I just got off the phone with an agent in Miami and I was completely and utterly stupefied by the conversation. Of course, I am going to fill you in and I want to hear your honest opinion.
So, this Miami agent was talking with me about short sales. She was wanting to know more about short sales and specifically about the short sale specialist network. As many of you know, I support the Short Sale Specialist Network because I have worked with them for over a year and they are great. As you can imagine, I had a lot of positive stuff to say.
Well, why we were talking, she asked me if I charge for doing short sales. Now, this question was confusing to me because I thought....of course I charge, I charge a commission. I told her what I was thinking and said, yeah, I charge a commission, 6%.
Apparently I didn't understand the question and she says to me, my title attorney charges $1,500.00 to negotiate the short sale and she wanted to know if I did that up here in Nashville.
I told her that in my opinion that was unethical. Well, of course she was slightly offended and proceeds to tell me how in Miami everyone does it. I very nicely explained to her...that's fine but, I wouldn't do it. Funny enough, she never asked me why....just kept justifying the behavior by telling me, or at least trying to tell me how it's done in Miami. The problem is, every time I got to the meat of my argument, she kept on telling me about how it's done in Miami.
So, what is my problem with this business model, let me explain.
If I have a client, who can't pay their mortgage, doesn't have a job, can't put food on the table and, needs to get out from under the debt burden of their home, I don't pile on more debt that they can't pay. It's unethical.
I don't care that the bank pays it....because, the bank isn't paying it, the seller is....let me explain.
Johnny gets a loan for $100,000.00
Johnny short sales for $50,000.00
Johnny owes the bank $50,000.00
Just because the bank tells Johnny he doesn't have to pay it, doesn't mean that $50,000.00 Johnny owes just simply goes away, someone has to pay it. Now, who do you think that might be...well, let me tell you, the banks depositors pay it. That's right folks, all of you doing short sales, do you understand that the owed money just doesn't float away in to space to never be seen again?
Now, my next point is going to flabbergast many of you because you aren't going to understand and it's too hard for me to put in a blog but, I will do my best.
If you get a bank, even as large as Bank of America, who operate without having liquid cash on hand to cover every single deposit, what happens to the bank when they begin loosing so much money that they are at risk of failure? The Federal Government jumps in and takes them over in receivership, or in the case of Bank of America, TARP aka nonvoting preferred share holders. My point is, the Federal Government begins giving them money to just stay alive. Let's use a better example, Fannie Mae. Fannie Mae is not only selling record numbers of non-performing assets, they are also selling them incredible short and that is why they keep going to the Federal Reserve via Congress every quarters asking for $350,000,000.00, yes that is millions, in money to keep the lights on. WHERE DO YOU THINK THAT MONEY COMES FROM? IT COMES FROM ME, THE TAX PAYER. In other words, why would I want to or seek out ways to add more debt to a seller that ultimately is going to come right back around to me to pay when Obama goes to the Congress and ask for debt ceiling increase....that he did just last week to know 16,000,000,000,000.00 (Not sure what that number is but, its suppose to be 16 trillion). Did you miss that....I am sure you did, we all almost did.
Who cares that everyone else is doing it....that's why this country is where it is economically. She then proceeds to tell me that it's not her job to negotiate with the bank.
WTF! If it's not the Realtors job to represent their client to the best of their ability, whose job is it? SOMEONE TELL ME! What happened to fiduciary responsibility here? She then tells me that the majority of homes in her area are selling below $50,000.00 and a commission is only like $1,000.00 a job and she can't sustain her living, she tells me she could make more scrubbing floors........THEN GO F**KING SCRUB FLOORS YOU LAZY A$$. (Oh, I didn't say that but, boy I was thinking it)
I am sick of lazy Realtors who don't want to get out there and work, making an honest living and then bitch and moan that when they do work, it's too damn hard and they can make better money doing something else. Yeah, if you are one of those, don't reply to this blog because if you do, I am going to light you up like a East Texas 4th of July. That's right, I have no problems saying it anymore. I am a conservative, gun toting, constitution loving, capitalist pig that believes that this practice is unethical and should be stopped.
If you believe that these services that take more, on top of your commission, is the right way, I work diligently to ensure all my means and efforts expose this lie and show these sellers that these fees are a crock because you could do the work yourself, with no additional expense and that the only reason you let these attorneys, title agents, 3rd party "negotiators" work these deals is because last summer they came and put hard woods in your home or every Christmas Santa comes by and delivers you that vintage Harry Winston.
No matter how you spin it, no matter how you justify it, piling more debt on to someone who can't afford it and expecting someone else to pick up the tab is ireprenshible and in my book, that makes you lower than a East Texas Rattle Snakes Belly. (Yes, I live in Tennessee now but, originally from Texas, born in Houston)
Now, it's your turn, go ahead and tell me how wrong I am. Go ahead and tell me how I am a socialist because this practice is nothing more than Capitalism and the American way....go ahead buster, say it.
What I do know, the America I grew up in, The Republic for which I am here and blessed by, was never Capitalism through theft. It was honorable, right standing and showed people who to make an honest days wage for an honest days labor....not this "lets see how much debt we can pile on".....CRAP!
Comments
It is unethical 100% of the time to outsource short sale negotiations. Yes, 100% of the time. Just my experience. We don't allow it of our agents in the Short Sale Specialist Network for MANY reasons. Here is a blogpost I wrote some time ago that I send people like that to who what to know Why the Short Sale Specialist Network does not allow 3rd party negotiations.
http://www.theshortsaleguide.com/forum/topics/why-we-dont-allow-3rd...
