Wendy Cutrufelli, Contra Costa Realtor

When holding my listings Open, I have repeatedly been asked the same question by potential buyers, "Are you the listing agent?". When I confirm that I am, they proceed to say, "Good, I will ONLY deal with the listing agent."

When I look suprised and say, "Why would you do that to yourself?" The reponse is"I'll get a better deal because you know the sellers bottom-line and you will cut your commission!"

Then the conversation gets interesting.

I explain that as a basic business practice I won't act as a dual agent and double-end a transaction. My seller has hired me to get their home maximum exposure and to negotiate the highest possible price the market will bear. If I can improve on their bottom-line, it is my job to do so! My fiduciary responsibility and my loyalty is to my seller. I choose not to lessen that commitment by dancing on the razor's edge of dual agency.

If they were my buyers, my fiduciary responsibility and loyalty would be to them. It would be my responsibility to negotiate the lowest combination of price and terms that is possible on any home they wish to buy. A good negotiator can return far more than the 1% commission savings.

I find it disheartening the we, as an industry, have done such a poor job communicating the level of negotiation, contractual knowledge and protection (in the form of appropriate property inspections) that professional Realtors bring to a transaction.

Refusing to double-end a transaction, honoring my commitment to my client and, thus, limiting my potential income on a single transaction seems to be an excellent way to bring the point home.

Your thoughts?

I list short-sales. No, let me clarify, I successfully list and sell short-sales. Ok, it's true that I spend hours on the phone trying reach the short-sale negotiator and it's also true that the majority of that time is spent on hold (the perfect time to catch up on paperwork and emails). But, although Realtors continue to beat the drum that "short sales DON'T get approved", they DO get approved and my sellers won't have "foreclosure" on their credit record.

On a recent transaction I was extremely fortunate to get a Wachovia short-sale negotiator who is absolutely amazing. He immediately picks up his phone and when he can't, he returns phone calls and email messages the same day. This guy is a keeper! Additionally, Wachovia locates their negotiators within the market area of the short-sales transaction. I don't have to battle with a negotiator across the country about the market value in my city because Wachovia sends their negotiators to view the property. I had my Wachovia short-sale approval in 10 days.

Since he is located in my market area, I asked him to lunch. I thought it important to find out the challenges he faces.

Here is "the other side of the story". This negotiator has 75 files needing his attention on any given day, of which 35% won't be approved as submitted for the following reasons:

• The sales price is significantly below what the home would sell for as a foreclosure (bad for the bank and really bad for the seller who may have income tax liability)
  
• The accepted purchase contract includes repairs that need to be completed prior to closing at the lender's expense (the lender isn't the seller in a short-sale as compared to an REO).
  
• The home did not receive sufficient marketing visibility (wasn't posted on MLS, for example)
  
• This is the listing agent's first or second real estate transaction and they are asking the negotiator to tell them the contractual forms that should be completed (Negotiators aren't normally licensed realtors and, even if they were, aren't paid to act as a Broker)
  
• The seller is related to the real estate agent or the buyer (not an arm's length transaction)
  
• The buyer's pre-approval isn't valid (the buyer's income or assets haven't been verified OR the loan officer wasn't aware of the property condition and the buyer's downpayment/reserves are insufficient for approval on the specific property).
  
• Of the remaining files, another 20% are awaiting additional documentation which he has requested multiple times and still not received (to be sent directly to the negotiator).

In a nutshell, he spends more than 50% of his day on short-sale files that aren't going anywhere due to lack of Realtor experience or due dilligence. Ouch!

I recently received an advertisement in my email that said "Learn how to Create a Loan Modification business and earn 'lazy money'". I was horrified. Is this the new way to prey on homeowners in distress? Does paying for Note Modification assistance increase your liklihood of getting your Note Modified? Not necessarily. [Note: when I originally posted this blog, my answer was "No". However, based on some excellent feedback provided in the commments below, I modified the answer].

Lenders have specific requirements that must be met to obtain a Note Modification and specific documents that must be provided to support your request. I have coached several homeowners through the Note Modification process at no charge and can state unequivocably that no one cares more about the Note Modification or is more diligent about follow-up with the lender than the homeowners!

All the homeowners need for a 'self-help' Loan Modification is:

• The specific documents required by the lender
• Help demonstrating the current hardship and, equally important, the long-term ability to pay the modified mortgage going forward
• The specific process, timeline and potential road-blocks
• Someone to call when they hit a wall or get frustrated

The charge for Loan Modification services appears to range from $2,000 - $3,500 or more and, yet, it only takes a one-hour appointment and availability by phone to provide those services.

I am often asked why, as a realtor with a 20 year background in lending, I would offer this service for free when I could easily charge for my expertise. The answer is simple. Some modifications aren't granted and some homeowners will need to sell in order to avoid foreclosure. If I honestly and diligently do everything I can to help them SAVE THEIR HOME, they will trust that the ultimate sale was truly in their best interest. Those that DO receive Note Modifications are my most outspoken referral sources and I couldn't be happier that they didn't have to sell.

It is true that some homeowners simply don't have the time or patience to tackle this task on their own and would prefer to pay someone else to take on the responsibility. There ARE good people offering Note Modification services for a fee but it can be difficult to sort the good from the bad. The California Department of Real Estate has issued a Consumer Alert regarding Loan Modification Services which offers some good tips for evaluating the service providers.

I received a potentially dangerous phone call on one of my short-sale listings. Let me give you the overview.

A Realtor called and said he was representing a "professional short-sale buyer" who purchases short-sales in great neighborhoods, negotiates the short-sale with the lender and has a 89% success rate. Always curious, I asked how this proposition works.

• The professional short-sale buyer has his own attorney-drafted purchase agreement
  
• The seller must put the property in a Living Trust and, within that trust, authorize the buyer to negotiate with the lender(s) on the seller's behalf.
  
• The seller has 45 days to back out for any reason. After 45 days, the seller must provide a notarized commitment to proceed.

Every filament of my brain screamed, "DANGER!" I told the agent that I would specifically advise my seller AGAINST taking an offer with any such arrangement. He was quite surprised and again reiterated that his buyer had a 89% success rate negotiating short-sales. I explained that negotiating the price of the short-sale is only a small part of the overall negotiation and a buyer would not be as careful to represent the seller's best interests in the non-price concerns.

(Please note, my concerns should not reflect negatively on the selling agent who approached me with the idea. He is doing his job which is to identify properties on behalf of his client, the "professional short-sale buyer".).

• The use of the non-CAR (California Association of Realtors) contract absolutely requires my seller to hire an attorney for contract review.
  
• Any transaction that requires a seller to make alterations to title should also be carefully reviewed by a real-estate attorney.
  
• Changes to title could void the current Title policy and moving a property to a Trust is considered a change in ownership. Few Realtors and sellers know to ask if there are any specific riders necessary to maintain the title policy when moving the property to a Trust.
  
• The C.A.R. Short Sale Addendum clearly states that the seller is not obligated to accept the Lender's short-sale terms. (There are some short-sale approvals that are so onerous that the seller is financially better letting the home go to foreclosure).
  
• Some lenders add previously undisclosed conditions of short-sale approval to the closing package.
  
• There is no guarantee that the full terms of the lender approval will be received within the 45 day period.

The buyer has a vested interest in getting the property for the lowest possible price which will result in a higher potential tax liability for the seller. Additionally, the buyer has absolutely no vested interest in protecting the seller from potential recourse (a judgement or collection) after closing.

Use Extreme Caution!

I list Short-Sales. As I type this, I can sense the shivers of dread running down your spine and, you're right, they are time-consuming, frustrating and downright grueling to get closed. The trial of lender negotiations and our role as the sole person between the seller and potential foreclosure is not the purpose of this post.

I want to share two quick stories that I call Life Lessons. These lessons are not new but resonate more deeply given the circumstances My short-sale sellers didn't lie about their income to qualify for their loan, didn't stretch beyond their means and are hard-working people who went to heroic efforts to keep their homes. Sometimes life doesn't have a happy ending.

Seller #1 purchased an investment property with 40% down to fix and flip. About halfway through the project his mother came down with cancer. He promised her that he would care for her until she died....and he did. Ten months later when he could resume his project, the market had taken a dramatic downturn and the value of his investment had dropped to less than zero. To make matters worse, his work hours were cut in half so he could no longer carry the payments. I met him at the property and found him touching up the new paint, hanging the new towel bar in the bathroom and fine-tuning the custom closest doors he designed. I asked him why he was spending the time with these small, unfinished details. His answer showed his character, "I might be losing my shirt on this project but it will be someone's home and I want it to be right."

Sellers #2. These sellers have owned their home for 4 years and they, like many in California, depend on two incomes to make their house payment. Mrs. Seller is bright, articulate and organized. She lost her Human Resources job 10 months ago and, given the current state of the economy, has been unable to find new employment. They tightened their budget, went through their savings, she found some temporary contract jobs, and finally they rented-out their home and moved in with family in hopes that they could hold on to their home. It wasn't enough. In 10 months they went from living the American Dream - with 750+ credit scores - to losing it all. While many marriages disintegrate under that amount of financial stress, Mr. Seller said, "We may lose everything else but we are still a family and - in the end - that's the only thing that's important."

We would all count ourselves fortunate to keep our families and character intact in the same situation.