How does the Negotiator Get Paid?
I know this questions is very general, but I would like to see opinions and discussions. I have been partnering with another person for several years. He's great at the negotiating, I'm great at the Real Estate side. Lately the lien holders have completely taken the negotiating fees out of the HUD, although leaving the Commissions at 6%. The negotiators, from several different approaches, seem to want at least 1%. I don't mind pay this out of my commission, but I do mind seeing that the distressed homeowner is walking away with more incentives than I am commission. I see where a lot of short sales are asking for Buyers to pay the 1%, but I also see a lot off feedback from Buyers agents that this is ridiculous. Opinions? If a distressed homeowner is receiving $3000 from HAFA, how can I legally ask that they pay their own negotiating fees?
Replies to This Discussion
-
Permalink Reply by Mark on
-
As a buyer, if it's disclosed up-front, I'll shy away.
It's just too many "cooks" in the soup, and one more way for the listing agent to shuck-off responsibility - even though they're drawing a full check. A third-party negotiator really only benefits the listing agent, there's no reason a buyer needs to pay for that.
If something like that were sprung on me, as a buyer - at the end of a sale, I'd be mad as heck and do my best to get the agent, broker, and negotiator strung up by the board of real-estate. It seems if the negotiator is doing the work of the listing agent, he/she really needs a license - and if the listing agent is getting paid for work not performed, in my opinion, it's a RESPA violation, collecting fees for services not performed.
-
Permalink Reply by Smitty on
-
Mark, "As a buyer, if it's disclosed up-front, I'll shy away. If something like that were sprung on me, as a buyer - at the end of a sale, I'd be mad as heck" So, basically you're just prejudice all together against a negotiation fee.
First, not all Realtors can do it right. Realtors started heavily negotiating short sales after the bubble burst in 07. So it was 3rd party negotiators i.e., title agents, lawyers, mortgage originators who largely did it before that. VERY little Realtors back then had the experience, so you're assuming because a Realtor negotiates they have the experience and that may not always be the case.
This discussion has been beaten to death on this site and honestly, I GET that a majority of Realtors want "control" of all aspects to the sale. I don't begrudge that, but that doesn't mean that 3rd party negotiators aren't just as capable. I still maintain that short sale negotiators SHOULD be held to a higher standard than a mere RE license. There needs to be much stricter licensing for short sale negotiators and MUCH longer training periods.
For buyer's agents to "shy" away from a listing because there is a negotiation fee, I would have to ask what service are you doing for your buyer? I mean if a buyer REALLY wants a house, it's not up to us as agents to say, "No" just because we have preconceived notion about 3rd party negotiation firms.Keep in mind, no one was up in arms when the Negotiators were paid from the sales concessions. Believe it or not, the buyer pays the EXACT same amount when the negotiator is paid from the sales concession vs. the buyer bringing cash to closing. People who don't UNDERSTAND the process have his perception they are paying more money for the house and it's simply not true.
-
-
I want to thank everyone for their opinions and comments. It seems as though the majority of agents are doing their own negotiations. I guess my last comment on this discussion would be how do you know that the agent is qualified to negotiate short sales? What makes them a specialist? Hopefully not that one day course. Agents are licensed professionals, but training on short sales is very brief unless you have taken extensive coaching and training from outside (3rd party) resources.
-
-
How do you know the lender is qualified to do the short-sale?
I've got one that's been pending for 10 months - the listing agent has answered EVERY request they've made, and the only LOGICAL conclusion is that the lender (servicer) wants to extend the process as long as possible, so they can continue to milk the investor for fees.
No amount of "mentoring", "training" , "coaching" or magic beans will make the sale go through if the servicer is acting in bad faith - and it's a lot more common than "agent" problems. An agent who truly drops the ball will get "found out" the very first time the seller calls the servicer.
-
-
The only question my buyer's agents ask is: "Are we likely to get paid?" Does the person handling the process have the time and the skill to bring a reasonable offer and push it through. Sadly, after doing this for almost 7 years, the answer is "no." We have found that certifications mean nothing. A law degree means less.
We hire a third party and disclose their fee. We want them to get paid. Early on they could get paid from the banks most of the time. As time went on, we disclosed they were to be paid by the buyer. We still get some minor resistance, and that is ok. We do however close almost every transaction. We also have time to work with buyers and sellers and leave financial work to people who do processing all day, every day.
-
Permalink Reply by Jeff Payne on
-
Janis, we interview the person that is doing the negotiations and ask a series of questions to determine if we believe they can get the short sale completed. We don't care what training or what designation that they have, we care about their experience and how they answer our questions. From there we alert our buyer of our findings and let the buyer decide their fate.
