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Permalink Reply by Richard on December 11, 2011 at 8:18am

Hi Elizabeth,

Thank you for the great comments and personal insight into the inter-workings of the bank.  One of the areas of the short sale real estate transactions that perplexes me is the lack of consistency and standardization.  I know there are some that will just say, "get used to it".  Some will also say, blame it on the lenders.  However, when the rest of the country and professions work within given industry adapted guidelines and, are held accountable to industry regulators, I see no reason why banking and real estate can't do the same.  Furthermore, I believe this is a key reason why the housing industry is in the trouble it is in right now.  At some point, buyers have to say, "This is where we draw the line".  Additional fees for negotiating services outside of the original scope is one of those points for me, unless they are willing to lower the price.

You know, when times were really good and people were bidding up the prices of homes, the buyers had to bite the bullet and give in because of fair competition.  They did so because there were very few choices in their favor.  The tables have turned and they have more choices and they are getting a little smarter with their dollars.  Mainly, because they see it as a double charge.  It's simple, you're already paying someone else for a service that are not really being performed by the original person that contracted to do it at the start. 

Regarding the agent's and negotiator's education, most other professions require they members to keep up with the latest technology, education etc.  Its called continuing education.  Why can't real estate do the same?

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Permalink Reply by Elizabeth Ross James on December 11, 2011 at 9:27am

Hi Richard,

As a rough estimate with the numbers you gave in your original email, you still are saving $49,500 because you are pursuing a short sale.

You are assuming these classes are taught by people Loss Mitigation Vice President’s?????

No doubt, there are many Realtors that are knowledgeable of short sales. However, the vast majority are not taught information/details that interrupt a successful and timely short sale process.

It is totally up to the buyer to walk away over $5K; however, short sales are already discounted up to 15% (of the current market value).

Let’s take a step back and look at the economic of the situation you have….

Also, it appears that you are viewing the purchase of the property as a "normal loan origination". It is not….

In my opinion, having a good team on your side helping you WATCH and HELP you save money makes economic sense.

The real question is a cash contribution of $5K worth saving $47,500?  ABSOLUTELY!

Paying a good team to assist you is worth it because the bank absorbs most of the costs/fees.

If you pay another $2K to a Negotiator, you are still saving A GREAT DEAL OF MONEY OTHER BUYERS WILL NOT RECEIVE IF NOT BUYING A SHORT SALE.

 

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Permalink Reply by Richard on December 11, 2011 at 11:40am

Hi Elizabeth,

I believe that you may have me confused with someone else in another thread. 

"As a rough estimate with the numbers you gave in your original email, you still are saving $49,500 because you are pursuing a short sale."

I don't see where I mentioned these numbers in my post here. Maybe someone else did.  But anyway, I'll take your bait. 

I'll say that regardless of whose numbers they are, here's a fact, "a listing price does not necessarily constitute a cost savings.  However, a price anywhere below the fair market value is a true cost saving." 

Regarding your statement, "In my opinion, having a good team on your side helping you WATCH and HELP you save money makes economic sense."

I say true, 110%!!  But remember, the buyer doesn't get to choose the team.  Only the seller and lender have that choice.  The buyer only get to choose their agent.  So I ask you the question.  Whose interest do you think the negotiator is looking out for?  It an easy answer for me.  It's the seller, lender, and themselves.  For the most part, the buyer don't have a voice.  The buyer can fold, flee, or fight.

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Permalink Reply by Jeff Payne on December 12, 2011 at 4:00am

Can you explain this more to us because I am not following your logic.  Where is the $49,500 savings come from?  A short sale is going to sell for what a buyer will pay for it, thus selling for market value.  The market value of a short sale can and usually is much different than the market value of a normal sale that does not need a lender to approve. 

The problem is that most banks and bank negotiators seem to think that a buyer will just hand over $5000 because of your logic on short sale discounts.  The banks then cut of their nose to spite their face and lose a deal over $5000.

Is a 5K cash contribution worth saving $47,500, it would be if that was actually the case.  it would be if the buyer was not cash poor or short on funds to pay the $5000 cash contribution.  It would not be if the buyer did not have an extra $5000 to contribute.

Would it be worth it to the bank to NOT ask for a $5000 cash contribution to get the toxic loan off of their books and move on to what banks do, loan money?  Banks need to stop acting like they are in the business of real estate and leave that to the real estate professionals.

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Permalink Reply by Richard on December 12, 2011 at 8:18am

Hi Jeff,

 

The numbers above aren't mine.............not sure where they come from.  That's the question I asked above.

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Permalink Reply by Elizabeth Ross James on December 11, 2011 at 7:37am

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?  

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Permalink Reply by Cody Lampariello on December 12, 2011 at 4:49am

Such an interesting thread let me add my 2 cents as a Title Company that is very active in third party negotiations. First thing we don't charge any kind of additonal fees to buyer or seller but require that we do the closing. Is that in the best interest of the buyer? Maybe, maybe not; they still get their policy of title insurance and clear title but when it comes down to it our client is the seller and the listing agent. That being said not all agents in fact most are not experienced like Jeff and some of the others on this site. If you don't know that when BoA asks for a promissory note it is a block check and most times all you have to do is  say no and they remove it you may be doing a great diservice to your client.

Just like any industry and/or professsion there are people that are good at what they do and people that are definitely not. Avoiding files with third party negotiators may be doing the wrong thing for your client. You are better of doing as Jeff said and interviewing them to make sure they know what they are doing. If there is a fee involved and you know about it in advance so be it just reduce it from your purchase price and move forward. You may be saving yourself months of waiting because the listing agent who is using that company may not have the skillsets or organizational skills to be able to get you to the closing table alone.

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