I think my arguments are valid in 100% of the cases. And Jesse, she lied to you, that is NOT the norm in Miami, we work with many GOOD agents down there. SOMEBODY is paying for that unnecessary service. We must stand for something or we'll fall for anything. And careful what people say in North Carolina and Georgia. We DON'T "negotiate" short sales, we process them.
Keep on standing by your principles, Jesse, well said!
As what Monica stated, in the State of Georgia, a real estate agent cannot negotiate a short sale unless they also are either a licensed attorney or a licensed mortgage lender. Yes, in GA, loan officers have to licensed just like RE agents. So proceedures can vary greatly from state to state. The ONLY things a RE agent can do is collect the paperwork and conduct a normal transaction.
Even before this law went into place, the State A.G. came out with a statement that real estate agents involved in a short sale negotiation are doing so outside the scope of their E&O insurance and could be found liable in court for their actions. That statement alone stopped me from even considering doing a short sale.
In North Carolina, we used negotiate our short sales and now they have a new law, that says we, as Realtors no longer can negotiate short sales and that an attorney has to do all negotiations. Here is what I found out, the attorney leaves the file sitting on their desk and doesn't make the necessary calls, follow ups and doesn't communicate to the parties. I still have to negotiate the transaction or my poor sellers would be foreclosed on. However; the attorney gets the negotiation fee on top of the commission. No, it's not fair to the seller or tax payers.
Hey Mark,
Yeah, I agree...disclose, disclose, dicslose and yes....get it all in writing and we do. We have a short sale addendum, provided by our real estate commission that address the agent's liability so, in Tennessee, we are reasonably covered...as long as no fraud takes place.
Everything you said sounds reasonable to me, but our real estate board suggests always to refer an attorney, or disclose, disclose, and disclose some more if they refuse, and get everything in writing.
Hey Mark,
Great point but, I am trying to figure out why someone would compelte a short sale in the first place whith out getting full satisfaction?
Further to your point, yes...I do have an attorney that reads the short sale approval letter, talks with the client before closing and when all is good, closes the file. He doesn't charge an extra fee on top of his fee for doing the title. In other words, to obtain my business, he feels he should do that as part of his job and for the fees he already gets paid.
Yes, I completely and utterly agree with your point that some people who say they are "experts" are far from it....FAR FROM IT. Yes, I agree that people should be taking precautions...more importantly, educating themselves and their teams to what can happen if they screw it up.
Yes, it is true, a fundamental difference between a true professional and those pretending to be so is just exactly that, fundamental, bedrock, the core essence in what makes them better. I have found those who call themselves experts in this industry are typically far from it. This isn't because they don't know what they are doing...that maybe true but, its more because they refuse to obtain additional education or un-willing to invest in themselves, or not able to bring on other experts to their team that will make them more able to resolve issues.
I guess my point is, some people shouldn't be doing short sales and even more people shouldn't be calling themselves experts. Is it a serious risk...absolutely however, it doesn't change my point that me, myself and I, will never add more debt on top of someone who can't already pay their mortgage in the hopes that someone else will pay for it. That is just wrong in my book.
I also will not bring people on to my team that don't see things my way. I run my team and my team runs under my operating philosophy, otherwise they go...or better yet, they never join in the first place. I have an Attorney and a CPA and they provide advice and counsel when appropriate and don't charge anything more than they would make within the transaction. Now, granted, some cases are completely outside of scope and yes, those experts have to make a financial decision to help pro bono or to charge and we take those on case by case however, it most instances, my teams does what is right by our clients, even if it doesn't add to our bottom line.
Well, Here in New York, all settlements and closings require an attorney, short sale or not. Thus, many real estate agents, allow the attorney to do the bulk of the Negotiations with the Lien Holder for a short sale. Many Attorney's already charge $1500 to $2000for a closing , some as much as $5500 or as little as $750.00. So since the attorney is required, anyhow, it helps that they can assist in the deal, in addition to the work of the real estate agent. I do it on a case by case basis. I do feel as you do, I will work for my 3% or 6% or whatever have you, depending on who the attorney is for the seller, if an attorney is chosen.
Jesse, it would make my job easier if I could negotiate the short sale for my client, and we used to, but no more!
I took several seminars hosted by our states real estate attorney, she said the courts are filling up with homeowners sueing agents/brokers, unhappy about the way the sale went, what they owe the bank, etc., and that as an agent negotiating a sale, you are most likely giving advice you shouldn't, or omitting advice that could be critical to the client. In essence, practicing law without a license, and the courts are not siding with the agents. Her advice, take anything off your cards, websites, signs, anything that states you are a "Short Sale Expert", it will be used against you in court. An example is a friend that is a large broker, his office puts on short sale seminars, they have short sale teams, and used to advertise as short sale experts. A client that recieved a notice from their bank showing the balance due after the short sale sued my friend saying he didn't say anything about owing the difference between the sale price and the amount owed. My friend said he told him many times, but it wasn't in writing so he lost in court, and had to file for bankruptcy. Much better in my opinion to refer them to an attorney so they can get all the pros and cons regarding their short sale, and you dont have to worry about ending up in court.
Maybe your state law is different than ours.
Buy the way, I and my whole family are conservative, God fearing, constitution loving, gun toting, capitalists.
I do it, have to!
-
1
-
2
-
3
of 3 Next