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Updated about 14 years ago, 09/14/2010
Web Short Sale
We recently starting working with a group of attorneys in CA that negotiate every aspect of the Short Sale, and provide legal services directly to the seller. The best aspect of the attorneys is that they charge the bank their legal fee, and we pay nothing, the buyer and seller pay nothing, and the real estate agents keep their 6% commission.
Has anyone else used a similar service, and what were the results?
This isn't new. There are a ton of lawyers out there doing it. I've tried it and to be honest my lawyer didn't know HALF the stuff my non-lawyer negotiator knew AND TO top it all off, the turn around sucked.
My biggest problem with the lawyers was they were just middle men. They didn't really NEGOTIATE a short sale. They presented my offer and when it was rejected they said, so what do you want to do? They were paper pushers. I asked them to justify my price and they had NO idea how to do that. The lawyers I used weren't good at getting me the price I needed and that was the biggest problem. They weren't negotiators at all...just a licensed contract submitter. They sat around scratching their heads when the bank countered or rejected any of my offers.
Nope..no thanks.
Ask them what they do when an offer is rejected and ask them how they justify your price. That will give you your answer.
The lawyers that we just started working with can confirm that they have in-house negotiators that are getting approvals on 94% of their files in an average of 61 days (excluding BoA and Chase, which are a pain in the butt for everyone).
If they truely have a 94% success rate, and it is Free (we do not pay for a negotiator), then I really believe that it can revolutionize how people approach and close short sales. Just wondering if anyone else has had success with attorneys and short sales?
Kristian,
Most Short Sale negotiators can get the "fees" paid, as you put it, by the Lender. So this action is not really revolutionizing!
As for the actual "fees", how much are they charging?
Another item you mentioned is the Realtor commission. Yet again, I know most Short Sale negotiators can also get the amount agreed upon in the Listing Agreement.
Now, another question. What "legal services" are being provided to the Sellers?
Thanks!
James, most of the negotiators that we have worked with charge the Realtor a portion of their commission, as very few (if any) lenders accept a negotiation fee on th HUD. In this scenario, the attorney charges the lender an 'Attorney Fee' which is paid on the HUD. The attorney offers their legal services to the seller, and insulates all parties in the transaction from any potential future legal issues. The attorney is also available to negotiate any deficiency judgement and get them removed by the lender.
So, legal services, and a 94% success rate, for no charge (except to the lender). It's not revolutionary, but it is extremely beneficial. Can you ask for more than a free service that also limits your future liability?
I've got to agree with Maryann. We had several files with an attorney firm that talked a big story, but left us in a real mess! We moved them to a well respected negotiator who really has been earning his fees as he cleans the mess up! Thanks!, to him when he reads this!
When we deal with attorneys (in states requiring an attorney handle the sale of real property), we usually have to hold their hand and walk them through the short sale process.
There may be some good attorneys out there doing this, but I see no benefit to using one in place of a good, non-attorney negotiator.
Bill
Bill, I guess that you are right, and that is why the attorneys have negotiators that handle the entire Short Sale, and close them at a 94% clip. The negotiators are in the attorneys office and get paid via the attorney fee from the lender. Is your negotiator getting more than 90% approvals, and how much are you paying them?
I'm sold on the fact that you get legal representation for the seller, and it is at no cost to anyone, but the lender. I am a real estate broker, and have paid $1500+ to get short sales negotiated with no legal representation for the seller. This just seems like a better alternative.
If your a real esate agent representing the seller and marketing the property to a retail buyer, than I do agree with Mr. Peter that hiring an attorney is a good option. Especially in California since you need to be licensed or work under an attorney.
However, if you are an investor snd your primary goal is to get the best deal possible, then it is not a great idea becuase the costs absorbed by the seller is a dollar for dollar loss in your discount. So, in my opinion, as an investor, you will be very disappointed in an attorney's performance mainly becuase they will hire a negotiator like myself and charge a little extra for themselves. Since I charge the same whether the deal comes from an attorney, agent, or investor, then it is much higher net charge when an attorney is involved.
Look, since the buyer brings in new money, it does not matter which side of the HUD is charged, it all comes out of the buyer's pocket as all lenders look at the net proceeds from the sale. So, implying that the attorney's fees are paid by the seller are inheritantly incorrect. Not too mention, it does takes attorneys longer because they have to read over every document...thoroughly.
I am glad you decided to chime in Scott. I find it really funny everytime it is expressed that the services are "free" or even "paid" by the Lender. No one ever takes into consideration who actually brings the money to the table.
Subscribed!
One of the local RE brokers in my area was saying she tried outsourcing and the "negotiator" wouldn't take any deals with more than one mortgage. Vetting deals like this would likely increase the "success rate" of a particular office. This is on RETAIL value deals too, not wholesale.
