A popular question in our Ask the Expert section as well as from our students: Who can legally negotiate a short sale for profit? The answer is complicated and dependent on the state where you live. The recent FTC MARS regulations are at the heart of this question, as well as your local real estate department’s specific interpretations of those regulations.

Most states agree that negotiating short sales as a listing agent is incidental to your real estate practice and therefore in line with the terms of your licensing and fair compensation. The gray area is if you can get compensated for negotiating short sales for other agents. Some states have declared that this is strictly prohibited, that the only “third party” negotiators allowed are licensed attorneys. Some states require additional licensing, such as a mortgage loan originator’s license from NMLS, with the idea that additional compensation requires additional licensing beyond what is common in real estate practice.

Different licensing bodies also have differing interpretations of the FTC MARS regulations. The real estate associations believe that you must be a licensed real estate agent to do any kind of short sale negotiations. The attorney associations believe that nothing less than a law practitioner’s license will do. And the mortgage industry has been lobbying recently to make the MLO license a pre-requisite, believing that they are the best party for the job. Banks and lending institutions have weighed in by insisting that they deal directly with the homeowner/borrower, though they will work with anyone who the borrower has explicitly authorized to speak on their behalf.

The specific interpretations and guidelines for short sale negotiation in your state must be determined from your department of real estate or other licensing body. The RENI encourages you to speak with them and your real estate broker.

The RENI’s popular Certified Short Sale Negotiator course does not provide a license of any kind and does not provide interpretation of the regulations in your specific state. It will, however, give you the skills to be a better negotiator for short sales once you have verified the licensing requirements for your state.