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If brokers decide to offer short sales as solutions to clients who don't qualify for loan mods, they should discuss the risks with clients and insist that clients retain an attorney and tax-advisement services.
When providers help
Some reputable third-party short-sale companies provide legal representation and tax advisers to homeowners for free. Brokers who refer their clients to these companies can reap rewards.
When a loan mod isn't the right answer for a client, think short sale. Brokers who affiliate with short-sale providers can offer broader services to their clients. Some short-sale companies pay a fixed referral fee of $500 to $1,000. Other short-sale companies pay brokers through profit-sharing or commissions.
To affiliate with a short-sale provider that will protect your reputation and provide the most opportunity for financial success, consider how providers measure up in the following critical areas:
Track record: There is no substitute for experience and competence. Find out the short-sale professional's or company's success rate. The success rate of the short-sale firm with which you work is more important than the details of how much it pays per referral. If a sale doesn't close, no one is paid.
Integrity: The client's experience with the short-sale company will impact the referring mortgage broker's reputation -- either positively or negatively. Avoid partners that are overwhelmed or that make decisions based on what's best for them rather than what's best for homeowners.
Legal representation and tax advisement: Short sales are complicated, and homeowners need an attorney and tax adviser to protect their interests. Some short-sale companies can provide free legal and tax representation or work with homeowners' own advisers. As a referral source, brokers don't want to be associated with creating a negative consequence for homeowners. Refer clients to short-sale companies that understand how to protect homeowners.
Commissions: Brokers should expect as much as 20 percent of the profit for each deal they bring to a short-sale provider. Find out the structure of commissions, profit-sharing or both.
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Although loan mods continue to solve some borrowers' problems, short sales are poised to grow in importance. Brokers who understand when to use short sales and when to partner with reputable third-party providers can help their clients and increase their income.
Kathy Van Sleen co-founded JK Short Sale to provide a trusted, legal means to transact short sales at no cost or risk to homeowners. She has a master's degree in business administration and extensive executive, financial and real estate experience. JK's 95-percent-plus closing rate demonstrates the effectiveness of its proprietary program and its commitment to homeowners.
By giving homeowners leverage, JK helps counterbalance the power of big banks. Learn more at jkshortsale.com or e-mail firstname.lastname@example.org.
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