Should I get a buyer's agent to make a short sale offer?

Question

I am working on my first investment property purchase. I have found some short sale opportunities on the MLS that I am interested in pursuing. I am trying to decide if it makes sense for me to connect with a buyer's agent to assist with this.

I understand that conventional wisdom in most situations is to get a buyer's agent. But, I have heard it suggested that if the listing agent in a short sale is getting an additional commission, he might be motivated to work harder to make my offer work. Since this market is hot, I expect multiple bids on these properties. Is the short sale situation one where it makes sense to just work with the seller's agent?

Or is it just smarter to try to connect with a good investor-friendly realtor and let them assist me as a buyer's agent?

In case it impacts the analysis, one of the listing agents is using a third-party company to assist with all the paperwork and negotiation involved in the short sale. Presumably he is splitting his commission with that company and he's not getting involved in the day-to-day work required to help bring it to closure. So I feel comfortable that that particular listing has folks involved with expertise in this area. The other listings do not have such a third-party company involved.

Thanks in advance!

Kim Knox · Answer

As a short sale listing agent, the advantage of working with the listing agent is that Agent may talk to you directly and determine if your situation warrants the Seller risking their time on your offer. I should mention, if you work with the listing agent, it is not the typical negotiation between Buyer and Seller. It is much more of a collaboration than a negotiation between clients. I want to know the answers to several questions before I support a any Buyer's offer. In my experience, people who are purchasing to occupy a home, who are more emotionally invested, are the better risk. If you are an investor that may write several offers, but have the financials to back up multiple purchases, that can be fine too. If you are an investor who has the financials for a single purchase, but I get the impression you have a lot of offers out seeing which one will stick, I will not write your offer. I will politely tell you I am not in position to take on another client, and suggest you find your own Agent. I really don't care if I represent the Buyer for more commission, or if that Buyer has independent representation. What I care DEEPLY about, is getting an approval for someone who will close the deal. Approvals are NOT transferable to the next Buyer. Some short selling banks actually reduce the commission paid in dual agency situations. Getting a short sale in contract prior to it hitting the marketplace has become increasingly difficult, government backed foreclosures now require a listing to be active on the market for 5 business days, and require proof of the listing being live on the MLS (Agent Detail Report to be uploaded into the system the day it goes live). Further, the Agent has to sign (and notarize) an Affidavit confirming that the home was available to the public at large and that open market competition was gained for a minimum of 5 business days.

Johnny Kang · Answer

You, as the buyer on the short sale, would have it under contract with the seller (homeowner). So even if there are multiple offers, since you're in contract, other buyers can't make an offer. Plus Listing Agreements have an expiration date, so you're not obligated to work with 1 agent forever so you can decide who you want to work with. If you want to know how to structure this and get clear on it, send me a private email with your contact info and I'll be happy to speak to you on the phone. (I don't think we can post phone #s here).

Chuck Hollowell · Answer

@Johnny Kang Thanks for the advice. I am curious how you can continue to control the short sale deal if you bring it to an agent and it then gets listed on the MLS. What happens if there are then multiple offers and someone outbids you?

Elizabeth Colegrove · Answer

I love short sales. They allow you to get a contract on a house. You than have months to save your funds up. I personally have bought 4 short sales and 1 foreclosure. They are my favorite type of houses. I personally prefer the realtor either to be on both sides or a realtor who's an expert. In my experience have a strong negotiator who understands the rules has been the biggest asset to completing them. The other strategy is putting back ups on short sales already in play. Often times people back out do to the time commitment. This will allow you to get the houses in a shorter time period.

Johnny Kang · Answer

Short answer: find your own short sale deals and work with homeowners directly. There are many reasons, but the simple fact is the goal of the agent is not in line with an investor's goal. Meaning, agents make more money when they sell a property for the highest amount. So even if it's a short sale, they'll want to sell it for the highest amount possible. You, as an investor make the most money when you buy it as low as possible and sell it as high as possible, quickly. What an agent wants is not what you want.Because of this conflicting interest, I find direct short sale deals with homeowners, which then gives me "control of the deal." I then find an agent who's happy to get the listing, since I'm the one who's bringing the deal to them and working the deal. I posted to another person's question, going in depth about short sales. It's a bit lengthy but this might help: http://www.biggerpockets.com/forums/311/topics/140...

Account Closed · Answer

Chuck,I would recommend staying away from short sales because they will tie up months of your time with no results. But if you want to move forward with it anyways, deal directly with the agent who is selling the house.