Etiquette Advice - Real Esate Agent

I would say that since you haven't signed a contract yet then you need to get yourself a short sale certified agent. Make apologies to your friend, and tell her that you've received some advice from your bank and property attorney that you've decided to take. Lay it out for her honestly and simply about the certification. Let her know that that's really the only issue.

This might be a situation that makes her realize that at least one of them ought to get certified to be a short sale agent.

I would NOT give her any money if she hasn't done any work for you, nor if there hasn't been a contract. Money exchanges hands cinches a contract in my mind.

ETA - Just want to add something extra I thought of - if you pay her something, it could legally mean that you have accepted an obligation to her, and then you might HAVE to let her have the listing. Don't take a chance by hamstringing yourself. I don't know that I'm right about it, but I just wouldn't take that chance...

Original:
I don't know the answer to your question about the number of properties or 3rd parties - maybe someone else can give an opinion on that. Don't give her anything for her time if you decide not to list with her. Do tell her that you have been advised to use a short-sale specialist. Tell her that too much is riding on this for you to hire someone without a lot of experience with it.

One of my real estate agents told me that when the market was real bad several years ago, she took a morning job with a real estate attorney working on short-sale paperwork. When the market picked back up, she didn't do that anymore, but she told me that she was SO glad she learned it so that she could help her clients. She told me specifically that a short-sale specialist needed to do this kind of work, and that she was gratefu to now be a short-sale specialist.

Good luck with all of this.

I would work with a realtor(s) that is experienced with short sales. You should find out from your bank who they work with (they usually have their own realtors).

Also remember that this can be a very long process, it took over 6 months for us to get the final approval to purchase our short sale home and then another 45 days to close. This was the sellers bank not ours that took so long.

I would not give any money to the current realtor and as long as you didn't sign any type of contract you are not obligated to list with them or share the commission.

Yes, you really DO need a short sale certified agent, who has completed multiple short sales. There is tons of additional paperwork involved that is specific to a short sale so a regular realtor would not have this background. Plus, it will take months to get an approved offer through your bank, and a short sale agent is accustomed to that.

If you do not have a contract with this agent (even a verbal one??), then simply explain the situation to her and apologize that you wasted her time. Paying her even a small amount could indicate that you have a contract and she or her partner could then expect a full commission when you do eventually offload the house. As a result, be honest. Tell her that you didn't realize you needed a short sale agent. That you appreciate her time. And that you will try to make it up to her by referring other clients, or something like that.

Finally, no, you absolutely do not need a third party to negotiate with your bank. A short sale agent can do all of that for you, or advise you what you need to do to communicate with your bank. Are you certain you qualify? Have you already stopped paying your mortgage? Many banks won't approve you for a short sale until you're three - six months behind, and they'll need proof that you can't afford the house.

Good luck. Short sales are not easy, and they negatively affect your credit almost as much as a foreclosure so make sure this is what you want before you jump in. Last but not least, depending on the state you live in, you may have to pay taxes on the amount the bank forgives. For example, if your current mortgage is $200,000 and the offer the bank ends up accepting as a short sale is $150,000... and they agree to forgive $50,000, in some states you have to pay taxes on that $50,000 because it's considered "income". A certified short sale agent should be able to tell you all about the laws and requirements in your state.

the only real question is should you employ someone who has experience in short sales, and the answer is YES. Time is of the essence as I'm sure you're aware.
If you feel comfortable offering something for their time, that would be fine.

Are you in a state that requires the listing agent to be present at showings? (IL is one, not sure of others - although now that I say that.... that might be Chicago city ordinance).

If not, I would say 52 listings is NOT too many for 2 agents. Although as you are seeing, I would say it's too many for ONE agent (which is why you didn't get personal attention when YOUR realtor was out of town).

However, that's not what I would be looking at.... just the total number of active listings. HOW MANY HAVE SOLD IN THE PAST YEAR? That's what you want to know. If they have 52 active listings and they sold 10 within the last 12 months that's a problem. But if they have 52 active listings and they sold 40 in the last year.... well then it's ok, because you know their properties are moving.

I would say you need to have a conversation with her, before you just back out. Being that you haven't signed a contract, you aren't legally obligated to use her (as you know) but you are right - you will be seeing her on an on-going basis.
If you back out, I don't think $50 is an appropriate amount. It's not nearly what her comission would be. Find out how many hours she has ACTUALLY worked on listing your home. Then ask how she would like to be compensated for her time.

Definitely go with a short sale specialist. One thing I wanted to comment on that wasn't mentioned in your post is that in order to be even considered for a short sale you must have suffered some kind of hardship. So, if you're still able to make payments and aren't behind and if your tenants are paying rent then you may not be approved. It's not enough that the house is underwater, you need to also have suffered some kind of hardship. Talk to a few realtors that specialize and see what they say. Also, if you are a candidate for a short sale, make sure the realtor isn't going to charge you an out of pocket fee along with the commission. We came across one of those, they sprung it on us after they supposedly found a buyer. We walked out of their office and went with someone who just worked on commission, and she got her commission. Anyway, just wanted to point that out. Good luck!