Sellers negotiator fee
We are a buyer and we found out sellers listing agent outsourced the negotiation to a third party. What's the typical fee these third party negotiators charge?
Thanks in advance
Replies to This Discussion
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Permalink Reply by Stephen B. McWilliam on
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I have provided the relevant references: RESPA Section 8 prohibits charging the Buyer an unearned fee. As provided in my original post in this thread any short sale processing fee cannot be lawfully charged to the Buyer whereas the Buyer does not receive the benefit making the fee unearned. The Buyer may provide a credit to the Seller on page 1 of the HUD. I'm being asked to provide a specific citation to the law that prohibits non-licensed MLO from charging short sale processing fees. I cited the Florida statute in my previous post that is similar to other state laws. This stated definition complies with the SAFE Act as adopted by most if not all states. A short sale payoff is negotiating the terms of an existing mortgage which requires a MLO license if a fee is going to be charged. I'm sorry but the laws do not specifically state a Realtor cannot charge a fee and if you believe that is required then you're an accident waiting to happen in these regards. The current laws govern who may charge and who they may charge; those laws have been cited in this thread. Obviously, we are all entitle to our opinions. However, I can assure you that the information I have provided herein has been provided through the Florida regulators. This now all reminds me of those Realtors that helped facilitate certain short sale flips a few years ago; several of them in Florida were recently indicted for their participation in the flips.
Lastly, it is almost impossible to avoid a UPL (unauthorized practice of law) claim when processing a short sale. The moment one comments on deficiencies from the note you now have UPL and the liability associated.
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Permalink Reply by Bryant Tutas on
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Stephen. It is important to point out that RESPA does not govern all real estate transactions. Financing has to be involved. And even then there are exceptions.So if the buyer is paying cash for the property then we are pretty much free to structure the deal anyway the buyer and the seller have agreed to. Including the buyer paying the short sale negotiation fee.
Also, as a licensed real estate broker in the State of Florida I CAN negotiate short sales as part of my listing services AND I can charge however and whatever I want for my listing services. So really it just depends on how my listing agreement is structured and how my commission is earned and disclosed.
By the way The DRE in CA released this in December 2011. Their opinion pretty much lines up with Florida:
Q. I perform short sale negotiations as part of my listing agreement with the seller of the property and am not compensated for negotiating with the lender. I am paid for completing the sale per the listing agreement. Do I need a Mortgage Loan Originator License Endorsement on my DRE license?
A. No. The negotiation of a short sale transaction with a lender does not meet the definition of a mortgage loan origination, so a Mortgage Loan Originator License Endorsement would not be required.Q. I perform short sale negotiations between a borrower and the lender and I do not have a listing agreement with the seller of the property. In addition, I am compensated for negotiating with the lender. Do I need a Mortgage Loan Originator License Endorsement on my DRE license?
A. No. The negotiation of a short sale transaction with a lender does not meet the definition of a mortgage loan origination, so a Mortgage Loan Originator License Endorsement would not be required. All the same, the negotiation of a short sale with a lender is an act that requires a real estate license. Accordingly, unless an individual qualifies under an exemption from the Real Estate Law, he or she must be licensed as either a real estate broker or as a real estate salesperson and be properly licensed to a broker.Stephen. Most of your statements are opinions that err on the side of caution. While they may be true in some cases they are not true in all cases. There are MANY ways to get paid in the handling of a short sale that are perfectly legal and above board. You also need to remember that not all short sales are in foreclosure. That means they are not distress sales and do not fall under MARS either.
Short sales are not for everyone. In your case they certainly sound too risky based on your commitment to working inside the box. There's nothing wrong with being cautious. Just don't expect others to work within your self imposed limitations.You really need to just go get your law license :)
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Bryant, as I pointed out in my original post RESPA only applies in transactions that involve a federally insured mortgage loan being utilized by the Buyer. I also stated that cash transactions are exempt from RESPA. furthermore, I stated that real estate licensees and title companies may process short sales lawfully regardless of RESPA. I also stated that it will be difficult to avoid a UPL claim in most cases should issues later arise. I never stated that it was impossible or that a real estate licensee cannot lawfully perform this function. Why anyone would want the added work and liability absent compensation is beyond me. Considering I'm regularly engaged as a real estate expert in the courts here in
South Florida I am exposed to the claims made by the aggrieved and their attorneys more than most. Therefore, I will err and caution those to be on the safe side so as to avoid unnecessary and expensive litigation.
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You know I just love picking on you :) Your correct statements get buried in all the fear mongering. I just wanting to make sure our members understand they do have options. I negotiate my own short sales because I do it far better than anyone else I have tried. Sellers need more than a short sale negotiator, they need someone that cares and will guide them through the process completely and with compassion towards their situation. Will an attorney do that? I doubt it. There is a time to seek legal advice. And that's when it's needed. Not all short sales require legal advice. In fact most short sales are very straight forward.
It's my opinion that a short sale transaction handled properly exposes me to no more liability than a regular real estate transaction.
I have complete confidence that IF I ever get sued over a short sale or any other transaction I will prevail. My records are complete, my files are full of the correct disclosures and I do an awesome job for my customers.
