This post will serve to gather a list of all the states that require a real estate license to negotiate short sales.

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Straight from Washington State DOL:

"The Department of Licensing ("DOL") and the Department of Financial Institutions ("DFI") require that a person have either a mortgage loan originator license, a real estate license, or be an attorney licensed to practice law in Washington, to negotiate short sales".

Let me add to that- Real Estate agents may not charge additional fees over the listing fee to negotiate a short sale. Short sale negotiation fees over traditional 6% may only be charged from a licensed loan officer and Attorney. 

Ben,

 

I don't want to take this conversation too far off track here, but a statement you made in your post is the reason that I posted this discussion:  "..distressed seller's can choose anybody to negotiate their short sale."

 

The whole reason that I posted this thread was I only understand the laws where I work, but in Minnesota your statement is factual true, but pragmatically untrue.  Nothing precludes a seller from choosing any person they like to negotiate their short sale.  MN statute precludes the person hired from accepting any form of compensation (from anyone: seller, bank, buyer, etc.) unless they are an attorney or hold a MN real estate license.  That begs the question of why anyone would desire to negotiate a short sale for free.

 

Cameron Piper

Coldwell Banker Burnet

Ben Racela said:

First let me say that distressed seller's can choose anybody to negotiate their short sale.  

 

In California real estate broker's cannot pay non-licensed SSN or 3rd party companies to negotiate short sales for their clients without the risk of losing their license.  In New Mexico there is a bill that is currently being discussed and some of the larger brokerages will not work with 3rd party SSN's for the same reason as California.  For both states another significant issue working with 3rd party SSN is E&O insurance.  But the main reason is to protect the seller's from companies or individuals with questionable operations.  For states that do not require a license please operate Ethically, Legally, and Morally right!

Rhode Island

State Re license

CA requires that you be a RE Licensee.  Unlicensed Short Sale Negotiators are coming under great scrutiny of late (as they should).

 
CALIFORNIA CODES
BUSINESS AND PROFESSIONS CODE
SECTION 10130-10149


10130. It is unlawful for any person to engage in the business, act
in the capacity of, advertise or assume to act as a real estate
broker or a real estate salesman within this state without first
obtaining a real estate license from the department.
The commissioner may prefer a complaint for violation of this
section before any court of competent jurisdiction, and the
commissioner and his counsel, deputies or assistants may assist in
presenting the law or facts at the trial.
It is the duty of the district attorney of each county in this
state to prosecute all violations of this section in their respective
counties in which the violations occur.



10131. A real estate broker within the meaning of this part is a
person who, for a compensation or in expectation of a compensation,
regardless of the form or time of payment, does or negotiates to do
one or more of the following acts for another or others:
(a) Sells or offers to sell, buys or offers to buy, solicits
prospective sellers or puchasers of, solicits or obtains listings of,
or negotiates the purchase, sale or exchange of real property or a
business opportunity.
(b) Leases or rents or offers to lease or rent, or places for
rent, or solicits listings of places for rent, or solicits for
prospective tenants, or negotiates the sale, purchase or exchanges of
leases on real property, or on a business opportunity, or collects
rents from real property, or improvements thereon, or from business
opportunities.
(c) Assists or offers to assist in filing an application for the
purchase or lease of, or in locating or entering upon, lands owned by
the state or federal government.
(d) Solicits borrowers or lenders for or negotiates loans or
collects payments or performs services for borrowers or lenders or
note owners in connection with loans secured directly or collaterally
by liens on real property or on a business opportunity.
(e) Sells or offers to sell, buys or offers to buy, or exchanges
or offers to exchange a real property sales contract, or a promissory
note secured directly or collaterally by a lien on real property or
on a business opportunity, and performs services for the holders
thereof.

in IDAHO - On Jan 21, 2010 The Idaho Dept of Finance sent a letter to the Idaho Real Estate Commission indicating that Active Real Estate Licensees and those licensed with the Dept of Finance as a loan originator would be those that may negotiate short sales.  Lawyers can also work short sales without any additional licensing.

