How to stop short sale lenders from automatically cutting our commission
Nearly 9 out of 10 of my short sales, the lender cuts the commission from 6% to 5%. I am sick of this. They know they have us by the short hairs and do it automatically. Now I have GMAC being represented by IMPACT that wants to take 1% of my 6% commission. They want me to sign a new fee agreement and commission disbursement form. What can I do and how can this be stopped.
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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To get back to the original question:
How to stop short sale lenders from automatoically cutting our commission?
The answer is simple: Quit relying on lenders to get you paid!
Here's an article I wrote a year or so ago that will show you how to get paid. I'm linking to it because it has over 100 comments and some of the comments are better than the article. It will change the way you look at getting paid.
If you are going to work short sales then know how to get paid.
And to answer Joesph about what qualifies an agent to negotiate short sales. Because negotiate is what we do. I have personally been negotiating real estate deals for over 30 years. To state that all we do is gather documents and use a fax machine is insulting. Although gathering documents is where the negotiations begin. Knowing what to submit and how to submit it is critical to successful negotiations. Presentation is everything.
Short sales are not brain surgery. Any successful broker or agent can learn short sales in a very short period of time.
Knowing the in and outs of how the lenders, investors and MI companies work and make decisions is also not difficult. It just requires research.
Now having said that there are many agents AND attorneys that are harming people by their lack of knowledge. And my guess is the percentages are about the same.
That's why we created Short Sale Superstars. We are trying to empower short sale professionals and the consumer by giving them first hand knowledge of how short sales really work.
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Permalink Reply by Joseph Alfe on
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Bryant, I never said agents cannot do this successfully. The question is: Should they. Let's face it, there are not many agents with your level of expertise. Or mine, so expecting them to learn the intricate and fast changing nuances of the business is not realistic, and referring to it as easy is doing everyone a disservice. My original point is, unless you have your level of experience, a full support staff, someone else marketing and listing your property, is is the highest and best use for MOST agents to do short sales? I don't think it is. Add the liability on top of it? Think about it.
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Permalink Reply by The Negotiator on
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Joseph, here is your standing ovation ... do you hear it? Good!
I don't know about the rest of you, but, I'm starting to get irritated with some of the people who post in here who won't let opinions stay opinions. They continue to respond off topic in a personal he said, she said, I said, I didn't say, you didn't say, I thought you said, I heard you say, I swear you said, I thought you meant, I didn't mean ... manner.
STOP IT!
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Joseph. I think everyone just has to make their own decision on whether or not to handle short sales. If they want to handle the negotiations themselves then they need to take the time to learn how. I also feel that if someone is truly in the business of real estate then they already have the skill set needed. But of course we all know that many in this business are not truly in the business. They are just in the business because they "like looking at houses".
I guess my point is that just the fact that some one is an attorney OR an agent does not make then good at short sales. Either one can be just as good or just as bad as the other.
It's not the license. It's the expertise
As for the time involved. That depends on how someone has their business set up. I'm a small brokerage of just me and 2 buyers agents. I handle every aspect of the short sale from listing, to gathering documents, submitting the packages, negotiating and getting them to closing. But I don't work with buyers and I rarely meet the sellers in person. I also rarely see the properties. I use runners for most of the property related stuff. The sellers and I mostly communicate via email and text messaging.
I also am not into doing volume of short sales. I keep my business small by design. I work form my home and can easily handle 25-35 pending short sale files and 25+ active listings
Certainly if I had the desire to do more short sales I would need to hire some staff. My first hire would be a a paper pusher.
Thanks for the discussion.
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Permalink Reply by Ryan Simpson on
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There is a lot of passion in this discussion and its great. I previously posted in this discussion how to protect your commmission and the agents that I negotiate for rarely get their commission reduced.
Let me give everyone the biggest secret to a short sale, and if you do nothing but this, you will be a successful negotiator: "Gather the appropriate documents from your client, make sure your documents are always up to date, and followup with the bank every 3 business days." If you do only those three things, you will have a succesfull short sale business. With that being said, of course there is more to a short sale, but those three things are critical. The question is, just because you can negotiate a short sale, should you?
Let me give full disclosure, I am an attorney and my firm assists real estate professions in negotiating short sales. Every time I teach a class or interview a real estate professional that would like to use my services, I give the same speach: "my firm is very good at what we do and we have a high percentage of successful closing, but we probably will not be as quick as you (referring to the real estate professional) ... we are simply a third party negotiator ... another step in the process."
Joseph had an excellent point that is rarely discussed. Has anyone considred the liability of negotiating a short sale? Are you giving legal or tax advice to your client? I cannot tell you the number of homeowners I have interviewed who either went through an unsuccessful short sale and had their home foreclosed on or went through a short sale and are facing severe tax consequences or the bank still has recourse to sue the homeowner for the deficiency.
