Up Front Fees
Can any share with me the documentation they are using for upfront fees for short sale transactions? Fee range?
I appreciate your help,
Kimberly Sherrod
Replies to This Discussion
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Permalink Reply by Jason Yacoub on
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I Agree too, beside if you charge upfront fee and seller pays it you know seller will corporate fully, I had seller list to short sale but did'nt corporate so short sale did not approve, and I do Charge $1500.00 for short sale not upfront thou and banks will pay it
Bryant Tutas said:Goof for you Mike. I completely agree. My average sales price is 93,000. I recently closed a short sale at 45k that took 5 buyers and over 2 years. I was happy to do it. The upfront fee I charged helped offset the costs of doing this transaction.
Mike Sher said:I appreciate everyone's opinion on this matter but I am for charging a small upfront fee. We are not running a NON-Profit service. Almost all of my short sales are with people who I did not represent when they purchased the home so I did not get any compensation for that transaction. Nor did I originate the loan that got them in trouble in the first place. If CPAs, attorneys and physicians can charge for their services prior to the completion of their hired task, why can't I. Do we as brokers have less worth? I am not talking about $1000's but 100's. I have closed over 100 short sales, I know more about short sales then most lender, attorneys or credit counselors. So why shouldn't I get paid a small up front fee for engaging in my services. If they don't want to pay they can find a less experienced Realtor, no one is forcing them to use me. Unless you are running a non-profit or are independently wealthy and you are GOOD at short sales, I say charge something. My average sale in Detroit is $100,000 and I need that additional $400-$700 depending on how many loans, to keep my staff, systems and marketing going. I think we can help people and still get paid for it. BTW, my clients always feel that is was worth paying me to do it right then the post closing costs of a sloppy job.
Respectfully
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Permalink Reply by Fred Price on
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I do not believe you can charge any upfront fees...I know we do not. The Heathrow Group
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Permalink Reply by Kimberly Sherrod on
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@Eric, thank you for asking why? There are a few reason why I would like to charge a fee, retainer, up front etc. Of course, this would be done with the written disclosures by my real estate attorney so that, if any fees are charged it would be by the legal parameters.
Why to charge a fee? I used to be adamant that I would never, under no reason charge a fee, how could I do something like that, now why the change.
1. I spend many, many hours of my down time researching, reading blogs, educating myself to the current trends, policies and theories of short sales and real estate. I know for a fact that not many agents are doing this. I believe that it is very important to stay on top of what is happening the market place and education is the key.
2. After 60 shorts sales and many more on my board, I have always had the policy of helping everyone that needed to complete a short sale, no matter the price of the home. At this point I have brought on another s/s agent, and an assistant. I can not afford to get paid $1200.00 for a low end home and still service my other listings. Not with the amount of time and expense that each one requires. Then I have to pick and choose who will I work with and I am not inclined to do that. I never want to have to turn away someone because their home is not worth a higher value. Why should they have to go to another agent that is not as experienced to sell their home.
If that home owner goes to an attorney, CPA etc., guess what they are going to pay.....a retainer.....why.....because that person is a professional and expects to get paid for their professional services.
I am not talking about a huge sum of money, a nominal fee that I am sure can be paid.
I appreciate everyones input on this matter, I realize there a two sides to each coin. Kimberly
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This is my first post here at Short Sale Super Stars and I am happy to say that I appreciate everyones response. Just reading everyone's thoughts is very encouraging. Thanks again.
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Permalink Reply by Stephen B. McWilliam on
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We would all like to "collect" all sorts of money. Unfortunately, ANY advance fee(s) and/or ANY fee charge specifically for short sale processing is unlawful and considered a criminal offense in most every state, never mind the administrative action by possibly losing one's real estate license. NAR and most state association have warned us all. Now live and learn.
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Permalink Reply by Mike Sher on
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Stephen, are you an attorney?
Stephen B. McWilliam said:
We would all like to "collect" all sorts of money. Unfortunately, ANY advance fee(s) and/or ANY fee charge specifically for short sale processing is unlawful and considered a criminal offense in most every state, never mind the administrative action by possibly losing one's real estate license. NAR and most state association have warned us all. Now live and learn.
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No sir. I am a Florida licensed Real Estate Broker and Instructor, Mortgage Loan Originator. Also, I am regularly engaged as a real estate expert witness for both state and federal court actions. I am typically involved in liability and/or fraud claims made against real estate licensees.
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Permalink Reply by Kevin Hardin on
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Bryant,
FTC waiver of enforcement is NOT an enabling statute. Prohibition of upfront fees is a state issue unless a Federal Act supercedes that. Here, upon passing of the MARS rule by the FTC, is prohibited ANY upfront fee in ANY state. With this waiver of enforcement, prohibitions against upfront fees falls back to state jurisdiction but, in no way was the waiver by the FTC an enabling act.
IN Arizona
A.R.S. §32-2155 which states: Restriction on employment or compensation of person as broker or salesperson
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is collected that the broker or salesperson is receiving compensation both for real estate brokerage, when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
http://kevinhardin.com/no-enforcement-of-mars-rule-against-real-est...
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Permalink Reply by Jeffrey Burnham on
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It amuses me how so many agents take the "high and mighty approach." Even if you go to a free clinic they charge a fee.
