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Updated over 16 years ago, 08/21/2008
Saxon Mortgage - another one that doesnt get it
so i have a good realtor friend that just called me to discuss some frustration he has experienced with saxon mortgage. he has been jumping through hoops trying to get a short sale done on a property for about 7 months now. he lost one buyer cause of their insane process at 350 on the property 4 months ago.
now today after finally getting saxon to accept 330 on the same house, they inform him that they wont pay 5% realtor wages, they will only pay 4%. so just cause he has extended so much effort and his 5% wages have been in the mix since last september, he told them to go pound sand, and saxon seemed all to comfortable with the idea of foreclosing on the house. the girl says to him, "you are willing to walk away from all this over 1%?" he said back to her, "youre the one who would rather foreclose and take a much much larger loss on the house then to pay me for my efforts."
i guarantee that this house gets listed for $300,000 or less with a 6% realtor comp in a few months.
now, im not the kind to walk away from money when work has gone on this long. this realtor is, but only cause its a matter of principals. also, to confirm this side of the story, this is a competent realtor who is pretty much the only realtor i know that has actually squeezed off a bunch of short sales. hes not the kind to approach this process the wrong way.
i got to ask, are the people at saxon striaght up stupid? i just dont see any normal behaviour that exhibits a willingness to move on from their messes. this house will be on the market another year, i guarantee. what are the costs of foreclosing? holding costs? cost of depreciation? listing it at point down the road, even at 330, after foreclosure is stupid and will bring a much much larger loss then selling it right now for 330 w 5% to the realtors. lame
The obsessive commission cutting at some banks makes no sense.
First of all the commission is SPLIT between a buyer's agent and a selling agent.
Also, if you show 3% to the buyer's agent on the MLS and the total allowed by the bank is 5% then you are working your end for 2%. Nice. Esp since it takes 3x the amount of work to get these done vs. a traditional listing.
Any loss mitigator that says "You're willing to walk away from this over 1%" isn't thinking right. 1% sounds little. But in truth 1% is almost HALF of the total paycheck if it's 2.5% (5% split 50/50 with a buyer's agent)
I'd tell them to pound sand as well. But I'd do it the right way. We call that negotiating.
They'd probably call back after I "helped" them see the light.
haha, pound sand was my words. he is pretty good at this stuff, and has closed a few shorts this month. his last year has been almost all shorts.
i see it that these banks need to consider themselves in a position of ZERO, and any money they get back above and beyond that is recapturing lost money. the old full note and what they think the value is, is meaningless. any money NOW is better then holding it one more month.
saxon is off his list of banks he will work on. he says carrington, deutsche bank and a few others are much more compliant, so he sticks w them.
I believe that Saxon is a Servicer, not a bank.
saxon i believe is REIT owned by morgan stanley.
I think it makes perfect sense. It was explained to me thusly:
Loss Mitigation Rep: "Why should we pay full commission? Getting short sale listings is like shooting fish in a barrel. They're low hanging fruit right now. There's hardly any work involved--you [short sale negotiator] are doing all the work, aren't you? The real estate agent has a Rolodex full of investors standing by or they should be able to slap the property on the MLS and get buyers, no problema."
This lender's loss mit rep has a point, doesn't he? REAs should take as many short sale listings as they can at a 15% discount to current market value. Line 'em [buyers] up, put 'em into escrow, turn the file over to a full time short sale negotiator (like me), take a lower commission for about an hour's work.
Rinse. Repeat.
SCG,
As usual, you are right on money. However, I would like to point out that the REA has an option...walk away...fine, no deal...everyone loses then.
You can't negotiate, if you don't have a spine. There is a fine line between compromising and getting steam-rolled. My line is crossed at five percent.
List at 7%.
Negotiate to 5%, if need be.
Period.
By the way, there is a little more than an hour worth of work involved (believe it or not).
You can list at 7% all you want but, in this environment, I'm not seeing ANY 7's getting a pass. Five percent split two ways is max. If there's one agent involved, the SS lender will approve 2.5 (in most cases).
I really believe that if the REA does short sales properly, it shouldn't take more than an hour's worth of the agent's time.
I get 5 points on one agent all the time, I would say about 80% of the time actually.
The one exception for me has been WAMU, those guys just won't budge on it no matter what. Pretty simple, toss another agent from the office ont he deal and problem solved.......At least thats what i hear....