Good thread and post by Maryann, James and Scott. I believe outsourcing your negotiation is one of the smartest things a short sale investor can do. Fees "paid by someone else" are not entirely accurate as you are dealing with a certain "negotiated" spread and net to the bank, so the amount of fee does matter. Likewise higher fees for better negotiated spreads are likely to more than offset the higher portion of the fee. I would question the 94% approval rate. What is the approval rate for "investor" deals (A/B then B/C) where they are able to "negotiate" enough spread for the investor to profit?
Originally posted by Kristian Peter:
I'm sold on the fact that you get legal representation for the seller, and it is at no cost to anyone, but the lender. I am a real estate broker, and have paid $1500+ to get short sales negotiated with no legal representation for the seller. This just seems like a better alternative.
I would also question the 94% success rate but maybe they are doing a great job,
I don't particularly love the spin that no is paying the fees except the lender.
In reality the lender isn't paying any of the fees. The B buyer is paying them all. The lender has a net total that they need to end up with and they are going to end up with that net $ or more no matter how the deal is structured.
In a deal where the Lender must net 100K, the purchase price could be $110K if there are 10K in fees or 120K if there are 20K in fees, the lender doesn't care (within reason) because it doesn't affect them. The only person who is affected by whether the purchase price is 120K or 110K is the investor. That extra 10K in fees is coming right from his spread when he goes to resell the property.
So these guys might be great but don't be fooled about who is paying their fee.
Eric
Excellent points by everyone, and Scott is exactly right that a negotiation fee always affects the seller's bottom line, and is actually paid by the buyer, if the buyer is seeking the lowest price possible. Every transaction has to have at least one negotiator, be it a real estate agent, paid negotiator, attorney, or the seller.
The basis for the above mentioned scenario, is that the attorney firm handles everything, there is no additional cost to the seller (who gets legal service), and the agents (if the property is listed, get paid a 6% commission), and the buyer (if they are paying retail) pays nothing additional. If the buyer is attempting to purchase the short sale on a wholesale level, then the lender must still Net the amount that is required on their internal BPO, minus costs.
My thought is to let the attorneys do the negotiation, provide legal services, and get these things closed at a 94% clip. Or you can pay someone like Scott to negotiate, you will pay less, but there will be no legal insulation, and we all know that 3-5 years from now, the airways will be full of late night TV ads from the Law Offices of Joe Shmoe that state, "Did you do a short sale in the last 7 years, if so, you may be entitled to..."
If this is a retail short sale, then it's a no-brainer for the agent, get 6% for no work, and have no liability. If this is a wholesale investment purchase, you may pay a little more for the attorney to review everything, but your liability will be greatly decreased in the future.
We've got 4 in the pipeline so far, and 3 approvals (one in 20 days). These are all retail sales, where we are the listing broker. When a wholesale investment opportunity comes along, we'll see if there is any difference. We have not seen lenders discount much from BPO value minus costs, but every now-and-then, there is a nice all-cash, fix-and-flip opportunity. I'll keep you posted as we get more short sales approved using the attorneys, and my main objective is to streamline the process and limit liability for the least out-of-pocket expense.
The 94% makes alot more sense if you are basically paying BPO value. No one on BP is looking to do that. Should be getting at least 15% off BPO,
But I understand you are a realtor so your incentives are in having the buyer overpay.
Loss Mits must love you guys!
Just got our 4th approval. Just gave them 6 more files to negotiate... This is great, and completely online.
Originally posted by Kristian Peter:
Great! I'm glad it is working for you. They may be the "real deal"! Like any group of professionals there are good ones, not so good ones and ones you want to avoid like the plague. I believe CA is not a deficiency state, so I assume that the approval letters were free of that language.
Bill
Hey Kris, can you post the link to this website or their contact info?
Do they negotiate DISCOUNTS??? Or Just negotiate down to FMV / Retail?
The service is there to get an approved short sale, assuming that the purchase price is within the BPO variance for the lender. So, they do not negotiate the lowest possible price, but they do get approvals based on FMV. They take the problems out of the equation and provide the seller with legal representation to avoid problems in the future. The service is perfect for real estate brokers / agents, or sellers. If you are trying to negotiate the lowest possible price on a short sale, and then flip it, then this is not the service for you. If you want streamlined, short sales, we've had 3 approved in under 21 days, at no cost - keep your 6% commission, and no legal ramifications in the future, as the seller gets legal advice, then this is a great service!
Email them for more details: [email protected]
Good point, Eric. "He is a realtor.....getting the buyer to overpay". He didn't address it....Note his scare tactics, too....."we all know that 3-5 years from now, the airways will be full of late night TV ads from the Law Offices of Joe Shmoe that state, "Did you do a short sale in the last 7 years, if so, you may be entitled to..."...classic..."we all know..."
If you knew this would be of possible benefit to agents/brokers/sellers, why did you chose to post it in a predominantly investor monitored forum? Why not in the "Selling Real Estate" forum, the "Real Estate Deal Analysis or Advice" forum or simply the "Real Estate Agent" forum? Nothing against the company you are "pushing", just wondering about your intent....