In our experience, you are correct. The banks will not “give away” these properties, but they most assuredly do not want them back. You will have to justify your position and price point with data, and then more data. The banks right now are overrun with requests for short payoffs and workout programs.

About commissions, you hit the nail on the head. It is all about negotiation. The bank will try to squeeze every last penny they can out of the transaction, I don’t blame them, in order to get the most money they can. Go into this negotiation knowing you will have to make concessions, so build in some room to give.

I cannot say enough about being represented by an attorney. In Florida, we are a judicial foreclosure state, so all cases going through the judicial system. Being represented by an attorney can give you them time you need to work your transaction, also we have found that when the banks talk to an attorney, they are much more receptive, especially during the negotiation process.

Points for agents who have not done a short sale to know:

1. The buyers must know that the process to purchase will be longer and the negotiations will be harder than your typical resale. The banks aren’t going to give the property away, and they have bereaucracies that take time to work through.

2. The first thing the bank will do is negotiate down the agent commission. If you’re a savvy agent, you can protect your commission (you’re going to earn every penny of it in these transactions) by having a buyer agency agreement with your clients. They’re going to get a great deal on the home, and you’re going to work your butt off, so why not have the buyer pony up to bring your compensation back in line with the agreed upon commission the MLS listing was supposed to gauranty?

3. Listing agents on a short sale – get your clients an experienced real estate attorney. They’re going to need one whether they realize it or not. The bank isn’t going to be looking out for your client’s best interests and they’ve got a whole legal department behind them.

4. Listing agents who try to negotiate a short sale contract as if it were a typical resale are going lose those buyers if they don’t disclose the short sale and don’t involve both party’s attorneys and the bank right away.

At least that’s been my experience so far. I’d like to know what others have experienced.

We should be closing on a short sale next week with 5th 3rd bank. They accepted $175,000 on a loan of $270,000. So I agree there are certainly some good deals out there. Fortunes will be made over the next few years.