One of the specialties spawned by the market of recent years has been that of short sale negotiator. This is because many – perhaps most – agents lack the time, temperament, or training to usher through a short sale.

The time involved in working a short sale can be significant. Not only is there the productive time that can be measured in tasks such as paperwork done, faxes sent, and forms checked and verified, but also there is the elusive time spent sending unacknowledged emails, leaving messages, and playing phone tag. It all adds up, and to an agent it is all time that is not spent marketing, lead generating, or creating new business.

A short sale negotiator also needs a certain temperament. It takes a tolerance for lost paperwork, unanswered messages, and general inefficiency. Some sizeable stands of timber have gone to provide the mountains of paperwork that have been lost by loan servicers. Not everyone can put up with this. It takes a certain inner calmness to press on when told for the third time that your file has been misplaced, or that the process needs to begin over because the person who was handling it is no longer with the company. Many agents do not have the emotional makeup for this.

Also, many agents lack the training needed for processing a short sale. Granted, even if there are some courses and certifications available, most of the training is of the on-the-job type. And even the most experienced had to begin with their first one. The point is, though, that there are many agents who find themselves with a first short sale listing – one which very well may elicit an offer – but who neither have nor want to acquire that on-the-job training.

So, granted that there is a need for short sale negotiators – much in the same way that there is a need for transaction coordinators and escrow agents – there are still questions regarding who the negotiator is to work for and what the relationship should be.

A short sale negotiator may be chosen by the seller directly, by the seller's agent, or even by the buyer's agent. Each possibility raises its own concerns.

It is, so to speak, "cleaner" if the seller chooses the negotiator. If the negotiator doesn't perform well, then the blame won't (at least, shouldn't) go to the agent. Of course the downside is that the seller may lack the understanding and perspective needed – something the agent is likely to have – to make a good hire. It is a certainty that the agent and the negotiator are going to need to work together and, at a minimum, the agent ought to have input into the choice of a negotiator.

It is probably most typical that the seller's agent will choose the person to do the short sale negotiation. The negotiator might be part of the agent's "team" or employed within a specialty division of the brokerage. But this is not necessary. The negotiator could be a stand-alone provider of service, or, on occasion, might even be employed at another brokerage. In the latter case, it needs to be clear for whom the negotiator is working (the agent or the seller) and what, if any, agency relationships are established.

The most problematic scenario – but not unheard of – is when the negotiator is employed by, or an affiliate of, the buyer's agent. There can be sense to this. Suppose the buyer's agent has considerable experience and has a short sale "team"; and the seller's agent has no experience in this arena. The buyer's offer might even be conditioned on having his agent's negotiator handle the interaction with the lender. The murky problem, though, is that now you have the buyer's agent representing the seller (to the lender).

Regardless of who is doing the negotiating, insurance is a relevant question. Not every Errors & Omissions policy will cover this activity. Moreover, the short sale process is fraught with potential for future claims. The failure of a negotiator to exercise reasonable care or to conform to (in many cases, emerging) standards of custom and practice can lead to real damages. Both listing and selling agents want to be sure of their coverage.

Finally, questions of payment need to be considered. Will the negotiator be paid out of commissions that have been earned or that will be negotiated, perhaps downward? Or will the negotiator fee be a stand-alone separate fee like those of most settlement service providers? If the latter, how is it arranged? Some short sale lenders may not allow this to be paid out of the sale proceeds. Having it paid outside of escrow may raise questions of lender fraud and/or RESPA violations.

Of course it is possible that the recently enacted HAFA program will make the short sale process so straightforward, predictable, efficient, and transparent that negotiators will become unnecessary. We'll see. Until then, it's reasonable to expect plenty of business for short sale negotiators.

Published: May 25, 2010

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Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .