3rd Party Facilitator (Non-Licensee) ---Does Their Fee Show Up On The HUD?

I have a 3rd party who provided me a investor/cash buyer. He wants 3% as a "acquisition fee" -he is charging the BUYER this fee for the privilege of presenting him (the Investor/BUYER)  this investment opportunity. The buyer is paying this fee out of pocket, at the closing table. Can this be paid through escrow, on the HUD; and, will the selling bank squawk? Also-what if the price was raised by 3% and that fee then paid--Thanks for your help!!!!!!!!!!!!!!!!

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Permalink Reply by Alyce Nelson on March 27, 2011 at 6:35am

I wouldn't raise the sales price because then you are dealing with the seller's proceeds and then they can say "no."

Unless the buyer is getting an FHA loan, which is sounds like this one not, the Buyer should be able to put the fee on their side of HUD without a problem.  If it we me I would make sure it is on the HUD so as not to be seen as a "side deal" ---a RESPA no-no.  When a short sale lender has balked about a fee on the Buyers side of the HUD, we keep the item there, mark it "P.O.C." (Paid outside of Closing) and resubmit… so it’s still disclosed on the HUD, just doesn’t show in the totals.  We’ve never had that rejected.  Then the Buyer would bring a cashiers check to closing for that amount to be delivered to the third party.

Permalink Reply by Elaine Cooper on March 27, 2011 at 6:55am

No 3rd party negotiators or the like can be paid on the HUD in a short sale.

And if you raise the price the bank will want the difference

 

Permalink Reply by Alyce Nelson on March 27, 2011 at 7:29am

Hi Bob,  We do attorney closings here and I do trust the legal counsel we are provided on this matter.  I do not believe the attorneys here would not risk their license or their livelihoods for a 3rd party payment.  You may wish to seek the advice of a qualified real estate attorney for your state, as we have, before accepting a blanket statement that they are not allowed.  Good luck!

Permalink Reply by Bob Sluys on March 27, 2011 at 9:17am
Thanks, folks-good advice!
Permalink Reply by Smitty on March 27, 2011 at 2:31pm

I'm confused by your post.  You have a 3rd party who provided you a buyer (cash investor) and the 3rd party wants an acquisition fee? This fee is charged to the investor?  I would check to see if referral fees are allowed for non-licensed indivuals in your state.  Many states prohibit a referall fee if the person is unlicensed.

 

You did not say this 3rd party was negotiating but it seeems that most people who answered assumed that.  A 3rd party negotiator can most certainly be paid on the HUD.  Fannie and Freddie will NOT allow it to be financed anymore, so if your buyer is bringing cash to closing for the fee, I do not see a problem.  Also, I'm assuming your buyer and "referrer" have some sort of contract? A convential lender MAY allow this fee to be financed, but let's determine EXACTLY what this fee is. 

 

The fee MUST be disclosed on the HUD even if it's a POC fee (paid outside closing) it still must be on the HUD on the side written in.  I think to be safe the buyer should be paying the referrer cash.  If the lender is financing it will likely be a problem and like I said if it's freddie or fannie, they will not allow.

 

It seems to me the 3rd party wants the BANK to pay the fee when they could just directly go to the buyer and collect it. They are not negotiating the short sale, so I don't see what services they have provided to collect a fee.

Permalink Reply by Bryant Tutas on March 29, 2011 at 12:32am
Bob. In Florida this "3rd party" would be committing a 3rd degree felony. An unlicensed person cannot receive a commission. I would check with your State's licensing laws before moving forward with this transaction.

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