Granted there are many agents and brokers that are going to have to pay the price for their negligence. But having said that I read far more about attorneys being shut down over short sales than I do agents and brokers.
The purpose of this site is to teach agents, attorneys and negotiators the right way to handle short sales and thereby limiting their exposure to liability tremendously.
My opinion is that whether or not a negotiator is an attorney, agent or broker has no bearing on how competent they are when it comes to short sales.
I just recently argued with an attorney that was threatening to sue me and my seller because the seller couldn't move forward with the short sale because they didn't agree to the terms and conditions of the approval. I told him to go ahead but first at least take the time to read the contract. He did. He sent the cancellation of contract over an hour later. He was an idiot. And, an attorney, getting paid to help sellers avoid foreclosure.
I cringe when I hear the advice some of my sellers have received from their attorneys.
Sellers need to hire an experience short sale negotiator. If the best person for the job happens to be a real estate broker then so be it.
Shorts sales are not complicated and I get irked when folks use scare tactics that are unfounded. Sellers are being harmed by being told that an attorney is the best way to go. My guess is that very few attorneys have a clue when it comes to short sales. There are some that are very good and there are many that suck. The same goes for real estate licensees.
I commend all agents that are willing to learn short sales and are able to handle the negotiations themselves.
Sellers need to do their due diligence when it comes to hiring someone to help them with their short sale. Don't be suckered in just because the person is an attorney.
Do you think an agent that took a listing where the seller hired an incompetent attorney to handle the short sale negotiations will be exempt from being sued?
Everyone involved in the transaction will be sued. I'd much rather be in control of the entire transaction. Nobody can protect me better than me.
Agents and brokers need to know what they can and can't do. They need to be educated.
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Permalink Reply by Jeff Payne on
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Bryant, very well said. Short sales are not for everyone. As an agent we have to decide, as Stephen puts it, "Why anyone would want the added work and liability absent compensation is beyond me". That is a simple business decision and one that I am willing to take on. Short sales can be added work but not as much work as an REO property and chances are the REO property will pay much less than a short sale.
I understand everyone's stance on this and most of what I have read on this topic goes back to opinions and interpretations. I highly doubt that there is a legal case that can be cited in regards to an agent or a title company in a law suit from charging the buyer for their short sale services.
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Permalink Reply by Donna McClelland on
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Well said Bryant! Also, I think a lot of people here have overlooked one very important thing - Most of us, probably 99% of the time, close short sales to the utter satisfaction of our clients , so why would they sue us later?
As a licensed Loan Originator and real estate Broker doing third party negotiations, I am meticulous about pointing out to my sellers in a formal document that they must sign once we receive the short sale approval, what their options are regarding the lender's short sale approval (accept, reject, counter offer) and I advise them to get legal, financial, and tax advice regarding the terms of the approval (i.e. deficiency, 1099 for forgiven debt, credit reporting) before they agree to the terms of the short sale. I'm sure this doesn't make me completely bullet proof, but the sellers do not feel they are being pressured into accepting terms they are not comfortable with which, in my opinion, may be the reason some of them sue later.
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Jeff, I've provided the specific references. FAR has released previous information in these regards and will be releasing further clarifications. When I have some available time this week I will obtain and post what has been published to date. However, my references to specifics sections of RESPA and FL s.494 are rather specific and self explanatory.
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Sounds good, I would be interested in reading it and appreciate you sharing it with us.
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Stephen, not trying to be argumentative here because I appreciate the information that you have but please answer this one for me...
NAR pushes their SFR certification. Please explain the 4th benefit that they are touting, negotiate with lender. Seems to me that would be saying that NAR advocates agents to work short sales directly with the lender?
Designed for real estate professionals at all experience levels, the National Association of REALTORS® (NAR) Short Sales and Foreclosure Resource certification, or SFR for short, gives you a framework for understanding how to:
- Direct distressed sellers to finance, tax, and legal professionals
- Qualify sellers for short sales
- Develop a short-sale package
- Negotiate with lenders
- Tap into buyer demand
- Safeguard your commission
- Limit risk
- Protect buyers
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Excellent point, Jeff, and perhaps you should also bold and underline "limit risk."
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Permalink Reply by Sheyenne Schultz on
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Jeff Hey, I'm a fellow Purdue grad too. Howdy!
In relation to Stephen....this thread is getting exhausting as it drones on and on on an issue that I DO see what Stephen is trying to say, for we have had people in his same position try to say the same thing over here. BUT he is alittle confused and mixing regulations for lenders with regulations for realtors. I HEAR what he is saying but it's NOT the same rules. U know it, I know it, and every other realtor on here that negotiates short sales knows it...except for Stephen. And it is too lengthy to explain what I know he is trying to say in this thread. In my opinion, the elevator is NOT going to the top floor, if u know what I mean.
I don't think anyone is going to change his mind. And this is why we live in the US, where we have freedom of speech. Everybody's entitled to their opinion. Right? Cest la vie!
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Boiler UP! I understand what Stephen is trying to say, I really do, I just don't necessarily agree with it as it is his opinion and not based on any case law.
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