3rd party SS Processors

I recently changed to a new Broker. Company claims, that if you use a certain Escrow Co., that they negotiate your SS for free. Bank get charged for that, and if the bank refuses to pay, it's OK.  I know, that has been a lot of dicussion here, re-SS processors.  My success rate is about 98%. SSS, I would like to hear your experiences.  Thank you!

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Permalink Reply by Joseph Alfe on January 26, 2012 at 7:03am

It would be rejected by the seller with our recommendations. In the off chance that they override us, we would respectively bow out of the transaction and cancel the short sale, and the seller would then be free to process as they see fit. What you are not understanding is that the listing agent does not hire me, the seller does.  The agent doesn't have a choice, though they almost all are happy that I am involved.

You are absolutely, positively incorrect about getting the highest and best price for the seller.  Your Fiduciary Duty (and mine) in a short sale is to put the seller in the best financial position.  This may be the best and highest, but most times it is not.  for example, if your client offers 200K, refuses to contribute anything to the deal, and another buyer offers 150K, but agrees to bring extra cash to cover seller expenses, buy out deficiency, etc..then it is in the sellers best interest to take the lower offer, so long as we can justify the offer to the lender. We have no duty whatsoever to the lender to disclose highest offer, because they are not the seller.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on January 26, 2012 at 7:08am

Interesting -

 

BTW, In California, the law says there can be NO deficiency on any approved short sale.

Permalink Reply by Joseph Alfe on January 26, 2012 at 6:42am

Correct. This is why I do not do negotiations in California. I think their law is incredibly short sighted and ultimately impacts the seller.  All other states allow it, as does Fannie and Freddie.

Permalink Reply by Mark on January 26, 2012 at 3:25am

There's a title company here in Phx that does it for free - (no begging the lender for money either) - it's not terrible, but they aren't really "advocating" for anyone. 

If the servicer tells them "everything has been approved by the investor", then on the next call, the servicer tells them "the file is going to the investor" - they'll believe it, send you a copy of the email... etc. 

So it's better than NO help, but the listing agent still "owns" the file, and really needs to keep an eye on things. 

It's worth the $0 you're paying for it! 

Permalink Reply by Jeff Payne on January 26, 2012 at 5:01am

Mark, eventually the title company will be losing money in my opinion.  I have discussed at length with a close friend of mine who owns a title company and it is hard to see how a title company can survive on their closing fees alone.  A $750.00 closing fee would be tough to cover a salary or hourly employee whose only job is to process short sales.  That is if the lender even agrees to pay $750 for a closing fee.  In my area the seller pays title and closing fees....

I would love to hear how those title companies make any money at the end of the day. 

Permalink Reply by Brent Innocenzi on January 26, 2012 at 5:59am

The title companies also make money for writing the title insurance for each closing.

Permalink Reply by Jeff Payne on January 26, 2012 at 6:09am

Sure but it is not much money.  The average sales price in my area is 150,000 and the title policy is $825.00 and the closing fee is anywhere from 500 to 750.  Assume that they get the closing fee of 750 and 50% of the title policy (probably not that much) they make less than 1200.00 gross.  They have a short sale processor, and closing agent at the very least to make it work that probably get paid well and they have overhead, utilities, mortgage or rent, insurance, technology..... 

I would be curious how much the title company would actually make from a short sale.  One positive would be that they should get ALL of the agents business whether or not it is a short sale so that would help alot.

Permalink Reply by Bryant Tutas on January 29, 2012 at 1:51am

x

Permalink Reply by Eric Mieles on January 29, 2012 at 2:20am
Joseph, I'm sorry and humbly I say you are 100% wrong!! What you're doing is what's wrong with our industry and if I'm the buyers rep on one of your transactions I would take it as far as possible to report you. Sorry bold statement but every post you have on this thread speaks as if you're in charge and not the seller. Let's remember this transaction only differs from a traditional on in that "sale is contingent upon third party approval"

The agents responsibility is "to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker." anything other than that and your not doing the best job for the seller.

There was a case here in Florida where a fee was being passed onto the buyer. The home went into foreclosure and the homeowner sued in court citing the fee was to blame for no buyers coming forward and buying the house. The judge ruled in the homeowners favor and sued the agent.

My buyer should not be responsible to pay your overhead and an expense that was incurred "voluntarily" by the seller. I can almost 10000000000% guarantee if I was to sit down with your seller and explain everything this detailed niche of real estate entailed in an "unbiased" way they would forgo just only entertaining offers that will bow down and pay your fee............100000000% guarantee!!!
Permalink Reply by Joseph Alfe on January 29, 2012 at 6:41am

Eric, I respect your passion but it is you who I believe is wrong.  Why shouldn't the buyer be responsible?  Look at an REO contract and disclosures.  Here, the buyer is buying directly from the lender, and it must be agreed that everything is at buyer expense. On average, a short sale sells for 27% less than a non distressed property. 27%.  When I am in the picture, the discount is even greater.  This directly benefits the buyer.  Shorter process times, more efficient process..these too benefit the buyer. I get seller closing cost credits on financed buyers to further compensate for my fee. A greater than 90% success rate, this benefits the buyer (how much time is wasted on buyer offers on short sales that never close?) In most cases, the buyers come out ahead when I am involved. To reject a concept out of principal without knowing the facts is irresponsible, unprofessional,  and childish.