-
-
Short sales require significantly more work than a regular sale.We shouldn't equate the extra work to Transaction Coordination which is part of every deal including Short Sales.We should be compensated for the additional work.I pay my plumber,doctor,car mechanic etc for their extra work.Realtors are insecure about the value of their services and don't charge what they are worth.It is time for Realtors to stand up for themselves, quit being apologetic and charge for your time,skill, knowlege and expertise.
Many agents in my office bring me their shorts and we co-list.We list at 6% with 2.5% going to the selling agent.Additionally we charge the buyer 1%.At the close we earn 3.5% plus 1%, 4.5% total which we split 50/50.We each end up with 2.25%.I've closed 51 deals this way and no lender has denied the 1%.Sometimes I get the 6% cut to 5% and we absorb the reduction,not the buyers agent.The 1% fee is disclosed in the listing agreement,purchase agreement,final HUD and disclosure I have buyers sign.This is legal according to Calif.Assoc.of Realtors.HUD says it is OK.I hope our industry as a whole gets the courage to charge what they are worth.
-
Permalink Reply by Richard on
-
Hi Eric,
I agree that you should get paid for extra work! No doubt about! If you read some of my other post, you'll see where I mention NAR should take a bigger stance on these issues, particularly with the lenders.
I don't want to sound unsymphathetic about the issue. The real estate industry should consider charging the people responsible for making it a short sale, the sellers and lenders. In most cases the agent suspect that the seller doesn't have the resources and they don't want to fight the lender. So it defaults to the buyer as an easy target? In reality, the buyer only see another mortgage that they will ultimately be responsible for. Additionally, the buyer is not getting anything extra out of the deal.
Some people argue that the buyer is getting a great deal in the purchase price of the home, however that home value is already falling because of the market. And, it was more than likely over-inflated to begin with.
-
-
Richard, May I suggest that you are thinking that the gross price paid by the buyer is the same as the net price. Since short sales do not process themselves, and professionals need to get paid, if someone charges a 1% processing fee to the buyer, and the buyer through his/her agent is clearly informed of the fee, they should make an offer that is 1% lower than they otherwise would.
Using round numbers, if I know that $100,000 is a price I am willing to pay, and there is a 1% fee, I would offer $99,000 PLUS $1,000. This is the same $100,000 but sightly restructured. More importantly, if the 1% goes to someone who knows what they are doing, I am much more likely to purchase the property I want for $100,000, I am likely to get at a price I am willing to pay. This provides service to your customers and gets YOU paid. So some agents can stand on whatever principles they want, but they will earn less money and have more unhappy customers.
This of course presumes that the people "serving" the homeowner know what they are doing.
-
-
Hi Edward,
I structure my offers by saying what I will pay for in the contract. If accepted, fine! If not, I move on. I know that often times strange turns can take place during negotiations that I don't have a voice in nor, any control. So, by stating in my contract my position on what I'll pay, there is no hidden agenda for the seller, their agent or negotiator.
Some will argue that some sellers will bypass my offer. That's fine and there are no emotional attachments anyhow. Itf they want to take a chance on someone else, then go for it. But, I normally go in with a good solid offer(with a small buffer for myself later), great-proven financing, hassle-free requests and I don't ask for things that the lenders will most often shoot down such as closing costs. I try and keep it simple.
I go by the simple rule: "A house is not a home...........yet."
One thing that I always keep in mind is most homeowners that are in trouble have predictive behavior.
-
-
Hi Richard,
There are states where the Realtor cannot negotiate a short sale. There is not an answer that fits all short sale situations. I want you know that your comments are extremely helpful and appreciate that you took the time to give your opinion. :)
As a former Negotiator (who worked at a bank), I can say first hand a certain skill set and education (investor requirements, srategy, etc.) is required to negotiate a successful and timely short sale. Remember, many times you will have multiple loans and liens on a property - different investors and requirements/programs. Successful and timely short sales require a specialized skill set. Understanding of the the bank's loss mitigation process is vital. New programs and regulations on the bank level are released almost daily. It is also important to understand short sales are voluntary by the bank; thus they are allowed to set their own requirements.
I guess the question really is....
1) How much value placed on your Realtor services (i.e. access to marketing, advertising, knowledge of distressed homes, etc.)
2) How much value you place on the Negotiator's education on newest programs and overall coordination of the short sale?
© 2024 Created by Short Sale Superstars LLC.
Powered by
**********************************
like buttons