Be careful out there. Did you advise your client to miss their mortgage payment? Will your client have a tax liablity? Did the client receive a full waiver or just a lien release, and how did you communicate it to your client? Will a short sale hurt your client's credit? Did you advise your client that they should do a short sale? You may laugh at some of these questions, but you would be surprised at the number of people I have interviewed where first, their real estate professional gave legal or tax advice, and second, it was wrong. There is another round of litigation coming and it is going to involve real estate professinals and short sales who gave legal or tax advice to their client. I just spoke to a client last week who did a short sale two years ago and received a lien release only where the agent on numerous occassions said don't worry this bank does not sue for deficiencies. The client received the first demand letter this month from the bank's lawyer.
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Permalink Reply by Jeff Payne on
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Joseph, your position is based on your opinion and I respect that but disagree that there is some sort of science or secret to processing a short sale. If an agent is brand new but eager and willing to stick with it until the end, if they follow the lenders instructions and send in a clear and concise package with great details, they will be just fine.
Maybe 3,4 or 5 years ago there was something to what you are saying but every lender that I deal with today has clear and concise short sale instructions. Follow the instructions, submit what they ask for, communicate regularly and be persistant and the majority of the heavy lifting is done.
You have to start somewhere, just like you did when you did your first short sale.....
Highest and best use for agents? That all depends on their goals and their business plan. I have yet to see anything published that says an agent who outsources their short sales to a 3rd party does X% more business than one that does not outsource short sales. Everything else has been studied to death in real estate. I would LOVE to see this study to see how the numbers actually look. I know locally in my market what it would look like and it would not be in favor of those that outsource
With that being said, short sales are not for everyone whether as a listing agent or a buyers agent.
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Jeff, I respect your opinion and like you said this isn't for every agent. How else can you explain why, according to Core Logic-Campbell Surveys that nationally, only 2-out of 10 agent short sales close.
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Permalink Reply by Stephanie Hart CA 310-930-2342 on
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The 2/10 stat is sad but also great marketing... I am so going to use that with my stats on my next mailers:)
Thom that is GREAT info on Negotiators. I am WAY to Type A to let someone else handle my business. I do half the things my assistant should becuase I don't think anyone can do my job as I would.
This site has been an invaluable source of information for all of us when stuck at roadblocks. Lets keep it upbeat and help one another not tear eachother down. We all started somewhere! I'll help all the agents that come to me in my office (or on here) with probs and have closeed many that other agents said I should walk from. We need to protect out clients and keep close watch on our own butts, bottom line.
Now lets get out there and sell some short sales people!
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There is not a science to a short sale, but the right knowledge and methodology can save you a lot of time and money. Short sales are time consuming and require a lot of work. If you take on a short sale with a bank combination that is impossible to negotiate because the second mortgage will only give a lien release for a certain dollar amount which far exceeds your clients ability to contribute, then you just wasted 6 months of your life. Not everyone out there can be saved.
With knowledge you can also set the right expectations with your clients, and with the right expectations set with your client will determine your client’s level of satisfaction which ultimately leads to referrals and more business. I would love to tell you that a short sale can be completed in 90 days, but we all know that is a lie for all banks and circumstances. Remember that this is probably the first time your client has been in this situation and they are looking to the real estate professional to change their life – to offer them a miracle. They need to know that we will go through 2-4 buyers, it can take 6 months or longer, the bank may require a cash contribution or promissory note, there mortgage insurance which will add more time and increase the possibility of a contribution, the loan type (fha, va, or conventional) will determine the process, will bankruptcy be involved, …. Set those expectations properly and the client will love you forever. I love sitting at the closing table when the couple is crying and smiling because the process is over and they just had a major weight lifted off of them. I have also sat at a closing table when the client is pissed, even though they received a favorable outcome, the wrong expectations were set and they feel like they were taken advantage of in the process.
Know what you are talking about and know the short sale process.
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Joseph, can you share that article with us please? Would love to read it.
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Jeff I have to run, got a guest spot on a Chicago radio show, but Google Campbell short sale survey and you should be able to dig it up. If not, I will try and find it when I get back. The actual ratio is 23% I believe. Sad but not surprising.
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I will take a look but keep in mind that Core Logic is the same company that claims that short sale fraud is a regular occurance and that there are $41,000 of unneccesary losses to the lenders. I am not aware of one single case of short sale fraud convictions even though core logic says there is rampant short sale mortgage fraud.
Of course Core Logic would most likely benefit more from foreclosures than short sales :)
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