Unlike some negotiators, I am retained by the seller with a written contract.  This establishes Fiduciary Duty.  My job is the get the sellers short sale closed quickly, and put them in the best financial position. Part of that duty is to screen buyers to weed out non legitimate or unqualified buyers. I get approvals, I get deficiencies waived a high percentage of the time, I coordinate closings...on average I spend over 30 hours per transaction, sometimes much, much more.  All of these things and more is why I earn, and deserve compensation. With my fee agreement being disclosed to the buyer early, they can make an informed decision on whether to move forward. 99% of buyers agree because they see the value, and above all, I allow a lower offer to be submitted.  Partly to compensate them for my fee, and partly to create negotiation room.  The effect though, is a real chance for the buyer to receive a greater discount.  There is value to the buyer.

The seller is always in charge.  Because I work closely with them, they usually agree with my recommendations, they usually agree if I tell them that a buyer is not qualified. If the seller insists on a contract that does not include my fee, then I will voluntarily excuse myself from the transaction.  In other words, I will never let a fee come between a closing, and I always am flexible (as should agents). I can't tell you how many times I have given up some or most of my fee to cover other seller expenses that could not be covered any other way.

I'll leave you with this: Both Fannie and Freddie specifically authorize third party fees charged to buyers. Most importantly, out of the hundreds and hundreds of short sales that I have closed, our sellers, buyers and brokers (and attorneys) are completely satisfied and grateful, and that is really all that matters.

www.ssprocessors.com

Permalink Reply by Jeff Payne on January 30, 2012 at 12:25pm

Joseph, not to get off topic but REO expenses are paid by the REO Lender.  Lender pays for title, doc stamps and closing fees, at least all of the REO listings that I have do.  Bank of AMerica pays the REO fees, not the buyer....

Back to the topic at hand...

Permalink Reply by Smitty on January 29, 2012 at 7:36am

Eric, you may have misunderstood something somewhere.  Let me disclose up front, I charge similar to Joseph and am a 3rd party negotiator as well.  I think if you read his discussion, he has already said he would bow out of any sale where the seller opted to take a contract where the buyer refused to pay the fee.  THAT SAID, buyers being charged a negotiation fee is quite common nowadays and please keep in mind, any buyer interested in a property has the right to make their own decision.  I could equally say that I've read over and over on this site about buyer's agents who simply "refuse" to show a buyer a listing that has a buyer paid short sale negotiation fee.  Isn't it the BUYER'S CHOICE what property they want to see??? No buyer's agent should be making that decision for the buyer.  If a property has CLEARLY listed there is a fee associated (charged to the buyer) that is payable at closing to the negotiator and the buyer still wants to see the property, it's not up to YOU  or anyone else to make that decision for the buyer.

What exactly would you report Joseph on?  He's clearly disclosed his fees, negotiation agreement, had it written into the P&S and on the HUD1, so what exactly did he do wrong? 

Remember the buyer is not paying any more for the property than they want to.  Let's say they are buying a property and want to pay a total cost of $130,000...well Joseph charges 3% so a $3900 negotiation fee is what the buyer is looking at.  They adjust their offer to the seller so it reflects as $126,100 and bring the $3900 to closing.  Joseph has already had a full discussion with the seller who have agreed to all of this and hired HIM to negotiate the sale.

There are MANY fees that are normally associated with the seller, that the buyer pays in a distressed sale situation.  In my area, buyers can be responsible for not only negotiation fees, but occupancy permits, bringing property to code, septic inspections, smoke certificates, and a whole load of other fees that are NORMALLY the responsibility of the seller, but in a distressed situation are charged to the buyer as the seller may not have the means to take care of those items.  When list agents in my area have to have the buyer pay for these things, they CLEARLY DISCLOSE IT and buyers know up front if they want that particular property, they are incurring those fees to close it.  It's the same with negotiation fees.

Keep in mind many lenders allow a seller contribution to cover the costs of negotiation as well...So again using the example above, a seller allows a $3900 concession and the NET to the lender is EXACTLY THE SAME = $126,100

Now I don't know Joseph at all, but i can tell you last year we shifted to buyer paid fees as some lenders were clamping down and I can only assume that's why his model is to charge the buyer as well. 


I don't know the case in Florida, but let's face it.  If a property doesn't sell, what is the number one reason?  It's OVER-PRICED.  Every property will sell for the right price.  A million dollar property will likely easily sell for $150,000 don't you think?  It likely won't be approved, but any good short sale agent knows you don't over price a property.  Most agents I work with have a property under contract within 30-45 days.  If they don't, then we keep telling them to reduce the price every other week $5000-$10000 depending on the price of the house.  Now we are building a nice listing history as well.

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