Hi Guys,

Our team has been working on some strategic planning and we were surprised to find a lot of the short sale listings in our area that demanded that the buyer would be responsible for a short sale negotiation fee , attorney fee for the seller's attorney, or some portion thereof.

We would be interested in hearing your thoughts on this model. 

Does it discourage offers?

Thanks in advance.

Chris

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If the buyer agrees then you are good to go. you could present it as "Seller will contribute 3% towards buyer's closing costs on all financed deals. 1% of this will go the short sale negotiator" or something similar. As in most things it's all about the presentation. 

OMG!  What you are stating is that you are requesting the seller, the short sale lender, to give the buyer 3% for financing of their loan but you will re-direct 1% of it to a negotiator fee. Do you disclose this to the short sale lender on an addendum or on the HUD?  If short sale lender does not pay a negotiator fee, then why would they allow a closing cost credit to be used for same thing? If you are not disclosing all to the short sale lender then you may be in an area of mortgage fraud. I don't know how your MLS rules are in Florida, but in California, if you list a specific price and the buyer agrees to pay it then you cannot add a contingency that they must also pay a short sale negotiator fee some of which I have seen up to $10,000.00. One other issue is what if buyer does not want to pay it?  Agents are getting into trouble by saying..." The buyer is getting a good deal so they shouldn't mind paying it" or "well if they don't want to pay it I will find another buyer that will"

I cannot answer for how others do it, but the way I do it is correct and legal in all ways.  First, the Fee is charged to the buyer, per written agreement, on RESPA at close on buyer side. Second, If a buyer wants a credit, they may ask for one, but we do not guarantee that it will be approved.  If a buyer NEEDS a credit to close, they are not qualified and their offer is rejected. If a credit is approved, it is paid like any other credit, on RESPA from seller to buyer.  The buyer may use this credit to pay any cost they chose. If you see a negotiator or anyone else trying to arrange a credit to be paid to anyone but the buyer, that is a RESPA violation.  Like I said before, everyone must benefit, and the buyer must feel that they are getting a benefit or the deal won't work. I always say, I help my sellers by helping the buyer buy.

www.ssprocessors.com

It all must be disclosed on the HUD.

What description, line number and section on the HUD do you disclose the short sale negotiation fee?

I tried putting "admin fee" processing fee" but all are getting rejected. 

Cindie are you talking about the buyer paying the fee?  That's what this topic is about.  If that's the case, it goes on the buyer side of the HUD.

 

If you are talking about the seller side of HUd most of the time a fee is put in the 1100 section or in the 1300 if you are not attorney based.  very few lenders are approving non- attorney fees for negotiation though on the seller side of the HUD

 

 

No it does not discourage offers.  My office is working currently on over 65 sales, and only 3 are not under contract.  I would not be in business if it did discourage offers. 

 

You'll have many people tell you it does, but again, it's likely someone who doesn't know enough about this type of payment structure.  If someone doesn't want to pay the fee, there are plenty of other sales in the area.

Bryant is right.  If a buyer is financed, they can ask for a seller credit.  I've seen two cash offers get a seller credit as well.

just closed a BOA short where the Buyer got $5000 towards closing and used it to pay negotiated back HOA dues...

Amen Smitty:)

Hi Smitty, You state "my office" in your message.  I'm assuming you are a real estate agent and coordinate with the bank without the use of a 3rd party.  In AZ, the real estate commissioner considers this to be against policy.  In AZ, we are not allowed to ask for money for short sale negotiations unless you are also an attorney.  We could lose our license here.  I'm sure there are people doing it, but why chance losing your livelihood.  I understand that short sales are time-consuming and we should be paid for our time, but we have to play the cards we are dealt. 

Mike,

This (i.e., the "who's qualified/licensed" question) is definitely jurisdictional.  AZ law sounds pretty similar to FL in that regard.

Chris

Smitty,

You may be right; but the chorus in opposition has been loud.  It has been interesting to hear both sides.

Chris

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