are too quick to judge 3rd party negotiators.
WHAT MAKES SOMEONE QUALIFIED TO NEGOTIATE A SHORT SALE?? My response: EXPERIENCE. I know for a fact that it has nothing to do with licensing and everything to do with how many approvals I have...and mind you I'm licensed. I also will NEVER call myself an expert, specialist, etc., because this industry changes daily and NO one knows everything about short sales. I learn EVERY DAY from this site, others in the field, homeowners, and it's ever evolving.
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Smitty,
Amen, amen, and amen!
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Permalink Reply by Jeff Payne on
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Smitty, I was up earlier today than normal and I am on my second cup of coffee so I decided to do some research on 3rd party negotiators. Every website that I visited after doing a google search had basically the same verbage marketing to realtors. All of them stated to hire the 3rd party because the real estate agent will save time and be able to take and sell more listings. Many of them stated that when the agent gets a short sale listing to come back and log into their site to access the short sale documents and then to upload all contract documents and let the 3rd party work from there. I definately appears that the 3rd party negotiators are marketing to the agents more than the homeowners for sure.
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Jeff, I'm not saying there isn't a correlations between agents and 3rd party negotiators. My issue is I don't feel a Realtor should be contracting out to a 3rd party. In this thread was the post from someone (buyers agent) who had NO IDEA the short sale had been outsouced to a 3rd party. Homeowners should be the ones hiring a 3rd party NOT REALTORS. Now if Realtors REFER the homeowner to the 3rd party, I have no issue with that. When a homeowner is working with a listing realtor and has NO IDEA that Realtor has outsourced negotiations, I find that EXTREMELY troublesome and problematic. I still maintain that HOMEOWNERS should have the ultimate say in who they want to negotiate their sale...NOT a Realtor. I am trying to fathom the liability when the sale goes South and everyone comes out pointing fingers between the Realtor, 3rd party negotiator, etc.
Realtors can refer business. I have Realtors call me every week asking if they can outsource to me, and I always say, "If your homeowner wants to hire us, then we can work with you" Realtors ARE a good referral source and likely a primary referral source to 3rd party negotiators. We have lawyers that work with us, and just picked up a title company that wants to refer to us, but we don't work or contract with them, all of our contracts are with the homeowners. We do have disclosures to both agents working on the property about who we are, etc., and even have their brokers sign off on it, but when a Realtor is hiring another party to do negotiations and a HOMEOWNER HASN'T hired that person there is a big issue.
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Permalink Reply by Paul Francis - Vegas Short Sales on
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Thumbs up!
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