Looking a Short-Sale in the Eye? Don't Blink!

By
Real Estate Agent with Dockside Realty VA 0225142975

Worried about your commission in a short-sale?

Last Friday I had the good fortune of attending a class at the Charlottesville Area Association of REALTORS® (CAAR) on short sales.  Yes, I know that doesn't sound like a treat.  What made it one is that the class was conducted by Lawrence E. "Lem" Marshall*. 

Having survived this market with only one short-sale transaction and no foreclosures I thought I was skating on thin ice.  There is no telling how long my luck would hold out and felt it imperative that I learned as much as possible about this "new" type of real estate.

Even the one short-sale I had did not start out that way.  It took tough negotiations to get it where the seller was going to come up short at the settlement table so I cannot really take credit for walking into this transaction with my eyes wide open.

The reason I mentioned the fact that we (buyers and me, their agent) helped create the short-sale is so that you will know that you may be party to doing the same thing if you have not done so already.

Now, about short-sales.  Rumor has it that there are times lenders do not really want to pay the commission that has been agreed to by the seller and the listing agent.  This may not become apparent until the bitter end.  Well, Lem advised us that the end does not have to be bitter.  Instead make sure it is as sweet as ever

Should the thought enter anyone's mind that you will accept less than is shown in your MLS listing simply refuse to accept it.

Refuse!  Refuse!  Refuse!

Do not blink.  Whether you are the listing or the selling agent, simply stand firm.  Do not budge.  What will the lender do?  The chances are very, very good that having come this far, having completed all of the work to get the transaction to this point, the lender is not going to really walk away from the table.

Lem suggested that you ask the lender if the home inspector was asked to give up some of their pay, was the settlement attorney asked to take less than usual, was the buyer able to pay less for the title insurance to cover the mortgage company's coverage, is the county going to accept a reduced tax payment?

Chances are slim to none that any of that is going to happen so why should you, the REALTOR®, be the one to take the hit?

Don't Blink!  Let them.

*For those who do not know Lem Marshall, here is a brief intro.  He is a graduate of The College of William and Mary Law School and is the Virginia Association of REALTORS® (VAR) Special Counsel.  Lem is definitely the go to person for any and all legal questions dealing with real estate.  We, in Virgina, are extremely fortunate to have Lem working on our behalf.

__________________________________________________________________________________________________

Welcome Aboard - Photo by Kate ElimIf you or someone you know is thinking of buying or selling property at or near Lake Anna, Virginia please contact Kathleen "Kate" Elim, REALTOR®.

Kate lives at Lake Anna, knows Lake Anna, loves Lake Anna, and specializes in Lake Anna area real estate. 

Call Kate at 540-226-1964 or by e-mail at lakeanna.kate@gmail.com. Be sure to check Kate's Web sites  and blog at http://lakeannaandbeyond.com/ or http://lakeannacountry.com/

Copyright © 2008 By Kathleen "Kate" Elim, All Rights Reserved. *Looking a Short-Sale in the Eye?  Don't Blink!*.

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 ©Copyright Kate Elim 2014

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GET MOVING WITH KATE!

540-226-1964 cell

lakeanna.kate@gmail.com

For easy property searches check out my web sites: katesellslakeanna.com

or

lakeannacountry.com

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Indeed.  I got the same information from counsel to the NVAR. 

I advised all of the agents in my network to simply demand the co-op offered in the MLS and if the only way to get the contract is to take it, take it and then file a complaint with the Board.

So far, she advised, every decision has gone in favor of the co-op agents.

We do not have to stand for this.

Great post. 

Dec 08, 2008 04:03 PM #1
Rainer
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CC (Colleen) Hine
Shorewest Realtor - Elkhorn, WI

Thank you for the great pointer.  Excellent advice.

Dec 08, 2008 04:06 PM #2
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Debi Ernst
St. Charles County, Missouri - Prudential Alliance Realtors - O'Fallon, MO
GRI, e-PRO, Broker/Sales Associate

Kate - I like that!  I've never done a short sale, but I've never liked the notion that I might be forced to accept less commission.  I'm glad that we can refuse...  :)

Dec 08, 2008 04:19 PM #3
Anonymous
Anonymous
Anonymous

Kate- I agree with the premise 1000%  Our MLS is going through some pretty major revisions regarding short sales...such as NOT putting a price in the MLS unless the listing agent is CERTAIN that the lender will accept it.  Good first start...there's legal talk about potential lawsuits regarding misrepresenting the price.  GOOD!

