I have read a lot on short sales but have not had an actual transaction. I have a friend who wants me to list his property & is looking into a short sale. I know that you are dealing directly w/the lender & any offers needs their approval but are they very complicated that you need special training on this type of transaction. Before this was popular agents were saying that you should be an expert on it before taking a listing like this. Anyone that has done it please advise.

Yes I have done many of them.Before in my market they offer a good deal to the buyers.In other markets that are declining rapidly the deal is not as good.

There are too many things to post but I have answered your other posts before.If this property is investor owned or has more than one mortgage or liens on it ti will be really hard to short.

No other mortgages or liens on the property. My manager just told me that the commission is determined by the lender? Did you take training on doing short sales?

A little in the beginning.I was doing these 2 years ago when most people didn't even know short sales existed.In upmarkets you just don't have short sales because the lender can foreclose and the house is worth more appreciation wise than when they foreclosed on it.Now in alot of markets it's the exact opposite so banks are more motivated to look at this option.

I learned in the school of hard knocks.Many short sales,many long talks in the morning with assett managers on how things really go down.If you call them at the right times and are really nice some like sharing the inside secrets and helping you out.Especially if you are a broker/agent and not an investor trying to buy the property.

The commission IS determined by the lender!In a short sale the owner still owns the property but the bank is taking a loss on the mortgage note so you have to have both the sellers approval and the banks approval to go forward.In other words the seller could agree to the deal but the bank refuses or the bank agrees to the deal but wants the seller to sign a promissory note for the difference and the seller refuses.

Since there is one note the next step is to determine the type of loan FHA,VA,or Conventional.The next step after that is to talk to the loss mitigation department or foreclosing attorney to see how much time you have before the sale date to get a short sale done.Example you find out you have only 3 weeks beofre the auction date(not going to happen) int hat instance the seller would have to pay for a forebearance to buy more time or the buyer would have to pony up more non-refundable money to the bank in case the deal fell through the bank would have more money to pay an attorney to restart the foreclosure process again.

Generally the lender pays 5 percent co-op with 2 agents involved sometimes they pay 6.If you represent the seller and the buyer is unrepresented the bank only pays 3 percent.This is why I like there to be a buyers agent so I don't have to do double the work for only 3 percent.

Once you know what type of loan it is you will be able to determine the percentages that the bank will accept.FHA,VA is an appraisal by a certified government appraiser.Conventional is a full interior bpo(brokers price opinion) if the value comes in to high your short sale is dead in the water.You can ask for another bpo for a reconciliation of value but ti still may not work.This is why it's critical to be out there when they are doing th ebpo or appriasal.Sometimes new or out of town agents are doing them or they do not know how to accurately asses repairs.This is why if you are the listing agent it is a goo didea to give them a retail line item estimate by a contractor on what the repairs and labor would costs to fix the house.This way the agents doesn't underestimate repairs to be on the safe side with there bpo value.

For instance on a FHA loan they will accept 82 percent of the appraised value.So if the loan on it is 100k and it's appraised in current condition at 80k they bank would take 82 percent of the 80k which would be 65,600!

Now the key is that is the NET figure to the bank.Agents commissions,closing costs,attorneys fees would be added on top of that figure.Now if the appraisal came in so low that the 82 percent net figure was lower than 63 percent of the original principal loan balance then they won't do the deal.

These are just some of the basics to short sales.

whew! I'm glad I just signed up for a short sale class offered by my board.

You manager is wrong. The lender does not determine the commission. In fact what you are doing is trying to negotiate the lien holder on the proeprty to take less then the balance on the note. As well as leave enough equaity on the table for the commission to come out of the proceeds of the sale. Also the seller or person on the note should contact teh holder of the ntoe and start to talk and see even if they are open to it. As well as what the guildlines are. Virtually every note holder has guildines already in place and if you ask early on you will find out what they would do if a short sale is approved.

Usually what happens is the mortgage is being handled by a mortgage servicing company on behalf of the owner off the note.Usually these scenarious will be spelled out in the servicing agreement package on that loan.Any deviation from the servicing agreement the servicers will have to get approval from the investor or institution that owns the note.This is one of the problems in a short sale because by the time they get an answer back sometimes they have already foreclosed on it because of the servicing agreement.Servicers don't want to get sued for voilating there servicing agreement without investor approval first on modifying the agreement.

There is not expert in sort sales. Just list it, try to keep in touch with the bank and hope for a good luck.