Lately, I've run into two servicers asking for Sellers or Buyers to pay them a Short Sale processing fee, management fee or whatever they choose to call it. A 1% fee seems to be the magical number. Is anyone else seeing an increase in this? It doesn't seem legal...do you know?
I'm seeing this alot more. Lawyers offices, servicers, etc...all wanting a piece of the pie. I am in St Louis where the avg sale is around 150K. When I have questioned some of the "companies" as to how the seller would pay for this, they usually tell me that the listing agent usually pays for it. In my market, we are doing short sales as low at 30K on occasion. First the banks want to pay only 5% and then these services want 1%. Its just getting ridiculous.
We actually can charge a short sale processing fee if we charge it at time of listing.
I haven't had a servicer hit me up yet. If they can put it on the HUD and take it from the deal then I'm OK with it. I personally won't be paying them anything.
Lynn, We can charge an upfront fee as long as it is for services rendered. Mine is a marketing fee. Look at it this way...a short sale seller is certainly free to hire an MLS only company of they choose to...right? Or they can hire a flat fee company. My business model just incorporates a flat fee and a commission. BUT be sure to seek legal advice on this and make sure you have the proper disclosures signed by the seller.
I have short sales in my market that are selling for $30,000 and less. I can't help these folks unless they pay me additional compensation. If it weren't a short sale I could just charge a higher percentage but unfortunately the lenders cap me in this area so I have to be creative. Make sense?
The law passed last year is to protect sellers from scammers that charge them upfront fees with a guarantee of getting the short sale or loan mod approved.
This is not bank servicers asking for this 1% fee. This is the listing agent who's hiring a short sale negotiator who tries to get a 1% fee included in their HUD as a "negotiation fee", because most banks will not agree to this, that cost gets lopped off onto the buyer. Unfortunately if there is a demand for a particular neighborhood, some buyer will pay for it, otherwise, I would just tell the listing agent to pay for their own short sale negotiator from their own commission.