Here are a few reasons why we ask agents NOT use 3rd parties to mitigate short sales for our files.
1.) Regulation - We as brokerage companies are state regulated institutions. 3rd party mitigation companies are NOT. Because of this, they have nothing to loose when it comes to licensing. Many also work under the guise of "investors" and they also tend to act on the "liberal" side of real estate law, and can entrap agents in THEIR practices. I've heard literally hundreds of horror stories, CLICK HERE for one I just read on our site literally today. There is also a time factor when it comes to short sales and buyers backing out. When it comes to getting contracts signed or documents back, the processor is just another unneeded party that if anything can ONLY contribute to further delaying the process and of course approval times.
2.) Accountability - While there are short sale processing platforms that attempt to control communication between ALL parties in the transaction, many companies don't use them, and MOST programs are insufficient. This means that when buyers or buyers agents would like an update, they contact a 3rd party, which may not know ALL of the details of the transaction and be able to effectively commucate them to all parties. Things are also lost in communication very frequently. Also, real estate transactions are supposed to be at arms length. Dothese negotiation companies and attorneys understand what an arms length transaction is, and who do THEY represent when a buyer or buyers agent contacts them regarding the file? What about when it comes to negotiating a 2nd position lien, who do they ask FIRST for a contribution? These types of things make arms length transactions virtually impossible when using another party.
3.) Fiduciary Responsibilities - Dueto the importance of the situation, I believe very strongly that in a short sale transaction especially, it is extremely important for brokerage companies to take their fiduciary responsibilities VERY seriously. For me, this is a pretty simple line to draw in the sand. Either you care about looking out for your customers best interests, or you don't. Telling them that you are there to help them in their time of need and then passing the buck to another company, most of which are not regulated, is certainly irresponsible.
What does this mean for agents? I understand that negotiating short sales is NOT part of your job description and in most situations you should NOT be negotiating them yourself if any way possible. A good short sale team is not a one man/woman show, it takes a team. Mitigating with lenders is not rocket science, and there is no reason an assistant, broker, or designated person in your brokerage office can't help with the negotiations. This way, they can still be under YOUR supervision directly, and you can do what you do best - SELL REAL ESTATE! And if you only have a handful of listings, there is no reason you can't do it yourself, it is NOT as time consuming as many would have you think.
Closing attorneys and title companies are great to partner with to help with legal matters, advance title work, HUDs, and closings. While they are a valuable part of a short sale team, There is no reason or need to pass the buck and hand off your brokerage companies fiduciary responsibilities and relationships by allowing them to actually work the short sale negotiations.
In closing, I'd like it to be known that I COULD stand to capitalize substantially from negotiating short sales. After all, we have literally thousands of short sale listings around the country we've referred to agents, ALL of which have agreed to not use a 3rd party to negotiate them! If I choose, it would be simple for us to insist that they use US to negotiate all of the listings we refer to them. That being said, if becomes obvious that I passionately believe short sales should ONLY be negotiated and worked by licensed brokerage companies and to do otherwise is completely careless and unethical.
Just my two cents, for what its worth!
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