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Yes- I was in the short sale and modification department. I have seen plenty of deals where the attorney tries to jack up his fees and collect all kinds of commissions for everything from being a real estate broker to negotiating the sale like a mod company to title work.
Most of the time there fees will be cut so not a whole lot to worry about- more like be aware that this is happening often- especially in states liek fruit cake California and Arizona, Nevada, etc- the hardest hit states.
Roger C. Fountain
Texas Certified Mediator, Former Bank employee int eh short sale and modeifciation department, paralegal and (inactive- at this time)realtor
9% in fees is VERY HIGH. My experience working at a bank would tell me not to pay the fees, but negotiate them down. Simple as that. If the "I'm God's gift to the world" attorney doesn't like it, too damn bad!
Roger Fountain
Pitbull Consumer Advocates
Comment removed by the moderator
Comment removed by the moderator
I don't know what the laws are in each state, but in California it is okay for the buyer to pay Negotiation fees (or whatever you want to call it) to people hired by the seller / listing agent. Generally, this would have had to come up at the beginning of the transaction - not something that gets thrown on at the end.
9% seems quite high (unless it was agreed upon and the value is still there). I typically see 1% or less - occaisionally have seen as high as 3% (again, agreed to upfront as to who would pay). Of course it has to be disclosed on the HUD-1.
Assuming this fee was disclosed up front, whether it is 1, 2, 3 or 9%, the decision the buyer has to make is whether the total price (including Negotiaion Fee) is worthwhile. If the fee was NOT disclosed up front and the seller's attorney is adamant about getting paid by buyer, I would complain to the appropriate jurisdictions for your state.
I don't think the fee was disclosed and that's likely what the issue is. IMO if it wasn't disclosed before the signing of the P&S then they can tell this lawyer to pound sand.
I would imagine the fee was not disclosed up front either - but it was not stated in the original question.
I agree with Smitty. Smitty, how do you ensure that you get paid on a short sale that you negotiated? What would stop the seller in this case from moving forward with the approval letter without the attorney? Unless the attorney can quickly place a lien on the property, seems like they can get this one closed without paying the 9% to the attorney and the seller can deal with it later. Thoughts?
Jeff, my contract is with the buyer and seller UP FRONT and disclosed ON THE MLS for the world to see and that's how I ensure I get paid. I wouldn't negotiate a short sale if someone came to me AFTER the P&S was signed if there was no disclosure. LOL..I don't think that's appropriate at all.
I encourage the seller to speak with an attorney at the beginning of the process, however in this case, I would imagine the seller and attorney need to work out what their agreement is at this point. IS there an agreement? I mean if there is none, I don't see why the seller couldn't move forward, but if there IS an agreement, then the seller needs to address the lawyer's fee. I also would make the case if this lawyer is holding up the sale of the property because of the fee, they are not acting in their client's best interest.
I think the lawyer COULD put a lien on the property fairly quickly, but then the fee will likely have to be deducted from the proceeds or put on the buyer anyways. It's a crappy situation either way.
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