However, they still have us put in a disclaimer that the lender has the right to reduce the commission.  We put x, the mitagator negotiates y.  Was there any discussion about this.  Thanks

Gail MacMillan Titusville FL Real Estate

p.s.  Like you I've steered away from SS and foreclosures but that may not last if I want to stay in business :(

Dec 08, 2008 04:24 PM #4
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

I have stood my ground twice at the closing table this year.  I'm amazed at the number of agents who just say okay when they sit down with the HUD-1 and discover a reduction in their commission.  What is in the MLS is a contract between brokers and in reality as an agent we can't make the decision to take less without our brokers okay.  We had a discussion in our office today about the number of complaints that are now being filed by agents who have been shorted at the closing table.  Some REO agents are about to get a rude awakeing!

Dec 08, 2008 05:00 PM #5
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Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Kathleen, That is great advice!!  I have done two as the listing agent and had no problem with them paying the commission.  What I have found out since is that there is a bottom line that they will go to and if you go below that they then try to cut your commission.  For my two we didn't meet that magical bottom line but I like your advice for future use as these have become more prominent since I did mine.

Dec 08, 2008 06:54 PM #6
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Lenn...The fact that the cases have been decided in favor of the co-op agents is heartening.

It's good that the word is getting out to agents to stand firm.

Kate

Dec 08, 2008 08:35 PM #7
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Colleen...Hope you never need the advice but just in case............

Kate

Dec 08, 2008 08:36 PM #8
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Debi...You just need to remain firm.

Kate

Dec 08, 2008 08:37 PM #9
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Gail...Do you put the disclaimer in the listing agreement and the mulitple listing system?  Or just in the MLS?

What if the agents would not agree to do that?

It's as though you agree to be paid a certain salary if you do the work and then the owner of the company decides not to pay you that amount of perhaps not at all. 

Sounds unfair to me.

Kate

Dec 08, 2008 08:40 PM #10
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Cindy...We'd better get a handle on this or we will not know if and when we will be paid.  Why are agents agreeing to this I'll never know.

Kate

Dec 08, 2008 08:42 PM #11
Anonymous
Anonymous
Anonymous

Yes Kate, it's very unfair.  The disclaimer (to my knowledge) is not in the listing agreement, just the MLS.  We have numerous arguments that the bank cannot go against the agreement between the agent and the seller, but I know agents are accepting less.  I've not listed a short-sale, like you I've steered away from them.  I've an offer in on a short-sale condo, it's been 4 weeks and still no word from the bank.  It looked, for a moment, like the condo assn was going to kill the deal because they filed a lis pendens for back HOA fees.  They have now stated they will not stand in the way of BoA accepting a contract.  So, the jury is still out as to acceptance; I'll run this one to it's conclusion before I jump on the short-sale bandwagon.

Gail MacMillan Titusville FL Real Estate

Dec 09, 2008 08:05 AM #12
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Gail...Is it agents that are willingly putting that in the MLS?  Are they afraid that they will not get this listing if they do not?

We, as REALTORS®, have to determine what we will accept and what we will not. 

The one way to get full commission is to have a buyer's agreement that requires the buyer to make up the difference.  That may or may not be a difficult thing to do depending on your relationship with the buyer and the ability of the buyer to pay the difference.

With that clause it is like accepting a job without knowing what salary you will be paid until the end of the month.  Just doesn't make sense.

What is the position of your REALTOR® association?

Kate

Dec 09, 2008 02:09 PM #13
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Gene Allen
Resh Realty Group - Virginia Beach, VA
Realtor Hampton Roads Real Estate

Our association rarely takes a stand on anything and on this I would say they would say to accept what the bank tells them.

Dec 15, 2008 01:34 PM #14
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Gene...Well that would be a bit of a let down.

Our associations were created to represent and help us.  If they don't back us what is the purpose of the association? 

Thanks for your input.

Kate 

Dec 15, 2008 05:34 PM #15
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Kay Van Kampen
RE/MAX Broker, RE/MAX Solutions - Springfield, MO
Realtor®, Springfield Mo Real Estate

This is good to know, since I'm in the middle of a bunch of short sales.  I'm sticking firm with my commission.  We've earned it after months of patiently waiting for answers and keeping the buyers from walking.

Dec 15, 2008 06:59 PM #16
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Hi Kay...Please stand firm.  Agents must.  You said it right...you have certainly earned your full commission working on a transaction that is usually much harder to get to settlement than most.

The person that suggests that you take less should be asked how many thousands they are giving up to make this one deal work.

Kate

Dec 15, 2008 07:06 PM #17
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