Additional Commissions? Normal?
This is my third short sale deal but a first where the seller's agent asked for essentially three components of commissions.
First, a $2500 to be paid to some "short sale and consulting services".
Second, a flat $2495 to be paid to the realtor as "additional commission" for the service of the company.
Third, 6% commission to be split between buyer and seller agents to be paid at the discretion of the lenders or lien holders, and if they approves less than 6%, the buyer pays for the shortage.
Is this typical? For me to shoulder $5000 PLUS up to 6% commission whatever the lenders don't feel like paying?
My attorney says I can write into the contract a contingency which states that if the lender approves less than 6% commission, I can cancel the contract within 3 days of seller's written notification of lender's approval and get my deposit back, but writing that in could cause the seller to not sign the contract.
Thoughts?
Replies to This Discussion
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Permalink Reply by Wayne Brooks on
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One $2,500 fee for short Sale "negotiating" might be okay. But two separate fees, with one for the Realtor who apparently is not doing the negotiating...no way. And, the Buyer to make up a commission shortage to the selling agent....no way. (The realtor could give up the whole fee to help the deal, then get it from the buyer???)
This Realtor seems Really impressed with their position, and not concerned with the seller's interests.
I have no problem having the buyer pay a reasonable fee, hopefully in exchange for a better deal. But, in this instance I'd:
1) Pass, or 2) Write your offer with the terms/condtions/fees You want, and send it. The listing agent Better submit it.
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My attorney read it over and said this is the most greedy set of terms she has seen from a listing broker.
She also pointed out two things I failed to notice.
The $2500 "consulting fee" was written very vaguely into the contract, and could be interpreted to mean that it is a fee I have to pay regardless if the short sale is approved or not, because it says that fee is due "...by the time of the scheduled closing" and not "...at closing". She thinks I owe this money even if the deal falls apart, either that or their lawyer was lousy in writing up the boiler plate.
There is another portion of the boiler plate that says "Buyer agrees to contribute to cover any and all shortages to close this transaction..." so theoretically I may have to pay other items the lender refuses. The lender can say I want to NET this, and I am stuck to pay the rest.
The listing agent told my agent these terms are necessary to ensure the buyer is serious and not tire kicking. My attorney says this really smells.
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Permalink Reply by Smitty on
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It's definitely in favor of the seller all the way. The lender can say they want to NET $115,000 and your NET offer may be $105,000 and the way it's written you'll owe that additional $10,000. This is a contract you already executed? I'd see if you can find another out.
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No not yet executed. I am reviewing the boiler plate with my attorney to decide if we tweak the contract to remove the one-sidedness or we pass. Nothing has been submitted.
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Yep. It's the second fee I'm having an issue with. I don't mind the negotiation fee to the company if they know what they are doing, (ask for references or proof they can negotiate a sale) but then to pay another fee and also the balance of the commission??? I'd say either or, but not both.
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The whole situation does sound slimy to me. The "Buyer agrres to contribute any and all shortages...", along with the rest, tells me you are dealing with crooks! Is this a Miami transaction?
Forget my earlier suggestion, just RUN....find another property.
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If you try to do this deal, and these listing agent/negotiators can't "stick" you for an extra, undeserved fee in the end...they will let the deal die. Run.
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Permalink Reply by Joseph Alfe on
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The negotiator fee is acceptable and they are doing it right by disclosing in beginning. The additional commissions, or being liable for any less than 6% commissions is not acceptable in any way, shape or form. Having to pay additional seller costs is common, and again, disclosed early. What I would suggest is to agree to the acceptable clauses, strike the unacceptable one, then lower your offer to compensate for these expenses. That's how I structure deals.
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I agree with Wayne this sounds fishy too.
However I like this property and I want to get it if the numbers work.
So I am going to submit an offer.
After talking to my attorney I am going to leave all their boiler plate language alone, but I will add in my own at the end that says BUYER WILL CONTRIBUTE TO A MAXIMUM COMBINED TOTAL OF $8000 towards shortages to commissions, additional commissions, consulting fees, and other assorted fees. Under no circumstances will Buyer be liable for more than $8000. Buyer will pay full purchase price, and the usual customary buyer closing costs as stipulated in the FAR/BAR residential contract section 9(b). Buyer owes no commissions, consulting or other fees if the contract is terminated or SS is not approved.
Then knock $8000 off my original offer price.
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One unrelated question.
The listing agent asked that I put $5000 deposit up front. Fine.
When the lender approves, another $5000 deposit. Fine.
For me this is a cash deal.However, they are asking the inspection to be done upon seller acceptance, instead of upon lender approval. This is not typical here, all my other contracts we do inspection upon lender approval. The agent said again this is just to make sure you have some skin in the game. OK fine, I'll pay the $500 or $650 to have an inspection done. However, it says once the inspection is done, their language says the deposit becomes nonrefundable.
I understand some of the experts here do require inspection upon seller acceptance.
My question is, between seller acceptance to lender acceptance we could be talking 90, 120 days or more. During that time there could be a water leak that floods the house or a fire or it gets broken into and vandalised, and I don't know if the seller's insurance is up to date. How do you account for that case?
Would it be reasonable for me to insert a clause to stipulate that upon lender approval, I should have another 10 days or so, to do a walk through of the property to make sure it is in the same conditions as before, and if not, I have the option of ordering another inspection at my expense, and I can back out if I don't like the results. Once this ADDITIONAL inspection period expires, then the deposit becomes truly non-refundable unless there is a title defect or something.How does the experts here handle the long time delay if inspection was done ahead of time?
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Yes, most purchase agreements call for the seller to maintain the property in the same condition. If your agreement doesn't, add it along with something like "buyer will verify property maintained in same condition within 5 days of notice of lender approval....subject to final walk through".
Also, with these guys you might want to define " customary and ordinary fees" in advance. I still smell trouble ahead. Let us know how it works out.
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There is a clause there in their boiler plate but it's useless.
"Seller will attempt to maintain property in the same conditions but Buyer understands there is financial hardship."
My attorney says that language like this has no meaning and shouldn't even be on legal documents. It means nothing. If I borrow $10000 from him can I write an IOU saying "I will attempt to pay you back but you understand I'd rather not"?
That's why we have to keep tweaking these forms to take ambiguity out of it. This agency has put fluff in many places that makes it sound fair but in reality tilts to the seller and the listing broker.
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