Has anyone had any luck outsourcing the short sale negotiations?
There are a couple of good negotiators that I am aware of. Tons of bad ones too. Anyone can call themselves a negotiator.
Even the good ones have plenty of complaints because short sales negotiations are notoriously tough and most are not successful. Investors seem to have this idea that negotiators have some kind of magic recipe to get lenders to agree to low prices. The negotiators sometimes like to encourage that impression. If a negotiator claims a very high success rate, they are either lying or they are not pushing hard on price and therefore not getting great deals for their clients.
The problem is that everyone gets their hopes up and then reality sets in and the deal doesn’t close and everyone is pissed. As a transactional lender I can’t even count the number of deals an investor came to me asking for funding because he had a sweet deal locked up through a negotiator…only to have the deal never materialize at all.
IMO, you need to do a few negotiations yourself first to truly understand the process and then try out a negotiator. But don’t pay anything upfront and keep your expectations low.
I agree with eric. You should try some negotiations yourself to get the feel. Most who claim the know what they’re doing, don’t know much and are interested in collecting their fee versus getting you the best deal.
Later you could hire someone to do the negotiations if you need to better leverage your time.
I agree as well. Find someone with history and research them. There are probably more bad negotiators out there than good ones (but there are some good ones!)
Some states are also much more difficult than others so I would also reccomend finding a local one if at all possible.
I have worked on hundreds of short sales and I also agree with Eric and I will add this; the negotiators that say they have a high SS approval (with proof) are careful to cherry pick the deals that they accept. They are usually good at marketing and attracting lots of deals consequently they tend to develop tight criteria for what they will work on. Most deals don’t even have a shot at getting approved. I see people working hard on bad deals that will never happen :banghead. Even people that call themselves negotiators. I agree with everyone that said you should learn how to do one yourself first. Outsourcing is a terrific idea when you have more deals than you can handle. Once you have the basic understanding of how to analyze a deal (which includes the homeowner and the lender) you will have a much easier time finding and recognizing a good negotiator. It isn’t rocket science but if you don’t have some basic skills and some systems in place, you will find yourself as frustrated as many people I see working on something that was never going to happen.
Gail,
Are you a negotiator?
I agree that any negotiator with a high success rate is not asking for rock bottom prices, which as investors is what we want. So the question is how to find a negotiator willing and able to go for rock bottom prices? Obviously, going for rock bottom prices means alot more failures and “wasted” time on files that don’t close.
So how can compensation for a negotiator be fairly adjusted so that he is paid for his time trying to get low prices for me but at the same time I am not throwing money down the drain on too many deals that don’t close?
Eric
There are so many pieces that need to fit together that most Investors are not aware of.
I cannot tell you how many approval letters I have gotten only for them not to close because the Investors did not know what to do next! Timing is everything with short sales. And everybody has to be involved and motivated - the homeowners, agents, everyone on your team. And it is not the negotiators responsiblilty for getting a good value. The Investor also needs to realize that sometimes he may have to step out of the deal in order to make it work, as not all deals are going to make a spread.
A good negotiator first and foremost knows lenders guidelines and understands what “net” should be accepted. They also have a good list of managers and supervisors when the file is not moving when it should.
I get paid a % of the spread, but there were times when I should have charged upfront fees as the Investors probably would have analyzed it a little better and not wasted everyones time and money.
Investors are always going to want to get the lowest price. Often it is unattainable. I think in that situation, the negotiator has to say, I am not going to work this because you are unrealistic. If you find yourself wasting time on files that won’t close, I think it is your responsibility to pre-qualify in advance to avoid that.
As to your statement, “And it is not the negotiators responsiblilty for getting a good value.” I could not disagree more. Again, maybe you are working retail deals which are not price sensitive. But my negotiators are completely responsible for getting to the bank’s lowest number. If they can’t do that, they are not in business long.
Eric,
I work for some of the top Investors in the US. So I don’t think I would be working for them if I could not get them the best number! When I say it is not the negotiators responsibility to get a good value - it isn’t… if the BPO comes in too high, that is not my responsibility, now is it?
And I find it difficult to qualify a property if I am often not even in the same state as it is in. I need to trust that the Investor has done that. We are after all, all working together as a team!
I am however, responsible for getting to the lender’s lowest number and that is why I said “a good negotiator knows lenders guidelines and understands what net should be accepted”. That is what was meant by that statement.
great subject, well first off with regards to your BPO, it should never “come in to high” if you worked to build relationship with the bpo person (preferably not a realtor or broker, if so request a new one) then be sure to have your information to influence the bpo, there are many tips, strategies and techniques to do this. Then FIND OUT what the bpo was put in at, and you have an even better advantage with the bank when you call to follow up. Most people do none of that, and Im talking realtors. So, (i will offend many with this commment Im sure) but the biggest problem with short sales comes from real estate sales agents and brokers who have NO IDEA what they are doing. AND most importantly they are not committed to the process. They tend to want to run around to starbucks, and seminars, and take education classes to get little acronyms on their business cards. If you are going to work a short sale you have to be 110% commited, dedicated, educated, diligent and ORGANIZED! how many organized realtors do you meet?
We do very well with our short sales, we market to find our leads, never been listed, and we NEVER work with a realtor on a short sale, too many deals.
Realtors tend to care about their commision, so putting in a low cash offer drives them NUTS! IT SHOULDNT matter to them, if they care about their client so much, then who cares if it sells for 5,000 bucks! the seller avoided the FC and you closed a deal. but since they are only focused on their commisions and all their little rules, regulations, etc, well,they dont do short sales. or the best one is when they just submit a contract with a price on it and say this is our short sale offer!!! LOL!! love that one…
:beer