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Brent. It would certainly depend on state law. In florida an agent cannot be paid for negotiating a short sale. They can however be paid for their real estate services of which "negotiating short sales" is part of. A licensed agent could be paid a referral fee after closing. They could be paid by the buyer and/or seller at time of closing or on a note after closing.
This would of course need to be run by an attorney to make sure it's legal in your area.
Bryant Tutas said:
Brian, I actually don't use that technique as I negotiate my own short sales. However I have my buyers agents run into the situation where the buyer was being asked to pay the negotiation fee. It threw my agent off tract. I simply told her to counter the deal by asking the seller to contribute that amount to the buyers closing. They agreed and it was not an issue.
My opinion it would be the occasion when it wouldn't work the way I had suggested.
I can think of several ways for a negotiator to be paid. Especially if they are licensee in real estate.
AND not all lenders even look at the buyer side HUD. I have closed many short sales where the final HUD was approved just by sending over the sellers side.
I know that the lenders want full control and it's their money, however there is a need for flexibility on the agent's part when the sale is not a traditional sale. There are a lot of us that work in fact based industries, however in short sales, there appears to be so many unkowns and nothing is a given.
This is one of my arguments that there should be more commitment from the lenders upfront in this industry. Not having ever sold a short sale home, but by being a participant as a buyer, I know that there is a certain amount of work that goes into this transaction. This effort appears to be well over and beyond a standard traditional sale. My brother, who is my realtor tells me that his work goes late into the day, not to mention the calls he get after hours. If an agent is willing to take on a tough purchase or sell, then he/she should get paid for it. Just my two cents.............
I like Bryant's approach too. The problem is some lenders won't allow a seller concession to a negotiator, for instance HUD does not allow processing fees.
Keep in mind no matter WHAT the buyer is paying the fee. I do think Bryant's presentation is better, but no matter what that fee whether it comes from the purchase price or not is truly coming from the buyer.
I think for me I'd rather do it in a way that any fee for services WILL get paid rather than trying with certain lenders that won't allow it and finding out after the fact.
So HUD doesn't allow it but Fannie Mae has guidelines that do. Sometimes you don't know until you're already WELL into the negotiation.
Thanks Richard. Buyers are smarter than agents give then credit for. Agents assume buyers won't do this and buyer's won't do that. Usually it's the agent's fear or lack of knowledge that is the stumbling block...not the buyer.
This is especially true when it comes to having a buyer sign a buyer broker's agreement (BBA). Agents really struggle with using these when the reality is buyers WANT them. A BBA is beneficial to the agent and the buyer. I rarely speak with a buyer that doesn't get that. I'm all about full understanding and clarity when it comes to who we work for and how we get paid.
Richard said:
From a buyer standpoint, and if required I'd rather see Bryant's approach to recovering fees. It's upfront, simple and fair.
Bryant Tutas said,
"You could though very easily charge the buyer side a percentage or a fee. It's all in the presentation. Just simply state in the MLS that "Seller will contribute 3% towards Buyers closing costs. 1% of this goes to the 3rd party negotiator for handling the short sale." Then just add an addendum to the contract. This way you are giving the buyer something instead of taking away. Plus they know before they even look at the property that this will be required."
I agree 100% Smitty, pricing is the key to get the offer. Our area is a pretty small area, only 250 sales occur each month in our county. everyone knows everyone and I think that the main player charging buyer fees has turned enough people away with their lack of a good success rate that the word has spread about them.
When putting my investigating cap on, the properties under contract were all priced WELL. So, none of the listing agents seemed to overprice the properties. I also think New England hasn't been hit like the rest of the country...well, let me take that back. It's still a distressed market out here, and there are a glut of homes on the market, but I think compared to the rest of the country we may be a bit better off.
Let's face it Jeff, any home will sell at the right price. The trick is to find the balancing point acceptable to the buyer AND lender.
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