Now I know from prior experience on this site I am going to get some vehement obections to this post but I wanted to put my two cents in anyway. I am at this point in time about one transaction away from making a company wide decision to not accept short sale closings that are processed by realtors.
Why you might ask...
As far as I am concerned it all comes down to financial responsibility. I would say that on almost 50% of the transactions we close that are negotiated by realtors there is some last minute fix that needs to be made because they do not understand the closing process and haven't completed everything in order to properly approve or close out the file. The most distressing thing about this is if there is a screw up. If the negotiating realtor didn't close out the file correctly. Has an approval letter that is expired and didn't get the extension. Or in the most recent case has an E-mail from the 2nd lender stating they will approve said amount but never actually got the approval letter. The financial responsibility falls on us.
Yes, it's our job as a closing company to notice these items and we do. What happens though when for some reason the processor on the file was overly busy and doesn't follow up to make sure the realtor negotiating the file did their job correctly. Who ends up being financially responsible when the new owner finds out there is still a mortgage on the property because they were all not closed out correctly. The closing company. The realtor could possibly be sued by the seller for not negotiating the loan correctly and the seller may win damages but guaranteed if the buyer makes a claim our title insurance company is going to pay it out in full. Too many of those and you're out of business permanently. Now as I said we've caught them all. All the little mistakes that our clients make when they negotiate their own files but what happens if we miss one?
I'm starting to think I may not be willing to take that risk.
So, now for your thoughts.
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Oh my goodness Keri hit it right on the head.. I can't count how many times attorney's, so called short sale negotiators, have dropped the ball. While pointing fingers at agents, 4 is being back at others.. While some agents don't have the experience of short sale, many third party negotiators don't have any training either..In my experience once an attorney get's involved they many times screw things up...
This is a very timely post for me.... my Buyer Agent is trying to close tomorrow on a short sale only to find out the listing agent "forgot" to put in the tax proration on the initial offer submission in equator. The initial offer submission did not have any seller fees, just the sales price so the bank approved the sale based on very little info.....
Jeff I can't tell you how many lawyers/title co's I have to educate on pulling municipal town info and taxes to make sure there is an accurate HUD...LOL..
We were just asked by one of the major underwriting companies to speak at an attorney conference regarding short sales. they asked what our biggest pet peeve was, and I told them when an attorney or title co tries to change the already approved HUD AT closing and submit it. ...or can't follow closing instructions on an approval letter.
I can't hand hold every person in a deal and boy, I have to on every deal.
I haven't read all the treads in this post so forgive me if this has already been covered...but Smitty's comment above is exactly why Realtors NEED to learn to negotiate their short sales...now understand, I am a professional third party negotiator-I work as an assistant to the attorney here at my title company...AND I am a 12 year Realtor. SO...here's the scoop-only a VERY small amount of actual negotiations in a short sale take place AT the bank! The majority of short sale negotiations take place at listing, contract and counter offers. The bank is usually a bunch of corporate protocol and guidelines that really have little negotiation ability in them. What this means is that these deals NEED a driving force which in my opinion should be the listing agent! This is the go to person who needs to direct this deal and cooperatively negotiate with the parties involved to get the deal to the closing table. I get DEAD deals at my desk BEFORE they ever hit the banks ALL THE TIME. Some were dead at the listing...Realtors NEED to understand the full process and not assume that once you turn it over to your attorney's office/third party negotiator, they can handle it all. It takes a team to make these successful.
Aw...thanks Kerri!
Wow so much love here today! Thanks guys and Smitty, I call it how I see it. :)
Keri wins! Seriously, she hit it right on the head! Many agents fail because they cannot grasp what their role is. In a perfect short sale, the attorney/title company, agent, negotiator all come together to leverage their expertise and experience for the benefit of the seller. The attorney legally protects the seller, the agent is the market expert and lists and sells the property and deals with buyers, and the negotiator deals with the lender, and coordinated the entire process. Check out my blog on this topic here:
http://josephalfe.com/2012/01/the-listing-agents-role-in-the-short-...
Great post!!!
Cody,
I understand your concern. We all deal with people from time to time who are not doing their job in one way or another and we have to pick up the slack.
We had a short sale last year that was TWO days from closing when the ATTORNEY handling the short sale did their title search and discovered a 2nd Lien on the property. The Seller hadn't been up front about it because he "thought it didn't matter because he wasn't paying it" and the attorney thought that two loans had been combined into one when he refinanced. It was a shock that they had not done a preliminary title search. Who takes a Seller's word when they are doing a short sale? Let me say that it turned into a Perfect Storm of a short sale and the Buyers ended up walking and writing on another house and this one is now likely foreclosed.
While I appreciate the desire to generalize, I don't think we can pin this one on anyone in particular. Many times I ask attorneys and title companies about short sale details, short cuts and escalation tactics and they don't know what I am talking about. I have taught them. Not that I know everything, but am always trying to keep up with the changes.
There are real estate agents who send me contracts that are improperly filled out, who don't do their jobs - but I don't think I have the luxury of telling them that I won't do business with and sell the Seller's house just because they can't or won't do their job. At a closing recently an agent told me it was a "pleasure doing business with me" and my thought was "I'll bet it was, I did my job and you tried to make me do yours as well as much as you could!"
It is not my desire to be critical, but there are real estate agents who can dance circles around 99% of attorneys and title companies doing short sales. Check their track record and you can do it on a case-by-case basis, would be my suggestion.
Sharon and others, What I see here is that the agents here represent the industries best and brightest. When we talk amongst ourselves, it is obvious that most of the agents here should not be included in any discussion of "should agents do short sales." However, if you look at the industry as a whole, the skillset and abilities...then yes, agents should not be doing short sales. The vast majority of agents I see aren't worth the paper that their licenses are printed on. It's pathetic, actually. Most can't even fill out a contract, much less process a short sale and no amount of sitting through 2 hour webinars is going to help.
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