How does the Negotiator Get Paid?

I know this questions is very general, but I would like to see opinions and discussions. I have been partnering with another person for several years. He's great at the negotiating, I'm great at the Real Estate side. Lately the lien holders have completely taken the negotiating fees out of the HUD, although leaving the Commissions at 6%. The negotiators, from several different approaches, seem to want at least 1%. I don't mind pay this out of my commission, but I do mind seeing that the distressed homeowner is walking away with more incentives than I am commission. I see where a lot of short sales are asking for Buyers to pay the 1%, but I also see a lot off feedback from Buyers agents that this is ridiculous. Opinions? If a distressed homeowner is receiving $3000 from HAFA, how can I legally ask that they pay their own negotiating fees?

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Permalink Reply by Nicole Stinson on December 11, 2011 at 9:54am

I don't use third party Negotiators , I negotiate my own files. I think it is up to the listing agent to get the deal through and if thier not comfortable doing it and they chose to hire a 3rd party to do it for them , they should pay the fee out of their commission. Just as agents that use a TC you wouldn't charge a buyer or seller this fee because you chose not to handle your file .

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Permalink Reply by Richard on December 11, 2011 at 11:41am

I can agree to that! :)

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Permalink Reply by Jeff Payne on December 12, 2011 at 9:42am

Nicole, I agree 100%

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Permalink Reply by Joseph Alfe on April 22, 2012 at 12:09pm

No, actually it should be up to the sellers, not the agent.

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Permalink Reply by John Treadwell on December 11, 2011 at 10:15am

Well rumors have it that banks are going to stop all Neg. other than a licensed realtors to handle the short sales ,and that's the way it should be. I do all of my own ,and even take on some other agents files ,but no un-license people should not be doing any part of the deal. If you need someone else to do it for you then you should pay for it

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Permalink Reply by Richard on December 11, 2011 at 11:42am

I like it John. Keep it simple and cost effective!

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Permalink Reply by Mark on December 11, 2011 at 11:46am

As a buyer, if it's disclosed up-front, I'll shy away.

It's just too many "cooks" in the soup, and one more way for the listing agent to shuck-off responsibility - even though they're drawing a full check. A third-party negotiator really only benefits the listing agent, there's no reason a buyer needs to pay for that.

If something like that were sprung on me, as a buyer - at the end of a sale, I'd be mad as heck and do my best to get the agent, broker, and negotiator strung up by the board of real-estate. It seems if the negotiator is doing the work of the listing agent, he/she really needs a license - and if the listing agent is getting paid for work not performed, in my opinion, it's a RESPA violation, collecting fees for services not performed.

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Permalink Reply by Smitty on December 11, 2011 at 2:02pm

Mark, "As a buyer, if it's disclosed up-front, I'll shy away. If something like that were sprung on me, as a buyer - at the end of a sale, I'd be mad as heck" So, basically you're just prejudice all together against a negotiation fee.

First, not all Realtors can do it right. Realtors started heavily negotiating short sales after the bubble burst in 07. So it was 3rd party negotiators i.e., title agents, lawyers, mortgage originators who largely did it before that. VERY little Realtors back then had the experience, so you're assuming because a Realtor negotiates they have the experience and that may not always be the case.

This discussion has been beaten to death on this site and honestly, I GET that a majority of Realtors want "control" of all aspects to the sale. I don't begrudge that, but that doesn't mean that 3rd party negotiators aren't just as capable. I still maintain that short sale negotiators SHOULD be held to a higher standard than a mere RE license. There needs to be much stricter licensing for short sale negotiators and MUCH longer training periods.

For buyer's agents to "shy" away from a listing because there is a negotiation fee, I would have to ask what service are you doing for your buyer? I mean if a buyer REALLY wants a house, it's not up to us as agents to say, "No" just because we have preconceived notion about 3rd party negotiation firms.

Keep in mind, no one was up in arms when the Negotiators were paid from the sales concessions. Believe it or not, the buyer pays the EXACT same amount when the negotiator is paid from the sales concession vs. the buyer bringing cash to closing. People who don't UNDERSTAND the process have his perception they are paying more money for the house and it's simply not true.

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Permalink Reply by Janis Schade on December 11, 2011 at 1:04pm

I want to thank everyone for their opinions and comments. It seems as though the majority of agents are doing their own negotiations. I guess my last comment on this discussion would be how do you know that the agent is qualified to negotiate short sales? What makes them a specialist? Hopefully not that one day course. Agents are licensed professionals, but training on short sales is very brief unless you have taken extensive coaching and training from outside (3rd party) resources.

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Permalink Reply by Mark on December 11, 2011 at 1:15pm

How do you know the lender is qualified to do the short-sale?

I've got one that's been pending for 10 months - the listing agent has answered EVERY request they've made, and the only LOGICAL conclusion is that the lender (servicer) wants to extend the process as long as possible, so they can continue to milk the investor for fees.

No amount of "mentoring", "training" , "coaching" or magic beans will make the sale go through if the servicer is acting in bad faith - and it's a lot more common than "agent" problems. An agent who truly drops the ball will get "found out" the very first time the seller calls the servicer.

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Permalink Reply by Edward Aretz on December 12, 2011 at 7:56am

The only question my buyer's agents ask is: "Are we likely to get paid?" Does the person handling the process have the time and the skill to bring a reasonable offer and push it through. Sadly, after doing this for almost 7 years, the answer is "no." We have found that certifications mean nothing. A law degree means less.

We hire a third party and disclose their fee. We want them to get paid. Early on they could get paid from the banks most of the time. As time went on, we disclosed they were to be paid by the buyer. We still get some minor resistance, and that is ok. We do however close almost every transaction. We also have time to work with buyers and sellers and leave financial work to people who do processing all day, every day.

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Permalink Reply by Jeff Payne on December 12, 2011 at 9:45am

Janis, we interview the person that is doing the negotiations and ask a series of questions to determine if we believe they can get the short sale completed. We don't care what training or what designation that they have, we care about their experience and how they answer our questions. From there we alert our buyer of our findings and let the buyer decide their fate.