Replies to This Discussion

Permalink Reply by Smitty on February 2, 2013 at 8:24am

I disagree.  I see the most seasoned on this thread don't disagree.  The question was does it discourage offers?  The answer is NO. 

I think many agents immediately distrust when they see a buyer paid fee, but when properly disclosed the fee has no impact on how many offers the property gets.  It's the price that essentially is going to generate the offer. 

We train attorneys in my state how to negotiate short sales.  Many have adopted our fee structure.

I don't work for the seller or buyer.  I represent the transaction, although I am initially hired by the seller, but my contract is both with the seller and buyer and both parties are repped by agents and attorneys.  I work with one of the largest title insurers in New England and we do combined presentations.  It can be easily done and I find its the most inexperienced agents who balk at a buyer charged fee.

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Permalink Reply by Wayne Brooks on January 23, 2013 at 4:25am

The fee charged to the Buyer is the cleanest way, becoming quite common and can be handled just as Bryant said.  There are some agents who complain, but I think it's because they can't educate their clients.  Factor the fee into your offer price.  I'd rather have an established, agreed upon fee up front.  I see too many "firms" who do it for "free" constantly manipulating the HUD and contract addendums, with the Buyer coughing up money for "seller's closing costs, attorney fees, liens, other seller obligations...." which is actually the "firm's" fee.  The fee is just hidden, and I just saw a recent one for $5,400(seller atty fees paid by buyer) on a $130k sale.

So yes, a reasonable fee charged to seller and disclosed upfront makes sense to me.

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Permalink Reply by Becky Martin on January 23, 2013 at 5:23am

Amen!

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Permalink Reply by Wayne Brooks on January 23, 2013 at 5:38am

Sorry, brain malfunction-last line above should be "So yes, a reasonable fee charged to buyer..."

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Permalink Reply by Phillip Allen on January 23, 2013 at 6:09am

When the SS lender is not willing to pay 3rd party fees (they never are willing) we always encourage that both the listing and selling agents participate in the negotiation fee, however, the buyer should be the first to step up and pay the fee; after all aren't  they buying a distressed property that is under the FMV...?!? BTW - in CA you can not "demand" buyer pay any fees...!!!

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Permalink Reply by Joseph Alfe on January 24, 2013 at 1:44pm

It is very successful, but only if properly disclosed to all parties in the beginning.  They was Smitty and I do it, buyers get several incentives and are usually very happy in the end. Communication and disclosure are key.

www.ssprocessors.com

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Permalink Reply by Chris Black on February 1, 2013 at 12:00pm

Joseph,

Thanks for participating in this discussion.  What are the several incentives buyers get?

Chris

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Permalink Reply by Karen Mathers on January 26, 2013 at 6:25am

I think it discourages offers big time. Banks are trying to get market value for their properties. Often I see them come back and want more than market value especially if it is a Fannie Mae property. What if the lender refuses to pay for any of the buyer's closing costs? Then you have a buyer who is going to pay for the seller's short sale out of pocket?

I discourage my buyers from looking at homes where the agent discloses this fee . . . and I think it should be disclosed in the MLS. It is hard enough getting buyers to wait weeks for a short sale to be negotiated; now we are going to charge them? I know I don't like to show those listings and I have had conversations with other agents to feel the same way. Maybe you end up finding a buyer and get a happy ending in most situations but it does discourage showings and offers.

What happens if a lender refuses to pay the buyer's closing costs and the buyer refuses to pay the 1% out of pocket and walks? Then you run out of time trying to find a new buyer who will pay the 1% and the seller is foreclosed on?

Aren’t short sales hard enough?

 

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Permalink Reply by Jeff Payne on January 26, 2013 at 7:27am

@ Karen, that is the mindset of most agents representing buyers in my area.  There are a few agents who charge 1.5% to the buyer but those agents do not sell much in my area.  I am talking with a reliable person on this board about their services right now and will let you know how it goes.  

I personally do not see an issue with it and think presented in the proper way, buyers will not have an issue with it but the problem will be overcoming agents overlooking the listings because of it..

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Permalink Reply by Heather Farquhar on January 27, 2013 at 5:51am

I agree Karen. How I handle it is I take 6% on the listing, offer 2.5% to the selling agent, 2.5% to us and 1% to the negotiator. Although the lender may sometimes balk at paying 6% they usually back down and pay the full commission. If they don't then the split then becomes 2%, 2% and 1% (this of course is disclosed in the MLS). This model may have to change though because CAR is talking about changing the rules to stipulate that you can't reduce the commission once it is in the MLS but for now it works great. The reason having the buyer pay it doesn't work (here in Los Angeles at least) is that just about every listing is selling in multiple offers, over asking. Currently we have a one month supply of inventory so even the short sales are selling at, or very close to, market value,

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Permalink Reply by Chris Black on February 1, 2013 at 12:08pm

Hi Heather,

I assume you are allowed to share your real estate commission with a non-realtor in CA?

Chris

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Permalink Reply by Heather Farquhar on February 1, 2013 at 1:03pm

Our negotiator is a Realtor.

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