Short Sales - Should I hire a negotiations company or mediator?

Rob,

Yes, we do everything ourselves, and short sales was the first time we did not feel comfortable getting in without full understanding how we will be getting out. So we went into yur backyard and contacted Real Estate attorney Richard Zaretsky. He works for the Seller, so the Sellers hire him and pay the retainer, however, if they get ot the closing, the Lender pays the attorney's reasonable fees, and he credits the amount of retainer to the Seller.

Pluses:

• does not cost the Seller as he gets his money back
• Adds qualification and professionalism to the service. His legal assistants would check the file, make sure it is without omissions
• Makes it psycologically easier to negotiate, as when the reps know that they are dealing with an attorney, they respond faster, and are more receptive than when they talk to realtors.
• Does not take my time, and allows me to do other things
• Does not eat my commission

My closing ratio is about 90% as well! If you read my my comment above it states that I charge the agent one in every five closings. My service is free 80% of the time with a 90% closing rate.

Regarding your taking 50% of another agents commission. doesn't that go completely against what you initially wrote this blog about? I mean, I'm negotiating deals and training them as I go and not taking that much?

It appears to me that you are trying to make a name for yourself/company with your designation. Have you taken this to NAR?

Also, How do you feel about standardizing this part of the industry? I have approached other companies with the idea of creating an association of sorts in order to bring some coordination and standards and regulation within the short sale negotiation industry. You can reply privately if you wish.

Ah!  Standardizing this part of the industry is an EXCELLENT idea!  I do not agree, however, that loss mitigators prefer to work with attorneys over Realtors, maybe some do, but some prefer Realtors.  After all, Loss Mitigators are just people.  Some people have their own preconceived notions about Lawyers just like some people have preconceived notions about Realtors. 

Last week at lunch with an attorney that does short sales we started comparing notes - % of successes, satisfactions vs releases, unsecured notes, etc.  - his score was certainly no better than mine. (I had suspected he would come in a little stronger on the satisfactions vs releases but he didn't)

Standardization is exactly what this part of the industry needs.  And it will happen - the next wave will be toward the end of this year (according to MY crystal ball) - we will continue to see changes in lender policies and still more new emerging trends.  Shoot right now, even many MLS boards are not certain how to police the short sale listings that are uploaded on a daily basis.

Alex, I do my own negotations. Short sale negotiations are just too important to hand off to someone else. There may be some exceptions if there are qualified parties that truly know the process. However, I've found way too many companies that are popping up saying they have the knowledge to process your short sale when in fact, they're just starting out as they see Short Sales as the new Real Estate craze with dollar signs.  However, if there are qualified companies and you're too busy to handle yourself then seek them out and use their services if you must. It isn't always so black and white, I'm sure. For example, with Rob Jacobs above, if he was in my neck of the woods, he'd be someone I'd go to if need be.

Wendy- You are so right. There's good and bad in every industry. I am going to write a blog on my thoughts of creating standards. What we do really touches on a lot of different industries and it's tough to catagorize.

Lynn- It scares me to think of some of the unqualified people that are trying to work for Brokers and sellers. It could get out of hand and create problems in the future. We're dealing with the proverbial american dream. And it needs to be handled appropriately. Thank you for the kind words. Rob

Hiring a professional to do your short sale negotiation is not completely hands off unless you want it to be.

Also, before hiring someone...ask for references...request a meeting...do a little digging first!!! Like with any industry including real estata brokerage...their are some real shady characters out their.

We do it all, we negotiate short sales for a flat fee for investors and other Realtors; we represent buyers interested in purchasing short sale deals and we work with distressed sellers looking for an alternative way out.

I say we because to successfully negotiate short sales a team is necessary. If you created a list of all the tasks associated with negotiating a short sale you might come up with a 20 item list that can take anywhere from 2 weeks to 4 months to complete. With an involved investor, realtor, or homeowner the tasks can be divided and the turnaround time can be drasticallly reduced (this is a win for everyone).

On a side note, I am getting the sense that a good pool of retail buyers steer clear of listings that indicate "short sale" or "pre-foreclsoure" or "subject to lender approval" because of the uncertainty they have about foreclosures in general; not too mention their lack of confidence in the average listing agents ability to successfully negotiate with banks. On the other hand, I have been told that savvy retail buyers actually look for keywords in listings such as "professionally negotiated" or "short sale specialist hired" or "short sale professionally negotiated by John Doe ESQ."

Great blog!!!

Anthony

In my opinion I think it is a great idea to outsource your short sales.  If you are selling Real Estate like you should be doing then you shouldn't have the time to sit behind a desk and shuffle all of the paperwork involved with a short sale.  To make any business successful you need to outsource what you do not know how to do and focus on what you are good at, Selling Real Estate! 

