Doing short sales with a real estate agent - Does anyone do it? *Need help

Foreclosures, Short Sales, Tax Foreclosures
1

All,
I know an agent who has a few leads for people in short sale. He wants nothing to do with the short sales and is willing to work with me:

My understanding is basically:

  1. The Agent gets the house & puts it on the market, & I come in as a 3rd party potential buyer.
  2. I contact the owner and obtain all the necessary authorization files.
  3. and I negotiate with the bank and get the bank to lower the asking price.
  4. Then what?

Now I need help with the exit strategy.

  1. What if I get the price lowered but I end up not wanting the house? This means I just worked out a short sale offer for the Agent who can now lower the price of the house and get a quicker sale, what do I get from it? How do I work out an agreement with the agent that entitles me to a fee?

  2. What’s an ideal exit strategy for a partnership like this to work out?

  3. Any advice? comments??? Helppp

2

Hi NJbird_dog, I have worked with a real estate agent and find it easier on me because I still have a full time job. I or she finds the house in pre-foreclosure and I work the short sale. I always have the house listed right away if it is not already. I get the contract and necessary paper work from HO and then have the agent put pending sale on the MLS. All the while the agent keeps looking for a buyer as I am working the short sale with the bank. I do the numbers first thing so I know what my max price I am willing to go on the short sale and have the agent use a price that will make the profit I need and pay her as well. That’s a rough description on what I do as I said having a full time job it’s hard for me to look for buyers and my agent is a go getter which helps a lot, and she will tell me what she really thinks the house will sell for quickly. Most cases she will have buyers waiting on me to finish with the bank and she did the education part with the title company on double closings.

Hope this helps.
Keith

3

Keith, how do you get paid? What do you usually charge? Can you please explain how you go about putting your commission/fee on the contract and which contract you use… Thanks.

4

I get paid just like anyone selling a house. everything goes to the title company and we do the double close after everything is paid off I get what is left over from title company.

Keith

5

Ive been thinking about working with agents as well. A couple of questions that came to mind when reading these posts that I hope that you would be able to answer for me…

You said that “I get the contract and necessary paper work from HO and then have the agent put pending sale on the MLS”

  1. I was wondering why the agent puts pending sale on the MLS?

And you said that ,"All the while the agent keeps looking for a buyer as I am working the short sale with the bank. "

  1. What do you do when you find a buyer before the ss is approved? 3) How do you quote a price to the buyer before ss approval?

And last question, most banks require that you make an offer before they even consider a short sale(and as part of the ss package)

4)Do you just submit an offer in your name and then double close?

Id appreciate your input Wainvestor. I am leaning more towards working with an agent now that I have found one that I really get along with.

6

Thank you for asking these very poignant questions, Gregg. I too I’m interested in working with agents and would like more clarification on what, and how this relationship between SS investor and RE agent works.

I think I understand why they term the listing as “Pending SS w/Bank approval”. This is most likely to make the buyer aware of the situation and encourage cooperation and patience as the deal progresses through the process.

MY QUESTIONS
1.) Since you have the seller under contract and presumably obtained the deed to the property, you are now the “owner” of said property. At this point you engage a RE agent to list “your” house while you work a SS with the lender.

Most lender’s SS package asked for a “listing Agreement” to be included along with the other documents. Now, as mere investors and not licensed agents, we cannot list properties on MLS. In fact, most of us do not want to do so because we believe this will set-off a biding war for the subject property thereby defeating the purpose of a SS.

The negotiation, or the SS package, is between the investor and the lender and is based on the investor’s personal monetary offer for the subject property, say 300K. Let’s take Wainvestor’s strategy and suppose that he has the RE agent working buyers for the SS he is currently negotiating.

Suppose the agent has gotten offers of as much as 450K for the subject property. The agent is now merely waiting for the SS package to go through in order to conduct a double close to conclude this deal.

Let us also suppose that during the lender’s evaluation of the SS package they discover/learn that the property is listed. Based on this knowledge the lender then contacts the listing agent and requests bid information.

Now, does the agent have an obligation to disclose said bids to the lender – it is my understanding that they do. If so, why would the lender agree to the investor’s 300K SS offer in light of the 450K offers coming in for this property?

Perhaps I’m misunderstanding the mechanics of this relationship, but if someone could answer this for those of use considering working with agents it would be greatly appreciated.

