I'm being told, a lot lately, that I should be charging for everything, when I am processing a short sale. I have seen some agents charge on the mls a fee to the buyer, a fee to the buyers agent ect. I have heard of making the escrow non refundable and 1/2 going to the short sale processor.
I'm just wondering what agents are doing out there with fees.
Paul In Orlando info@PaulAntonelli.net
Paul, our listing agreement includes listing and marketing properties. It does not include facilitating the short sale. It is actually not part of our job per the listing agreement. Seems you have just assumed it is to get the transaction closed. By offering 2% to buyers agent it also makes the transaction smooth. The extra 1% is now between the buyer and their agent. I feel as a listing agent it is not my place to dictate the buyer to pay certain fees, nor to I need the extra work. This way I'm always compliant everywhere.
So what you are saying is that when a listing for a short sale comes in and it is listed as a short sale, all we are to do is list it and market it? If that is the case then why would we take a short sale listing?
I think if you did the training to do shortsales and you take a listing on a shortsale you should do the whole deal and demand a commission that is adequate. Dont make it difficult and get into grey areas trying to charge someone extra fees.
No Paul that is the whole point. The extra work demands more compensation. We do are negotiations in hose and have found that the easiest way to close is reduce the BAC instead of charging the buyer 1%. I was trying to convey that short sales are not like any conventional sale, but since there is not specific language to address the s/s processing in the listing agreement, some expect it is to be done for free. The value we bring to the transaction deserves extra compensation. That to me is the justification for a third party negotiator. Our listing agreement does not address the facilitation of a short sale. We all do it, but it is not in the scope of the agreement.
Paul, I agree with you. We want to keep attorneys out of our business for that very reason. They always win, we usually never do. Short sales are a sign of the times and if you are going to handle them, then it is your job. not my buyer's to pay for the fees for something that you can't or don't want to do. the day will come when all of this will come falling down on the heads of agents. If you hire someone to put the sign in the dirt, should my buyers have to pay for the service, because YOU don't want to do it?? This might work in some parts of the country. Here in Orange County, CA, it goes on but there are a lot of us who say that it is wrong. I guess I got to know the former DRE commissioner to well. and he was passionate about getting the bad guys for being too creative! I am an SFR, NAR designation and Qquator certified and have attended many many classes on the subject. Banks DO NOT prefer to work with negotiators. They would rather work with the RE agent that knows what they are doing and yes, we need more money, that is why I recently changed brokers. I needed to keep more of my commission. so that solved the problem with fees. I am still able to do the job and get great results for all concerned, after all I am still the REALTOR who reputation is on the line. I have not had one sold at autcion...
i totally agree with you. I'm not saying I don't agree I do. Actually here in Florida you need to be under an attorney with the short sales. And I never said I didn't want to do the work, that's all I do. I not only do my own but these days I'm doing more file for other agents in my area.
I am completely OK with charging for my services. I have often been left holdin the bag becuase seller cannot afford to turn utilities on for inspections or becuase a small repair needs to be done to make the deal go through. I think every short sale agent who works a lot of short sales has been in this situation and becuase we want to help the homeowner and also make our commission we do what is needed to make the sale happen. I only give the buyer agent 2.5% and I keep the other .5% to help cover some of my costs but if I have to turn utilities on now I make it a $250 non refundable option fee. It typically runs me more than that but it is better than zero. I think to say that we need to suck it up and do 10 more work for 0 compensation is bad business. Eventually with that busienss model in mind you could run yourself right out of money and then who is going to help the sellers who need our services? By taking care of my business costs and expenses I am insuring I am still in business to help those who need it.
Hello Paul..I have found a way to make this easier for all agents listing a home. First, I respect the amount of work that agents do, especially for the little that they get in return as a commission. Second, the resources and material that are require to process the sale can be incredibly expensive: paper, toner, phone bills,gas, mileage, time, etc.. I know most agents can write these off on their taxes, however it is still AN EXPENSE! How I instruct my agents that list our law firm homes is this: In the MLS, list who is doing the negotiation i.e. a law firm, a mortgage company or other legitimate copmany, Second, list that THE BUYER pays 1% of the sales price or a specified fee as a negotiation fee to these businesses. You and I know that the buyer is getting an incredible deal on these houses and that there is a shortage of inventory. By asking them to pay the negotiation fee, and allowing a legitimate processor to negotiate your file, it leaves you with extra time to list your homes or find homes and put the added stress of submitting, negotiations, follow up calls etc..on the processor. I have yet to come across a buyer who will not pay the fee. Especially since there are usually multiple offers on the home! Worse case scenario, split the cost with your counterpart agent to share the expense. Try the buyer route first! I hope that this helps all of you out there with this same question. Keep up the great work and make this a great 2012!
Agents use to charge the Buyers here in Arizona but like others have written there was a lot of resistance. As Buyer's and Buyer's Agents were "not feeling" the extra charge. We currently make our earnest non-refundable for a short period of time to keep the Buyer on board. We had one short sale with a $1000 earnest deposit in escrow that looked like the Investor Buyer was possibly going to lose for non performance. I advised the Seller of the situation gave her the pros and the other pros, Pro you may be able to obtain the $1,000 in escrow and we scramble to get a new Buyer or the other pro he performs and we close on the home and you move on without any threat of deficiency.
The Buyer did perform and we did close. However the Seller did tell me that if she did get the $1000 she would split it with me. That's the nicest thing a Seller ever said to me. I thought that was thoughtful. It doesn't seem like you can legally make the earnest non refundable and ask for half but if it could be done I would definitely be all for it!!
I have asked the banks to pay a fee for file review and processing.Some banks say no, others have allowed. I usually ask for 500 to 1500. I would not ask a buyer directly but think it fair to split negotaitor fee between agents .
By the time we figure this out, the lawsuits start flying and the E&O carriers too figure it out perhaps it will be nearly over. There should be compensation over and above a typical real estate commission for most short sales, shorting the buyer's agent is not the answer. Until the "banks" figure out that front loading the effort by estabishing realistic pre-approved pricing and commmit to closing within reasonabe time frames this mess will continue, sadly. Can't wait to see what happens when sellers start coming after agents due to the terms of the short sale negotiated by the agent. Likely a very good idea to have an attorney involved considering there is a lot more to a SS negotiation than $$$.
Here in Florida you should start seeing this happen real soon. And I have already heard of one company being dropped by their E&O company because they were doing short sales.