Attorneys and 3rd party negotiators who are licensed by the mortgage lending division can also negotiate short sales.

 

Real estate agents can negotiate short sales only if they are involved as an agent in the transaction, (not as a 3rd party negotiator.)

 

Assembly Bill 152 which modified NRS Chapter 645F

http://www.leg.state.nv.us/75th2009/Bills/AB/AB152_EN.pdf

Terri White said:


Mark E. Wilson said:
Nevada is required to have a State Real Estate Licence NRS: 645.

 

Mark - I have been looking for exact language of the law; do you have the sub-number under 645?  thanks much

NH Anyone can negotiate a short sale and NHAR actually suggests that Realtors DO NOT NEGOTIATE ON A HOMEOWNER'S behalf.

The exact verbiage is as follows: " REALTORS must be careful when handling short sale transactions to not negotiate with the lender on the property owner’s behalf."

You will need to go to the link and CLICK THE BULLETIN and scroll to the last paragraph on the last page:
http://www.nhar.org/member-services/legal-committee-resources/poten...

If you want to negotiate as a 3rd party and do not have a license you have to follow certain guidelines:
http://www.gencourt.state.nh.us/rsa/html/XLVIII/479-B/479-B-mrg.htm

We have moved from a seller's agent to a facilitator on our short sales.

I do not believe there is any licensing requirements in Massachusetts either.

Ben, E&O issues aren't JUST for 3rd party negotaitors.  Those issues affect every Realtor out there.  Call YOUR E&O company and ask if you can be sued for negotiating short sales.  The anser will be a resounding YES. 

Ben Racela said:

First let me say that distressed seller's can choose anybody to negotiate their short sale.  

 

In California real estate broker's cannot pay non-licensed SSN or 3rd party companies to negotiate short sales for their clients without the risk of losing their license.  In New Mexico there is a bill that is currently being discussed and some of the larger brokerages will not work with 3rd party SSN's for the same reason as California.  For both states another significant issue working with 3rd party SSN is E&O insurance.  But the main reason is to protect the seller's from companies or individuals with questionable operations.  For states that do not require a license please operate Ethically, Legally, and Morally right!

Here in California, you definitely need a RE license to negotiate short sales.

Directly from the DRE: "Short sale negotiators must be licensed real estate brokers (or a licensed real estate salesperson where that person is working under the supervision of his or her broker)."

Rod, that's not "entirely" true:

"Only real estate licensees, California lawyers acting as lawyers and investors acting on their own behalf can engage in short sale negotiations. "
http://www.dre.ca.gov/pdf_docs/pr/DRENewsRelease_092910.pdf


Lawyers and investors acting on their own behalf can negotiate.

Smitty is correct about E&O. 

For example, my own policy absolutely covers Short Sale Negotiatons both on behalf of my listings / sellers and, as a 3rd Party Negotiator (which I handle MANY for other Brokers & Agents).  On my E&O application, I spelled it out;  "Direct and 3rd Party Short Sale Negotiation",  and I spoke specifically about it with my Insurance Broker at renewal time / prior to my last two policies being issued.

As Smitty says - check with your E&O Provider / Carrier to make sure you are covered.

Smitty said:

Ben, E&O issues aren't JUST for 3rd party negotaitors.  Those issues affect every Realtor out there.  Call YOUR E&O company and ask if you can be sued for negotiating short sales.  The anser will be a resounding YES. 

Ben Racela said:

First let me say that distressed seller's can choose anybody to negotiate their short sale.  

 

In California real estate broker's cannot pay non-licensed SSN or 3rd party companies to negotiate short sales for their clients without the risk of losing their license.  In New Mexico there is a bill that is currently being discussed and some of the larger brokerages will not work with 3rd party SSN's for the same reason as California.  For both states another significant issue working with 3rd party SSN is E&O insurance.  But the main reason is to protect the seller's from companies or individuals with questionable operations.  For states that do not require a license please operate Ethically, Legally, and Morally right!

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