@Glenn frm Naples – Your point about how you would have ruled has the same problem – we just don;t have enough info to make an infomred decisions (that’s why arbitrations take so long and som man y questions can arise.

@everyone – I agree that negotiating the commission in a potential short sale situation in annoying at best, and I can understand why anyone would resent it, but we need to remember that we have an obligation to put our client’s needs before our own, and if we allow the commission to be placed in front of needs of our seller or buyer client, we’re just plain not doing the right thing.

After all , the responsibility to pay us rests with the client, not the lender, so if you have a real problem with the difference in the earned commission and the negotiated commission you might want to address that with your client. But do you really think someone should face a foreclosure when there is a potential short sale just so we can be paid a specific amount? Or should the buyer lose the home they and their family will live in for that reason? And should the lender (who is already taking a loss) be responsible to pay a commission that they never agreed to pay? We’re no different in their eyes from junior lien holders who have even more to lose if the sale doesn;t go through.So while I don;t like it, I think we need to do the right thing to get the client what they need.

We have been discussing issues with potential short sales in both the Legal Resources and MLS committees here.

Our next go around should be on the pre-foreclosure and possible short sale listings where the seller moves and is not reachable via mail or telecommunications. This is an issue to the listing contract being a bi-lateral contract.

Another issue is when a “short sale export” is handling the short sale aspects, the property is listed with another real estate agent and the “short sale expert” brings in a buyer.

The potential short sale transaction has many issues which need to be addressed.

I thought I would share a related anecdote regarding
————–”all offers are subject to bank approval”—————

2 weeks ago, our board handled a grievance where the short sale in question was listed for (say $100,000, because I didn’t ask the actual price). They had the “all offers are subject to bank approval” clause in the listing.

The offer came in at full price with no contingencies. The listing agent tried to get the bank on board, and they said “NO!” The deal was unable to go forward, BUT the selling agent filed a grievance for their commission and the board ruled in their favor. The listing Realtor had to cough up the commission.

I am a little more skiddish about short sales since this ruling.

The thing that actually makes me most nervous is that the board has not announced the ruling to the rest of the REALTORS. The only reason I found out is that I know the Realtor who lost the grievance.

I guess there are no guarantees but death and taxes.

As Suzy mentioned in her post that her seller was 7 months behind in their payments and it was not known until the notice was published in the newspaper. My question is why didn’t someone do some research and find that a lis penden or NOD was filed previously?

Real estate agents that want to get into the short sale business should be able to reverse engineer the entire real estate transaction, perform financial forenics, and understand the mentality used in the a collection process.

My personal opinion on why potential short sales hang up is 1) the lenders are stupid when they tell people that are anticipating financial problems “we can’t help you now, but when you are behind in your payments call us back and we will be able to help you.” Years ago when mortgage insurance was used the education programs taught people to call if they were anticipating financial hardship. 2) the lenders are telling people two things – “don’t pay” and “you are in hopeless situation.” 3) the lenders are not thinking part of the pie is better than no pie – interest rate recasting. 4) too much “junk” transactions are hitting the loss mitigation departments, unrealistic prices as a method to force an idea of what the lender might accept.

I am actually going through the CSP instructor program now. It seems pretty good. Maybe not as good as the ABR Foreclosure elective, but pretty good, none-the-less.

There are lenders who will approve shortsales in the front-end, without a contract. I was along the same thought pattern of asking “should the agent be exempt from loosing money in this poor market”. I’ve answered my own question to say this – they are! The lack of buying and selling is already hurting the agent. So, in order to make a living, the agent can’t continue to work for “free” or near free for the work they are doing. The short-sale is a result of the Lender’s risk and Seller’s in ability to pay and not the agents failure at all.

I think it’s important for the listing agent to remember that they can’t disclose the short sale status unless approved by the seller, as it’s confidential financial information of the seller. However, there are damages that can occur to the buyer if the short sale is not disclosed. I’ll outline those in a later post.

So, to Pat G… are they willing to reduce their salary by 33% or more because their employer made some poor choices? I bet if we required loss mitigation officers to reduce their salary the same percentage as they reduce the agent’s – this issue would go away.

Pat G. says she works for a lender. She got a call from a real estate agent arranging “short sales” (homes selling for less than the mortgage is worth) who referred to Pat’s business as “the stupid bank”:
“I’m wondering if the agent is reducing her commission? Why is it okay for the seller to lose money and the bank to lose money, yet the Real Estate Community continues to earn their full commission?

I feel that the Real Estate Community is now starting their own Predatory Sales Approaches. Advertising homes as ‘short sales’ or ‘pre-foreclosure’ is just wrong. There are no ‘short sale’ listings! Everyone is told upfront, we can’t pre-approve a short sale. Hence, the need for a contract. It’s not a ‘short sale’ until the Lender agrees, period. So to advertise it as such is misleading to the general public. Potential buyers feel the Lender has already approved the home for a short sale, and that it will be an easy steal.”

I really sympathize with the situation as you described your wife’s experience, but it seems that what you see is determined to a degree by where you stand doesn’t it?