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Wednesday, May 4, 2011

Who's negotiating my short sale?

I was speaking with a newer friend recently about his experience selling his home as a short sale.  I was not the listing agent on this situation as this friend had already signed on to another realtor about the time that we were getting to know each other.  I wanted to hear about his experience, first to ensure that the process went smoothly and secondly to see how this agent negotiated with the bank in the event there was something I could learn. 
I found out rather quickly this agent ended up taking money out of my friend's pocket.  His agent hired an attorney to negotiate the short sale in lieu of taking the time to do this themselves.  Agents do this so they can continue focusing their time on the rest of their business instead of getting bogged down to a phone and computer while working with the bank.  While this is becoming more common place in the distressed market, I've yet to see an attorney get an offer negotiated faster or smoother than when the agent negotiates themselves.   The price of hiring an attorney to negotiate a short sale could get expensive, depending on the attorney doing the negotiating.  The attorney will either charge a flat fee or a percentage of the commission on the sale.  Most agents will deduct this fee out of their own commission, as they feel this is their price to pay.  However, this was unfortunately not the case in my friend's situation.  
My friend ended up paying the attorney's fees out of their own pocket!  As part of the listing agreement, they had agreed to pay the attorney's fees themselves instead of the agent deducting this from their commission.The sellers were to receive a small amount of relocation assistance at the closing table because they had an FHA loan and FHA allows for $1000 to the seller at closing.  Most loans do not allow funds to go to the seller, due to the fact that the lender is writing off the remaining balance.  While the sellers didn't have to come up with the money out of their own pocket before closing, they did lose out on money that was rightfully theirs at the closing table. 
I share this story with you to illustrate that how they were taken advantage of.  In this housing market, there are many realtors out there that will do what they can to keep as much commission in their pocket as possible.  If that means charging a seller a fee that should have come from themselves, they apparently see nothing wrong with this situation.  People in distressed situations should never have to pay to sell their house, even as a short sale.  I ask you to please keep this in mind when you hear about folks discussing short sales with you in the future.  Remind them that a realtor with INTEGRITY will never charge a distressed seller uncustomary fees to sell their home.   
Feel free to call or write with questions or comments on this situation, I'm always happy to help. 

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