Without Knowledge...."Passing The Buck" Can Be Fatal For Your Client!!!

First of all, please allow me to preface this blog post with the following statement...."I am NOT against the use of third party negotiators handling short sale transactions. There are many effective third party negotiators and some that I would even use....after a lengthy interview, of course. The actions of some third party negotiators DO NOT reflect the actions of ALL third party negotiators".

....No that I've gotten that out of the way, it's time for me to speak my mind.

We all know that the FHA PFS program (the best thing since sliced bread in my book) is first and foremost, a pre-approved short sale program. In fact, being proactive in ensuring that your FHA Short Seller is allowed into the program is paramount for a successful FHA short sale. One of the main reasons is that the Seller is protected from foreclosure throughout the duration of the program. This is a CRUCIAL point to this story...

True story....I was talking to a local listing agent about a short sale that she was listing. She came to me for advice on whether or not I used a third party negotiator since she was contemplating doing the same. I told her that my control issues forced me to handle each and every short sale personally since I honestly had not met a negotiator who would work a short sale as hard as I do and who had a close rate as successful as mine. Now, don't get me wrong...I wasn't being arrogant, only honest. If I found one who did, I'd definitely punt a few of mine over to them. She began to tell me about the scenario that her client's were facing. They were three months delinquent in their mortgage payments and had an FHA loan. She mentioned the third party negotiator that she was working with and I quickly informed her that I'd interviewed this firm and they were adamant about the fact that they would not send any paperwork or begin the short sale process until after they've received an offer. I told her that it would be pretty risky for her clients if she waited on an offer instead of proceeding to send in the requested paperwork and get them into the FHA PFS Program. She then began asking me about the program....I WAS STUNNED!!!! I then realized the enormous amount of faith that she was entrusting to a third party when her clients were clearly depending upon her expertise and knowledge (or lack thereof). I explained the program to her, gave her a couple of websites to research different programs for different loan types, and encouraged her spend a weekend researching these different programs. Her response to me was "I don't have time to do that".

What do you mean, "you don't have time to do that"? You're totally comfortable with remaining ignorant with the entire process, ignorant to the options that your client has, ignorant to the danger of waiting on an offer before starting the process and protecting your client from foreclosure? She was completely comfortable with passing the buck to a third party negotiator who had a policy of throwing a multitude of files up against the wall to see which ones would stick!

I pondered her response for the remainder of the day and realized that there are some agents who will list a short sale with absolutely no intention of closing the transaction! If it closes, it closes...if it doesn't, then "oh well". These people are literally playing Russian Roulette with someone else's financial future and advertise themselves as "Specialists". We're not talking about Monopoly money!!! These people are desperate and it's unfortunate that so many take advantage of this desperation by NOT providing their clients with useful and knowledgeable information regarding their decision to sell short.

Okay....I'm stepping down from my soapbox for the day! Thanks for listening.

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Comment by Vanessa Calhoun on March 5, 2013 at 1:08pm

I wholeheartedly agree, Smitty! There's so much FREE information that's available to EVERYONE regarding short sales, so there's no excuse about having very little knowledgde regarding something that you've agreed to do. Even when it comes pricing and marketing a short sale, an agent HAS to be able to look at the market from the Seller's lender's standpoint or at least have a viable resource to turn to if an appraisal or value issue should occur. Unfortunately, some agents simply punt every aspect of this transaction to an inefficient third party negotiator and wonder why 1) it takes 9-12 months to close or 2) why it didn't close at all. No one agent, negotiator, attorney, or whomever can know all that there is to know about short sales....that's simply impossible. However, remaining ignorant of the process can prove fatal for the client.

Comment by Smitty on March 5, 2013 at 12:56pm

I am a third party negotiator and I agree.  There are third party negotiators that give us a bad rap all day long, but there are equally just as many unqualified agents, attorneys, title companies that all negotiate and shouldn't be. 

To be honest, I work with dozens of agents that don't know the ins and outs of short sales.  They usually ARE too busy marketing, listing, etc., to learn the details of something as complicated as the FHA short sale process, but that's when I have an opportunity to educate them if necessary.  I look at each relationship I have with an agent as a partnership and an opportunity to learn from each other.  I stay clear of agents that know everything there is to know about real estate, just as I'd stay clear of any short sale negotiator that knows everything there is to know about short sales.  We should be constantly learning as professionals and in short sales there are new updates every month in the industry, so it's IMPOSSIBLE to know everything.

It's sad this agent seems to have chosen unwisely.  Lesson be learned.

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