 That is like me not knowing much about internet marketing.  Yes, I can go learn how to do it but it would be much more beneficial for me to hire it out rather than lose business because I spent hours upon hours learning something rather than focusing on my core business.

We too teach Realtors how to do short sales.  If they want to negotiate their own short sales then that is fine!  I have found that most of them would rather outsource it because they don't know as much as a third party company nor do they want to know that much about short sales. 

For  Alex...Certified Distressed Property Expert - certified by whom? Who is certifying body...

Hello All,

I must say I agree with most of the comments posted on this Blog.

A real estate professional can take short sale trasnactions in 2 different ways.

1. Learn, become knowledgable and expericend in short sale trasnactions. You are a real estate professional and your real estate license does not claim you as a residentail specialist. As a professional you should be able to proivide full real estate services in a residential market, commerical market, Short sale market , REO market and Forigen national market. Its what being a real estate professional is. a Real estate market expert.

2. yes a real estate agent should request assistance to the short sale transactions as the volume is in the high numbers. It is overwhelming for one agent to handle 20 short sale negotiations on his / her own and having to market the property to obtain a potential buyer.

The trick really is research ... research the compnay that cliams ther are short sale experts. There are many companies that are professionals and will get the deal down but again there are others that will just take your sellers in take fee and run.

As for the fee, there are compnaies that are willing to negoitate the loss mitigating / negotiation fee. Our compnay for example will wipe out the negotiation fee (if the lender does not agree to pay for it) if we handle the closing trasnaction. Other compnaies will ask you for a percentage of the real estate comission or up to the cost of thier fee which can usually range from $2500 - $5000.

These independant negotiating companies usually do not have an addition service to offer to possible cut the negotiation cost, therefore if the lender wipes out there fee who will pay them for their services? The realtor of course.

Most lenders are now impleneting that the realtors be responible for the payment of any short sale negotiating services. Why? well because it was the realtor not the bank in which hired the loss mitigator to do the work for them. Just an FYI. 

Its goes again to my begining statment, realtors should be experts in all market types for this reason exactly. 

In looking for a short sale negitator a real etstate professionla really needs to feel comfortable on who he /she is sending the business to. It is not only your commission on the line but your clients future.

Most realtors are not knowlegable as to the effects of a homeowner going into foreclouser. That is a 22 year deficency judgment against them and guess who they will look at of the short sale doesn't go through?

Needless to say , yes there are aome banks that are not negotiating as they should but there are others that are sending us back the counter offer with in 90 - 120 days. That is the average turn around for a short sale approval in Florida.

If you would like more information as to our short sale assistance , please feel free to conact me.

It really is all about business development and doing business with some one you can trusy and know will assist you in every way possible.

Best of luck for all those in the real estate market.

I agree with you on some points... a realtor should know the process but learn at whos expense?  Having some one negotiate the file gives realtors the freedom to do other things that need to be done.  As you may know how many hours are you on the phone with Loss Mitigation?  Can you afford that loss of time?  Doing one to five files a month will not be the best thing to do if this is your primary income.  These are some of the things why you may want to outsource it.  But again... the choice is yours...

While I understand your concerns about outsourcing your short sales, you seem like you have good experience in closing them, however,  In my experience, 9 out of 10 agents do not have any clue how to close short sales, so turning to a professional can be an option.  As an agent, you are an expert on listing and selling property-that does not make you an expert on loss mitigation.  My agents love me, because as a former lending executive, I understand how mortgage lenders work from the inside.  If you can't say that you can do the following, then you need to hire me or someone like me:

*Short sales with no delinquency

*Short sales for seller with assets

*Protect sellers credit

*95% close ratio

*30-45 day average approval times

*Average agent commission of 5%

*Commercial property short sales

*Help with buy/sell short sale marketing

*Help listing agent properly disclose and work with sellers/agents

*Legal compliance

* Constant listing agent updates and communication

And , perhaps most importantly, not using up your valuable time on dealing with the lenders!

I don't charge the agent or the seller, and yes, my fee gets added to lender paid closing costs, but it is a win-win situation, so, Why Wouldn't You Use a service such as mine?

http://short_sale_expert.activerain.com/

I started using a Short Sale Negotiator and haven't looked back yet. They allow me to spend more time looking for new clients and less time dealing with the bank. Overall the commission is a little less. But, I can rest assured knowing that the file is in good hands and that they close nearly 90% of all our files. Plus, they definitely negotiate a higher commission than I would get.

If anyone want to know who I use you can look them up at www.TheShortSaleCompany.com