Sorry about the long post…

Ive been thinking about working with agents as well. A couple of questions that came to mind when reading these posts that I hope that you would be able to answer for me…

You said that “I get the contract and necessary paper work from HO and then have the agent put pending sale on the MLS”

  1. I was wondering why the agent puts pending sale on the MLS?

And you said that ,"All the while the agent keeps looking for a buyer as I am working the short sale with the bank. "

  1. What do you do when you find a buyer before the ss is approved? 3) How do you quote a price to the buyer before ss approval?

And last question, most banks require that you make an offer before they even consider a short sale(and as part of the ss package)

4)Do you just submit an offer in your name and then double close?

Id appreciate your input Wainvestor. I am leaning more towards working with an agent now that I have found one that I really get along with.

7

Hi-
I am new to SS and still learning, but it is my understanding that the bank’s request for a listing agreement is to verify that the original DEFAULTING owner attempted to sell the house in order to satisfy the debt, before the bank will consider taking less than what’s owed.

As far as the bank is concerned, the Purchase & Sale agreement you submitted is proof that YOU are buying the house. They don’t need to know that you are selling it- in fact Ron Le Grand says NOT to put a for sale sign on the property until after the BPO.

If I am off base here, someone please correct me!

8

Do not ever do a short on a house that you would not want yourself

9

“Do not ever do a short on a house that you would not want yourself”

Huh? Is that a joke?

10

LOL…what is he talking about??? I mean…I wouldnt mind shorting a house that I want to move into…but I also would not mind shorting a house that I would not want to move into either.

Its all about the money!!! Oh yeh and helping them out of foreclosure :biggrin

11

wain’s not telling all the details for specific"reasons/issues’ that he has ironed out with the title company and the realtor. some things just have to be learned “buy” doing.

12

You sure about that? If members on this forum are not in direct competition…whats the need to withhold the info?

ryan

13

I agree, the best way to learn is to actually do for yourself. I asked the question, yet I’m moving forward in my endeavors to succeed in this business, and I will… Nonetheless, I wish I would have gotten an answer. That being said, in our persistence, we will get the answers for the questions we have. However, our objective here is avoiding some of the dangers/pitfalls that others have suffered.

In so far as competition is concerned, despite the fact that some of us may work the same geographical locations, I do not believe we are in competition… You will get what you get because of your efforts and the type and amount of business you create. Remember, is it your efforts, your personality, your skill, passion and compassion for this business that will make sellers say “yes, I’ll go with you”…

In the end, this forum helps a person that’s why we read on. Those of you that genuinely answer questions and try to help, thank you. I pledge to reciprocate where I can.

wain’s not telling all the details for specific"reasons/issues’ that he has ironed out with the title company and the realtor. some things just have to be learned “buy” doing.

You sure about that? If members on this forum are not in direct competition…whats the need to withhold the info?

ryan

14

Hi all! New to the forum. I am an agent in CA. Been investing for about 4 years now, got my license about a year ago. I am a Certified Short Sale and Pre-Foreclosure Specialist in California. There are only 80 of us in the entire state. I work very heavily with investors.

One way we have structured our business is-- on the deals that my investor is not purchasing/assigning, he negotiates for me and takes a third of my gross commission after COE. On deals that we are going to flip/assign together, we split everything including my commission 50/50. Obviously, with this arrangement, you’d have to get with an agent you absolutely trust.

15

Just wanted to update this thread about something I am working on.

I had a couple come to me regarding a short sale, and once we started all of our paperwork, they mentioned to me that the Realtor they used was interested in meeting with me because she had many more clients in their same position. (SCORE! :stuck_out_tongue: ) So I called, and we met. Basically, I told her, I’d negotiate the short sales for her, if she found buyers, and we could split her commission. I told her if it is a property that I am not interested in, or that the bank won’t come down enough for me to purchase it as an investor, that I would provide that service to her. I’ll post if we actually DO any deals like this, but the couple that introduced us may be the first one like it. They owed New Century 2 loans totalling $260K. The house is only worth about $210-$220 now. The BPO came in at $210 (they didn’t give me a chance to influence it. :frowning: ) I had offered $147,650. New Century (actually now Carrington Mortgage) “countered” with $195K. If I can’t get them down at all, I will try to use that Realtor to sell this, and collect 2-3% on the commission. I’ll keep ya’ll posted. I’ve never done that before, but I’d rather make 2-3% than 0 if I can’t get a big enough discount for our purposes!!

Steve

16

Are you a realtor or investor?