Are you positioned for the new Short Sale Guidelines?

It has been great to see how Short Sales are taking an important place in the Real Estate Market over the last 4 years.  When I started to negotiate Short Sales back then, nobody in my office knew or understood this type of transaction (I don’t think this has changed all that much since then…) and one of my brokers even said to me: I don’t understand this transaction, why don’t you find “normal” clients and “normal” transactions?  Now she calls me for advice. 

Well, the time came.  Agents wanted to get involved in Short Sales in order to survive, and banks are now supposedly more open to negotiate short sales.  But they have also been pretty creative…

Starting in April of 2010, some new Federal Guidelines are coming to the table.  It’s called “Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed in Lieu of Foreclosure” from the Making Home Affordable Program.  On the surface, there is some good work in this document.  On the other hand, it reflects some of the “creativity” that has crept into the process with some lenders.

On one page, a rule says “Prohibits the servicer from requiring, as a condition of approving the Short Sale, a reduction in the real estate commission agreed upon listing agreement.”

Then about a page later: “The amount of the real estate commission that might be paid, not to exceed 6% of the contract sale price, and notification if any portion of the commission must be paid to a contractor of the servicer that has been retained to assist the listing broker with the transaction.”

This hits home with a transaction I am working right now with Everhome Mortgage  A year ago, this company received my packages, processed them, and if it made sense for them I got an approval letter.  Now they have contracted with another company called National Quick Sale.  No one wants to disclose who the owner is of that company, and because it is an LLC, it is harder to investigate than the big corporate lenders.  One wonders if there might be an “unhealthy” relationship in there somewhere.  I find it interesting that the Servicing company and the Mortgage company have the same area codes and prefixes…

Everhome now requires agents to use National Quick Sale to process Short Sale transactions.  From press releases on the internet, it appears other smaller lenders are doing the same.  National Quick Sale charged me $100.00 just to register for the “opportunity” to negotiate the short sale with them on Everhome’s behalf. 

I had already been working on this transaction for months for my low income client, who owns a low value home, which of course means a small commission.  National Quick Sale sent me an email stating I needed to put 1% in the HUD, plus a $250.00 processing fee.  I did this, then after a month trying and failing to get any responses, finally the person told me yesterday that the contract between National Quick Sale and Everhome is that Everhome is to be paid this 1% plus $250 from my commission.

“That’s funny,” I said.  “The negotiator did not explain that statement 6 weeks ago,” and her statement was clear that they were being hired by Everhome, not me or my client.  I find it utterly amazing how everyone feels they have a right to negotiate away MY commission without asking my opinion.

When you are put in this position, you ask yourself: Is it really worth my time, knowledge, effort, and the money I invest in each sale in order to pay for advertising, MLS fees, gas, signs, lockboxes, phones, and of course my time (which I mention again because short sale negotiations require so much more of it)?  How many of you would just give up and let the property go to foreclosure instead?  There is not a “win-win” anymore.  The lender wants a full-time contractor (we agents) who works for free.  This virtually guarantees that people in the low income bracket with lenders who have these unnatural alliances are at a huge disadvantage in finding a person who will help them because Real Estate Agents do not want to work for free.

How many of you would accept a new client in this situation?  How many of you would let a transaction like this one die now that the lender is [forgive my harsh language] stealing nearly half the commission?  Who has a new and interesting way to fight back against this unfair [and unrealistic] practice?  This forum has a lot of us experienced agents; let’s see what we can do to fight back, what we can do to change the rules.

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