I have previously seen legislation stating that a Realtor could not collect a fee for negotiating a short sale, nor could he collect extra commission for handling the short sale. 

Friday, I attended a seminar where a local Real Estate Attorney said that a Realtor can get paid and can earn extra commission.  Can anyone tell me where I can find this ruling?

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It depends on you State laws. The federal ruling you are referring to is MARS. This no longer applies to agents handling short sales. The SAFE act may also apply in some circumstances. You need to get a state specific answer.

Thanks Bryant.  Yes I knew about MARS but I had seen other legislation regarding fees.  I am in Florida

Just to be specific Bryant, MARS does still apply to Real Estate Agents. The Stay against enforcement of MARS against agents is jus that, a Stay. MARS is stil in effect. Section 5 of MARS was NOT stayed and FTC is enforcing that section against realtors. That section also addresses up front fees. MARS was found inapplicable to agents "per se". It means that just because an agent is a real estate agent, does not mean that is applies, BUT if the real estate agent acts like a Mortgage Assistant Relief Service by way of his her acts, they WILL come under enforcement.

Bryant is right.  check your state laws.  Each are different.  We have a short sale negotiation company where we charge a fee for negotiating, but the list agent also gets their commission.  Most of our sales we act as a 3rd party negotiator.  We don't ever list the property, but there are sales in which our sister brokerage lists and our company does collect a fee.  It's legal in our state.  We actually speak around the state at local Realtor Associations and title underwriting companies in our state also ask us to come speak about short sales.  You have to check your state laws.  Obviously it's legal in our state, but some states (NJ) comes to mind I don't think allow it.

I want to know if it is legal in Florida and can someone cite the statute.  I know third party negotiators can collect a fee, I am questioning whether the Listing Agent can charge an additional fee on top of the commission.

In Florida we can charge a fee if it is part of our normal way of doing business. We can't just charge a short sale fee but we can charge a listing fee that we charge everyone. At least that's my understanding.

Call the legal hotline.

What's wrong with just collecting your commission?  List side should get an extra point anyway..they do all the work.  That's pretty standard with many short sale list agents here in Calif.

No one said there's anything wrong with that.  Just checking on laws in Florida.

Kimberley,

Take it from someone who has done 7 short sales this month already and nearly 40per year over the last 3 years.


You won't find many if any short sale lenders that will pay more than 6% commission and this prevents us from making extra as the listing agent.

I know it seems counter productive as in some cases the additional 1% you would add to get a 7% commision, does not exceed the fees that law firms charge.  I know our law firm owned title company charges $2750 from the bank for their fee and they get it.

However, an agent is only going to get 6% total commission for the deal in nearly every instance.  I have only had 1 lender in 3 years allow us to charge 7% with a 4/3 split.  The rest reduce to 6%.  And everytime we add an additional processing fee for short sales of $495 and it gets denied in every instance.


Recent changes in the major lenders policy now only allows 2 types of people to negotiate a short sale... a licensed REALTOR and a lawyer.  This change I'm sure Bryant will attest to has reduced the business being outsourced to 3rd party negotiators but I totally understand the lenders point of view in they are just trying to trim the junk fees and increase the NET to the LENDER and thus making it more attractive for approval.  Don't misunderstand, I do not think that paying a negotiator is money wasted.  Read on and you will see why.

One title company we use often has actually hired a licensed, non competing realtor on staff just to negotiate and meet this new requirement.

I myself took a different route and since am so effective at negotiating these, have allowed agents within my firm to add me as a co lister and I take a referral fee to complete the negotiation and bring it to closing. 

In the cases where listing agents have no experience, patience, or desire to negotiate these very special deals, it has opened up a new income stream for my expertise as I actually enjoy trying to set new closing records each month.  And the lenders get to close 100% of the deals in a timely fashion.

The lenders so respect my work, I am now a referral agent and only 1 of 10 that Bank of America recommends in St Lucie County to their clients who call in to start a short sale.

I am also now the ONLY recommended agent by Chase for their short sale clients in St Lucie County.

My best so far has been 19 days from contract to closing for a traditional short sale and 33 days from listing to sale to closing for a HAFA short sale.

However, it appears that since May 15th with our latest updates from the major lenders, I started 5 new ones on Friday and 4 were HAFA and 1 was traditional and the traditional has been appraised and is on hte way to closing.  This could break my previous record of 19 days.

The 4 HAFAs are all approved pending appraisal and 2 of these have already been done.  They too look like they can break my previous record of 33 days.

For those of us that have SHIFTED our thinking, our training, and our specialty with the economy, we have perfected this market segment and you are correct, we DO DESERVE to be paid for our specialty.

But the bottom line is the lenders do not see it that way. 

Thus many agents feel it is not worth the extra time, the extra calls, the extra training necessary to learn to do these effectively.  I on the other hand do not and actually enjoy the challenge.

So for my fellow Keller Williams agents, I am getting quite popular where some agents have failed 3 or more times to get approvals, they now have a tool to IMPRESS their sellers with as they know the listing will close and in a timely fashion. 

I have one on my desk since Friday that has been listed for 3 years, has failed to close 5 times, and Weds I submitted it, on Weds, I got HAFA approval pending appraisal, on Friday they appraised it and we expect our HAFA APPROVAL letter this week.

We expect to have a fresh contract by next weekend and by the end of the month a sale.

So you decide, in my humble opinion, there is only 1 reason a short sale fails and it AGENT.  THERE IS A DIFFERENCE!

WIth that said, I completely APPLAUD the agents from Keller Williams that have realized this is not for everyone and they are reaching out to me and allowing me to make them look like heros to their listing clients.  Kudos.

Kevin, from one KW agent to another, that is awesome!!!  You are knocking it out of the park! care to share your avg sales price and GCI with us?  I am also in Florida and our market is about 50% short sale and our avg sales price is $150,000...  Team GCI for the year is about $160,000 for the first 5 months

 

I'm also with Keller Williams in the Panhandle of Flroida (Destin).  Other agents co-list with me to get the job done, we just share 4% of the commission and pay out 2%.  The only ones that have not closed are ones where the seller backed out or filed bankruptcy.  That doesn't happen anymore, as we have the "conversation" ahead of time. :)   I also have a contract with a local Real Estate Attorney for me to do the negotiation, and he charges a $1500 fee of which I get $1,000 and pay out $500 to my assistant (above the commission).  Most banks pay it.  Some won't pay that and the settlement charge, but most buyers don't mind paying the settlement charge in the end.  If you know anyone who needs help here in the Panhandle, I'd welcome the referral, and will certainly refer anyone in St. Lucie County to you.  Warm Regards, Pat

My record is 8 days with Chase!  I am a licensed Realtor 3rd Party negotiator (Calif and AZ) which means I can still do 3rd party negotiations with the lenders who have changed their policies to limit short sale transactions to licensed agents and lawyers.

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