Many say... "oh, I would NEVER charge a fee." Even when you devote hours to a client that you can SAVE from foreclosure, keep them in the house for several months RENT FREE while the banks and HOAs "review" the info you have to send UMPTEEN times?? You can SAVE the client from a Deficiency Balance pursuit... how much did THAT save your client?
How many hours do we spend, sending the SAME information when the bank tells you "we never got your file- can you FAX all 97 pages AGAIN, because we don't ACCEPT emails?!"
While we're spending all this time working for FREE, the short sale Seller is also living MORTGAGE FREE. Is it that fair? We're expected to wait MONTHS to get a dime, play the paperwork game all for FREE?? Then, if it's a HAFA eligible situation, the Seller can even walk with a $3,000 bonus?"
Oh yeah, we can pay for the sign, pay our MLS dues so we can put the property out for grabs with other agent's Buyers, prepare nice color flyers pay for the ink and paper and spend the time preparing a good flyer, MARKET the property thru whatever means necessary-pay for that marketing, spend hours gathering paperwork, input that same paperwork multiple times into the bank's system, prepare a CMA or BPO to send to the bank. Then if we get an offer we can negotiate with the Buyer and their agent, we can update the Buyer and their agent continually throughout the process, for FREE of course.
Then when approval day comes, the bank will decline any Brokerage fee (if your broker charges this....which is NORMAL for MOST agents that are part of a National Franchise, which I am not.) (Funny, nobody baulks at the marketing fee they pay for having the Franchise Name on their business card!) But when the Brokerage fee is declined, guess who gets to pay that?
It's amuzing that so many agents have this "I would never charge for advance fees" attitude. If I were to go to a doctor, I wouldn't go to the doctor that was FREE just because he was FREE. I would go to the PROFESSIONAL that could resolve my ailment. The doctor I could trust to keep me updated and informed throughout the proceedure. The doctor I thought had the necessary skill to properly help me. Price would be secondary to the results. If price were the only factor, there would still be Yugos (or whatever country Yugoslavia is these days) roaming the streets of America. Do you buy your car based ONLY on price? When you're in the grocery aisle do you get the cheapest cheese? Or the one with the quality ingredients? Different folks make different choices. Price is not the only factor in the world. For this reason, Dillards and Nordstroms have little fear of Walmart,KMart or Sears (who MAY be going away shortly.) There's a saying I've heard from many professionals.. "I have no problem with my competitor having a cheaper price~~~he know's the value of his product."
Now, before I get the tons of hate mail from you "High & Mighty" agents.. we all make our own business decisions. Just like I'm sure you will claim.. my clients are always EXTREMELY satisfied with me and my results. I have to buy all the items I mentioned above. My clients understand this and seldomly baulk at a modest advance fee to cover the sign, electronic lockbox, flyers and time to offset the hours spent just preparing the short sale. This is MY decision. You're free to make your own. Baskin Robbin's has 31 flavors of ice cream...since there are so many points of view. I will say this, the one thing I encourage all my short sale sellers (and Buyers for that matter) is to talk to other agents. They should work with who they think will do the best job. The PROFESSIONAL that will get things done.
Charging for advanced costs is NOT illegal in Nevada where I live. (It may be where you live?)
I would suggest that you consult your attorney when making your decision and that they review your documentation if you adopt a policy to charge for advance fees. (Although I doubt they'll do this for FREE.)
As my soapbox is really creaking, I'll step down now. I wish you all good luck in your business and (IN MY OPINION) taking care of your clients should NOT mean taking food off your own table.
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Permalink Reply by Jeff Payne on
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Jeffrey, believe it or not, I totally agree with you. It is your decision to charge what you want to charge and work for what ever company that you want to work for, that is the beauty of this business. We make our decisions based on our business plan. For me, I really don't feel the need to charge an upfront fee, I can see how and why agents do, it is just not for me. Call it High and Mighty, call it what you want.
Might sound very contrary to most but I spend MORE time to get an REO sale closed than it takes to get a short sale closed and I dont charge the REO bank a fee either. I actually spend little time on short sale files because over the years I have built great relationships with most of the lenders and have the go to people when I need them, I also put a very detailed short sale package together and that helps. cant remember the last time I heard that they could not find my file.
As far as signs, lockboxes and flyers, I reuse my signs all of the time so they have been paid for 100 times over, same for the lockboxes too, as far as flyers, I haven't printed a flyer in years so I cant say anything about that.
Good post, I LOVE to see agents with passion and your post shows your passion!
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Permalink Reply by Beverly Cibulsky on -
Jeffery,
I am not sure what your point is? I am not sure your are a happy real estate agent or not? The participants on this site are from all over they nation! So, yes we must abide by our own state rules.as well! Around 2005 ish. real estate professionals were delt a new hand! "short sales"! (hold up or fold up) I did my first short sale in 1992 a divorce situation (trust me it was so much easier then, you actually got to speak to someone important at the bank!)
We all have healthy opinions here! Our goal is to exchange knowledge that may some how help others in our profession who are also dealing with these difficult times and sales. This is not a "hate maile" and goss I dont think I am "high & mighty" well maybe Jeff does (REALLY, !!!JUST KIDDING JEFF!!! lol)
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Beverly, of course I think you are high and mighty :) You have to be just to even want to think about a short sale, you have to be "high" and you have to be "mighty" or you would drive yourself crazy !!!!
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