Hmmm...
How 'bout loss mit fees? Do you get those routinely when the bank's paying 5% to the agent?
I do the same as above.
Loss mit fees come from the buyer.
Originally posted by "SoCalGal":
Hmmm...
How 'bout loss mit fees? Do you get those routinely when the bank's paying 5% to the agent?
You will have to forgive my ignorance, but I have never been party to a transaction where such a fee existed. Perhaps you are looking through myold posts where I mentioned that I frequently negotiate for the realtors? I do so only when I actually purchase the property. The realtor is free to keep all commission in that case and I make it a point to always get them 5 points, keeps the referrals coming in, and frankly the idea of a kickback from a realtor on a property that I purchased is a little to grey area for me.
The point still is, that other than WAMU, I have not had many issues with getting the bank to pay 5%. I generally send in offers at 7% as a nother poster on this thread mentioned as well, and will settle for 5%. 5% is the number thats hit most of the time, with about an equal spread at 6% and at 4% for the remainder. Again, this is with a single agent.
I do see a time in the near future that banks will contest this a bit more though, even lately its been tougher, but I have always managed to make it happen.
Really! We get a loss mit fee from the seller via the shorting lender's side of the ledger.
That's incongruent with industry standard. Since 7% is practically unheard of, why not submit with 10%? Or 20%? Hell, ask for 50%. Then you can "settle" for 10%. <teasing>
I know...think about it though...who is really benefiting?
the buyer.
the loss mit fee i get from the buyer is 1 pt.
I have no idea what the loss mit company works out with the bank, but I'm sure there is some negotiating there as well.
As long as i get my 5%, i don't really care.
Remember, I'm the agent...so I get the buyer to sign documentation to pay 1 pt to loss mit company. this fee goes on the HUD. The buyers obviously don't care if they are saving 20%. Right?
Win-Win-Win.
I mean, Win-Win-Win-Win-Win (Buyer-Seller-Agent-Loss Mit-Bank).
Whew! I'll have to run your strategy by my company's owner. Sounds good to me! :-)
Originally posted by "SoCalGal":
Really! We get a loss mit fee from the seller via the shorting lender's side of the ledger.
That's incongruent with industry standard. Since 7% is practically unheard of, why not submit with 10%? Or 20%? Hell, ask for 50%. Then you can "settle" for 10%. <teasing>
Only works with cash and hard money buyers, you have to keep that in mind, which is why many think that there is a "cap" at 6%. Also, I have no idea what the laws/regulations are in your state, so if there is a local rule preventing anything more than 6%, then ignore me. The reason everyone says you can't get more than 6% on a deal is because most banks and financing institutions that give the mortgages to the buyers won't allow it. This does not mean that cash buyers or hard money lenders have a problem with it.
I actually know several realtors who ask for 10% on every shortsale. Oddly enough, they get it sometimes too! I think there is a new seminar going around where someone is advocating it.
Anyhow, 5% is a number I know I can hit with regularity. Getting more does happen, but it obviously depends on the deal and the bank. Shortsaling a listing going to a normal end buyer that is getting a loan from a conventional bank? then nothing more than 6% (still send it in at 7% though).
Rehab fixer where someone is getting a hard money loan or paying cash and my company is listing it? Then 5-7% (odds are will still end up at 5%)
My personal purchases? Never more than 5%!
Doesn't mean it happens 100% of the time, but like I said, the overwhelming majority will do it. Even if they state some BS policy that they won't, it can usually be overcome.
We've got some hard core negotiators onboard. Love it!
Oh, and back on topic of what the thread was about, Saxon isn't really the issue. They are a servicer like many others. While I do find they are terribly slow, and not always the brightest on the phone, its generally the investors that are killing deals, not so much the mitigator personally. They are relaying information over as you get it to them, and unfortunately it seems all ther pertinant information gets lost in translation.
On some occasions I have been able to figure out who the investor is and make direct contact, this often has a very positive result, but is a painful, arduous task (biggest issue if you figure out who it is will be getting the proper authorizations, works better with smaller banks and hard money lenders)
Will you elaborate, please? What do you say when you figure out who the investor is and you get someone actually connected to the file itself on the phone? Don't they respond somewhat on the order of, "What the heck are YOU calling ME for?"
On the short sales are agents sending in their own liquidation value appraisals?